Cut in unemployment benefits urged

UNEMPLOYMENT benefits, including housingallowances, should be reduced and the amount of welfare paid should decrease according to the length of time a person is without a job, the OECD economic report on Ireland recommends.

It warns that the collapse of the building sector has left a big number of largely unskilled youths that unless employed as soon as possible could cause social unrest and a move against the austerity measures.

While emigration has traditionally relieved Ireland’s unemployment situation, it is not such a good policy now as the best educated are leaving and may not return.

The report, put together by the Paris-based think-tank paid for by governments in the developed world, recommends measures to reskill workers, make it cheaper for employers and cut unemployment and welfare benefits.

It acknowledges that the difference between wages and unemployment assistance in Ireland is below the EU average and so, as the ESRI reported this week, work pays better than welfare except for about 3% of people. But for those on low incomes, the OECD argues, unemployment money is quite good and so acts as a disincentive to people to work.

It is particularly critical of the housing allowance and the way it is administered and suggests that it be revised.

This is contradicted by the more nuanced and detailed ESRI report released earlier this week that found that only one in eight people on jobseekers’ benefit or allowance were receiving a rent or mortgage supplement, while the best off — a couple with two children — account for less than one-in-five out of work. Single people receive a third of the national average wage, it pointed out.

The OECD report recommends, on the basis that people do not work for fear of losing their housing allowance, that they should continue to receive part of the allowance depending on what their employer pays.

The report also believes that unemployment assistance should be reduced according to the length of time a person is out of work and that money for out of work part-time workers should also be cut.

They recommended that the Government should continue to halve employers’ social welfare contributions on weekly wages up to €356, which should help low-paid jobs such as in tourism.

Both Fás and the Department of Social Protection were criticised for operating inefficient services that do not improve people’s chances of getting work. A quarter of those eligible have not been referred to Fás because the department excludes those made jobless more than twice. Those referred receive only limited help, while those who do not cooperate are rarely penalised.