IT IS THAT time of year when politicians will be busy floating policy ideas to test the public reaction ahead of next week’s budget.
We’ve had kite-flying on spending close to €1bn out of a €1.5bn tax package on a handout to the hospitality sector, hiking the tax-free sum a favoured niece can inherit from a bachelor uncle from €40,000 to €400,000, and putting €1,000 back on to student college fees.
Another proposal floated is removing Jobseeker’s Allowance from the across-the-board increase to social welfare payments and pensions.
Different rate increases are not unheard of. As recently as the late 1990s to mid-noughties, budget increases to pensions outstripped the increase to all other core welfare payments until a target to bring the non-contributory state pension to €200 a week by 2007 was achieved, to tackle the high risk of poverty then faced by pensioners.
In the two decades since, the treatment of core welfare payment rates has been the same, with just a couple of exceptions in the financial crisis years. Not only that, but what is now being proposed is treating one group – the unemployed, less favourable than all the rest.
Some readers will no doubt be thinking that no change or a smaller increase to the weekly €244 Jobseeker’s Allowance is common sense at a time when there are plenty of jobs available for anyone who wants one.
So, what’s the harm?
Low unemployment levels
Unemployment has remained below 5% over the past three years, which is to say the labour market has been at or close to full employment.
Out of a record 2.9 million people now in the workforce, only a tiny faction is on the dole. The latest Department of Social Protection figures show a total of 150,440 people claimed Jobseeker’s Allowance at one point or another over the three months from April to June, and 76,533 claimed contributory jobseeker’s benefits.
Of those, fewer than 57,000 were fully out of work for a year or longer, around 20,000 of whom are aged over 60 or signing for PRSI credits to qualify for a pension at a later stage. The rest were recently unemployed workers and underemployed workers, who get a fifth of the weekly rate (€48.80) for each day without work.
Not only would everyone claiming Jobseeker’s Allowance be impacted by a stealth cut to the payment, so too would around 50,000 children be pushed even further into poverty if their parent doesn’t move into work or work more hours.
Disincentives to dependency
What the proposal to devalue Jobseeker’s Allowance also ignores is the existing disincentives to idleness and the decades of reform to remove welfare and work traps.
At a maximum personal rate of €244 a week and a lower €153.70 aged-related rate for younger jobseekers aged 18 to 24 years, very few people are financially better off on Jobseeker’s Allowance than in work, even after accounting for entitlements to secondary welfare supports and tax deductions from wages.
The proof is there for all to see in the poverty statistics. People who are unemployed are over six times more likely to be at risk of poverty, three times more likely to suffer deprivation and eleven times more likely to experience consistent poverty than people in work.
To further dissuade welfare dependency, the weekly fine for refusing to engage with the public employment service was doubled to €90 from January this year. In the first five months, 4,035 claimants have had their Jobseeker’s Allowance reduced. And the other claimants? Participation in labour activation programmes by the unemployed is high in Ireland compared to most other EU member states, according to the European Commission.
Cutting income safety net
Most workers who loses their job today will fortunately only be unemployed for a short period. The average time spent on contributory jobseeker’s benefits is 13 weeks, with 70% of workers in a new job within six months of signing on.
But when the economy is depressed, the time spent unemployed lengthens. In the dark days of 2011, over half of all unemployed people found themselves out of work for more than one year. It would have been even higher were it not for the large numbers leaving the country in search of work.
The proposal to chip away at the minimum income for the unemployed is being packaged as taking aim at some imagined vast number of work-shy layabouts. What it actually amounts to is cutting the income safety net of all 2.9 million workers – employed and self-employed, who risk finding themselves reliant on Jobseeker’s Allowance in the next downturn if unemployed for longer than their nine-month entitlement to a contributory Jobseeker’s Benefit.
Don’t be fooled. It is you and 50,000 children who would ultimately pay the price of this proposed cut to the dole.
Dr Laura Bambrick is a social policy officer at the Irish Congress of Trade Unions (ICTU). ICTU is the umbrella body for 45 unions together representing the interests of some 700,000 workers on the island in all sectors of the economy.
