Latest OECD Report on Ireland is wrong on welfare rates

Social Justice Ireland is deeply disappointed with some of the recommendations of the OECD’s latest report on Ireland. In particular we are disappointed with a number of recommendations that would seriously damage poor people, especially those who are unemployed.  The report contains mixed messages, some of which are at odds with Ireland’s current reality. The research on which some of these recommendations are made is deeply flawed.  Some of these  recommendations are also at odds with the ESRI report on Tax, Welfare and Employment just published.

The OECD Report proposes that unemployment benefits be linked to unemployment duration to promote the return to work of those who are unemployed. In other words the OECD is recommending that payments to unemployed people should be reduced the longer they are unemployed. This recommendation ignores some very important points:

• Unemployment is at 14.2%. 7.7% of the labour force are long term unemployed i.e. unemployed for more than a year.
• The latest ESRI report on ‘Tax, Welfare and Work Incentives’ clearly shows that those on unemployment payments would be better off if they were in a job.
• In the period to 2008 when jobs were available only 1.3% of the labour force were long-term unemployed.
• When jobs are available it is clear that Irish people take up those jobs and do NOT opt to stay unemployed – as “a life-style choice” or for any other reason.
• The payments received by people who are unemployed are already €34 a week below the poverty line for a single person and €56 a week for a couple.
• Forcing people into even deeper poverty will not see them take up jobs that do not exist.

The report itself acknowledges the significant danger that high unemployment will become a structural issue in Ireland and that the rate of emigration has tripled among Ireland people since 2008. 

The report also notes the large decline in labour-market participation among young people.

The mixed messages contained in this report are misleading and Social Justice Ireland believes they fail to take account of some of the key influences identified above.

The report also recommends that the Government should continue with the measure of expenditure cuts to taxation of 2:1 which Social Justice Ireland opposes. One of the reasons given in the report is that it would spread the adjustment of the burden more widely. This is an insult to those who have been most affected and will continue to be badly affected by cuts in public expenditure, those who had no hand, act or part in causing this crisis. Social Justice Ireland is disappointed that yet again, the issue of the contribution that the corporate sector should make to Ireland’s economic recovery has been overlooked and ignored.

The report also recommends a broadening of the overall tax base in Ireland and the introduction of a site value tax. Social Justice Ireland has been arguing the case for both of these proposals for many years .

An overview of the OECD report may be downloaded below