IMF Paper proposes welfare reduction to ensure job creation in Ireland

The IMF (International Monetary Fund) has published a study in which it recommends that the way to raise Ireland's employment so as to avoid the persistence of the current high unemployment rate is to reduce unemployment payments over time. It believes this should be supported by stricter job search requirements, additonal resources for FAS (to assist these job searches) and a reduction in the minimum wage. This study was written by IMF staff (including Ajai Chopra who is leading the IMF team in Ireland).  The full text can be accessed here.  The recommendations for Ireland are on page 22.

 This study's recommendations to Ireland raise some interesting questions.

• What jobs are unemployed people to pick up through the IMF's stricter job search requirements? There are more than 13% of the labour force unemployed at present. The vast majority of these would take up any job is one existed. They don't.
• Does the IMF think that unemployed people don't have sufficient incentive to take up paid employment? Where is the evidence for this when only a few years ago unemployment in Ireland was at a record low when jobs were available.  In making this proposal the IMF was simply insulting unemployed people in Ireland who have a very good track record of taking up a job when a job exists.
• Is this simply another example of the IMF blaming the victim who is suffering as a result of the government's implementation of IMF proposals on economic development?

The exact wording of the IMF recommendations for Ireland are:

1. Raise employment to avoid persistence of current high unemployment rate.  Specific measures:

• Introduce gradual decrease of benefits over time of unemployment spell and stricter job search requirements
• Provide more resources to the unemployment agencies (FÁS) to provide efficient job search assistance to the growing number of unemployed
• Review the level of minimum wage to make it consistent with the general fall in wages

2. Improve competitiveness to promote exports as a sustainable source of growth.  Specific measures:

• Reform planning and licensing systems in net work industries, so as to increase competition in sheltered services sectors
• Focus public resources on high-priority projects in the knowledge-based economy