And the Poor Shall Inherit the Bill

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Government lies and myths cloud attacks on social welfare

Tune into Pat Kenny, Live at 5, or any other formulaic RTÉ current affairs programme these days and chances are you’ll come across a panel of ‘experts’ debating the social welfare dilemma. It’s no coincidence that, two years into a recession, with unemployment and a deficit still growing, interest in our social welfare system has increased exponentially.

While most of the commentators on these shows will mask their thoughts in language about ‘reform’ and ‘helping people out of poverty traps’, what it all boils down to is this – the social welfare bill was €21 billion at the end of 2009.

It is predicted to continue growing because the government has no jobs strategy. The state was €24 billion in deficit in December 2009 and this will keep growing too because the government’s deficit reduction policy is deflationary (that’s why Sinn Féin has called for a reversal of social welfare cuts and a household stimulus package to encourage investment in the economy). Social welfare accounts for over one third of all government spending and, as they have no plan to get people off the dole, they must cut the payments.

There is no argument against the system needing reform – it does. It is complex, multi-layered, ineffective in either providing for those in need or tackling fraud. It does not interact properly with any other department, FÁS or the revenue. However, the arguments are targeted at the rates that are paid, as opposed to making the system more effective. If it were to be an effective social welfare system, the rates and staff numbers would in all likelihood be higher.

The problem the government has in reducing the rates is that the people on the dole these days are not just poorly motivated or without education, the ones who never had a chance and can be trodden on at a minister’s discretion. The growing unemployment level means the people on the dole now are coming from redundant professions like architecture, or are highly educated graduates who can’t get jobs. So, the government’s press office and its pals in the business world and the media have gone into overdrive creating reasons (lies and myths) why the dole must be cut to try to make their money-saving policy seem like sound economic policy.

So let’s examine the top five ‘facts’ being put out by the government as it intensifies its war against poor people.

1. ‘Social welfare recipients can get up to €40,000 a year’

FACT: An Irish single unemployed claimant receives the third smallest amount in benefits in the EU15.

The subtext of this argument is that social welfare in Ireland is a disincentive to work. This figure comes from adding up every possible benefit available to a family of four, including children’s allowance (which is available to all parents) and the maximum rent allowance, which is only available in Dublin.  The OECD found that in 2007 (before the cuts) single claimants were in receipt of comparatively low payments in the EU. A 2008 report from the Vincentian Partnership found that many households on social welfare or the minimum wage do not have enough income to sustain a basic standard of living, with a single claimant living in Dublin in need of an additional €61.52 per week just to get by.

2. ‘A lack of activation measures allows people to stay on the dole’

FACT: There are no jobs for people to go to.

Over the course of the last two years the live register rose from 181,000 in January 2008 to 436,000 in January 2010, and it’s still growing. The number of companies in receivership continues to grow; the Construction Industry Federation says its members are still letting go workers; SMEs say that almost half of all their businesses who sought credit last year from banks were refused. A Euro-stat report found in 2009 that Irish net replacement rate, i.e. the ratio of social welfare benefits to previous take-home pay, is extremely low. Luxembourg has the highest rate at 86.6% and Ireland had the lowest rate with 34.5%. Few people are happy to be on the dole. Most want jobs, but cannot find any.

3. ‘Our rates are too high compared to the rest of Europe (especially Britain)’

FACT: In 2006, the British government spent 17.2 per cent more per person on social expenditure than Ireland did. Other comparisons against spending per Irish person include: Belgium, 34.8 per cent more; Germany, 21.9 per cent more; Austria, 34.9 per cent more; Denmark, 36.1 per cent more; and Luxembourg, 112.9 percent more.

This is particularly popular for Fianna Fáil border TDs who perpetuate the myth of social welfare tourism across the border. What they don’t take into account is the fact that while dole rates might be lower in the Six Counties, residents there enjoy a much cheaper cost of living, including free health care; cheaper housing, food and other essentials; and a myriad of other social benefits that are not available in the 26 Counties. In terms of the government’s overall spending on social protections, the average EU state spends 26.9% of its Gross Domestic Product (GDP) on social protection. Out of the EU 27, Ireland comes 20th, with 18.2% spend.

4. ‘Lone parents’  payments are so high they keep women out of the workplace’

FACT: The average weekly full-time childcare cost in Dublin is €200. The minimum wage is €346.

The old chestnut – being on Lone Parent’s is so attractive that working class women are getting pregnant to avoid having to work. The misogyny aside, very few people are pointing out that with the government closing down community crèches left, right and centre, for a lone parent to go to work, they would end up paying so much in childcare they would effectively be working for nothing. Childcare provision is something that Sinn Féin has championed in its jobs creation proposals  – if we get people off the dole and working, we have to provide childcare for them, which in itself will create jobs.

