Overhaul of our €22bn welfare system must be done by design
The best poverty reduction scheme in the world is a job
You walk into a room lit by fluorescents. A man sits you at the table and hands you a pencil and some paper. "Redesign Ireland's social protection system, please. Lunch is at one."
Once your hyperventilation passes, you'll want to know the 'edges' of the design brief. Ireland spends well over €22bn on social protection measures. Almost one-third of everything the Government spends goes into this area. The unemployment rate is 13.7pc, which represents around 292,000 people. But social protection is not just social welfare payments.
The social protection remit is huge, from jobseeker programmes to bereavement payments to child benefit and much, much more. Social protection is a complex organisation that hundreds of thousands of people depend on for their survival. You should not attempt a redesign without thinking very, very hard about what the change will look like.
You have to go from the big idea, from the first principles, all the way to the nuts and bolts of who will do what, when, and for how much.
That's policy design.
Harold Nelson and Erik Stolterman define 'Design' as intentional change. Design is not how something looks, but rather how it works, and how it works in relation to everything around it. When designing policies, there are no first principles, and no blueprints. There is no received wisdom or even a large literature to draw from, only isolated examples. The policymaker is essentially rolling a set of dice with a €22bn system when they want to change things.
But let's go back to you. You have to redesign it all. No pressure. How should you start?
You're pretty sure the best poverty reduction scheme in the world is a job. Jobs lift people and their families up. More than 20,000 people have moved from being long-term unemployed to employed in the past year. You'd like to accelerate this trend by providing lots of incentives to employers to create new jobs, and you really want to help jobseekers retrain quickly to match the needs of employers through training schemes and internships.
Those are the carrots.
You might also want to reduce the total cost of the jobseeker programme as a stick.
In Germany in the early 2000s, when the labour market was very sluggish, they enacted the Hartz IV reforms which completely changed their unemployment insurance system and resulted in a significant reduction in unemployment benefits for the long-term unemployed.
IMF economists Tom Krebs and Martin Scheffel studied the Hartz reforms and showed the 'carrot' part of the policy, which helped employers and prospective employees match more easily, really helped get people into work and was much more successful than the 'stick' part.
Many of the recent announcements around Pathways to Work 2013 involve changing the nature of the carrots and the sticks. The Intreo integrated employment and social welfare offices represent a key change, while the changes in benefits are less well understood. There are often unintended consequences to policy changes.
Lone parents in part-time work may see their incomes fall, paradoxically, as a result of these changes, while other jobseekers will benefit.
At the Kemmy Business School in the University of Limerick we've been trying to think about how to design policies.
With the School of Architecture we ran the Intelligence Unit in Limerick City Gallery for seven weeks. The idea was to bring design thinking to policy problems, using a range of expertise from architecture to economics to marketing. The results are on display now in the Limerick City Gallery.
I learned three big things from the Intelligence Unit project. The first is that really thinking through how something is going to be implemented requires a deep knowledge of what is already there, what systems are working (and not working) on the ground, and why that is the case. Listening to those with expertise on the ground is key. The second lesson is letting creative people see the same problem from many angles to come up with new solutions. Economists see things one way, architects see things another way. Neither perspective is right, and the combination of their work usually brings something new and unexpected.
The third lesson is institu-tional buy-in. We were working closely with Limerick City and County Council, so we had a strong sense which ideas would fly, and why. Understanding the constraints those who implement policies are under is probably the biggest lesson I learned from the Intelligence Unit project.
Redesigning social protection isn't easy, but it needs to be done. Bringing design thinking to the table will help those designing the policies, and those who have to live with the eventual results.
Stephen Kinsella is a senior lecturer in economics at the University of Limerick