5. ‘Welfare payments went through the roof in the good times and the reduction in the cost of living means they too can be reduced.’

FACT: Contrary to a statement by the Minister for Finance that welfare recipients received an 8% increase in their income in 2009, there was actually a decrease of 5% when the changes to the rent supplement and the cutting of the Christmas payment are taken into account.

Despite the claims of the government that social welfare recipients benefited hugely from the Celtic Tiger, a 2007 Survey on Income & Living Conditions conducted by the CSO found that 16 out of every 100 people in Ireland were at risk of or in poverty. Even at the height of the boom, the level of inequality in this state was not dealt with. Poverty was not eliminated. The Consumer Price Index has shown decreases in certain items over the last year, including mortgage interest, food and clothes – but other expenses, such as health charges, education, transport and insurance have increased, and these disproportionately affect the less well off.

Welfare did not meet the needs of recipients in the good times and cutting it now will drive them into poverty.

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9 Responses

  1. Bert McCann

    March 12, 2010 1:05 pm

    A timely well-argued piece. It is not understood that unemployed people play several crucial roles in the machinations of the economic system. It is entirely in the interests of so-called free-market capitalism that there is a pool of unemployed people. Their plight is a threat to the employed, especially low-paid workers. Don’t oppose wage cuts or you could be worse off like those unemployed folk. Indeed we can bring them in to work for even less than you are being paid. So goes the mantra. People on the dole are also useful candidates for demonisation when society need a distraction from political scandals, economic downturn, clerical abuse or whatever pre-occupies reactionary minds a the moment. And then there is the availability of cheap labour to be pulled in whenever required. Unemployed folk fit that role perfectly.

  2. William Wall

    March 12, 2010 8:38 pm

    THE CHAIRMAN & THE BOARD

    they say we can’t afford the poor
    they are the wolf outside our door
    pay them for idleness no more

    they say we have to save the banks
    who say otherwise are cranks
    mark their debts paid with thanks

    but think of the chairman & the board
    & how the CEOs have scored
    it’s the rich we can’t afford
    it’s the rich we can’t afford

  3. Mchael Burke

    March 13, 2010 7:54 pm

    A very useful post.

    One of the great Big Lies surrounding the growth of the unemployed is that they could be ‘encouraged’ back to work by cutting benefit levels. The underlying assumption is that it is idleness which causes unemployment.

    But, during the boom and to keep pace with inflation, unmployment and welfare benefits did rise sharply. Yet the rsult was not rising uenmployment as people chose to stay at home; instead unemployent fell sharply. Because the overwhelming majority of the unemployed want to work.

  4. joannespain

    March 14, 2010 1:52 am

    Michael, I imagine a lot more unemployed people would work if there was childcare provided also. EG, many lone parents are caught in a trap where, to return to work for the minimum wage, how would they place their child/children in creches at thousands per month, especially now that the gov is abandoning the equal opportunities childcare scheme…
    Sorry for late post…mother of two babies under four, both in childcare at cost of €1500 per month while recently redundant husband searches for work, OH, and one year old has teething problems so up late most nights!

  5. Mchael Burke

    March 14, 2010 12:56 pm

    Joanne, you are right. A lot of ‘discouraged’ workers, overwhelmingly but not exclusively women, drop out of the labour force altogether when they can neither obtain work above the cost of childcare, nor are any longer eligible for unemployment benefit.

    However, international studies have shown that universal child care for 3 and 4yr olds has a huge economic multiplier effect (in terms of demand for employment as well as supply of labour and improved retention rates at school/higher educations, even for lower crime rates in later years). Government investment in this area would pay for itself many times over through increased taxes and lower wlefare costs.

    Some analysis on this in the Irish context should be published soon.

  6. Pope Epopt

    March 16, 2010 10:46 am

    So can we assume that Sinn Féin will make it clear before the next election that a reversal of social welfare cuts will be a non-negotiable term of entering coalition government?

  7. joannespain

    March 16, 2010 10:55 am

    Pope epopt, you assume we are entering coalition. There are a myriad of things the establishment parties would have to do before we could consider entering coalition with any of them and I suspect that none of them would. Reversal of social welfare cuts would be on our list but it would probably be the least offensive to potential coalition partners who have shown themselves ideologically and economically opposed to us. I would suggest you read our policies on the SF website to discern the manifold differences between us and other parties. I have more respect for this site as a vehicle for left-wing progressives to share their opinions, than to use it as a mouth piece for individual political parties policies.

  8. Donagh

    March 16, 2010 3:19 pm

    Perhaps Pope I should put at the end of Joanne’s articles that she is writing in a personal capacity just to make it absolutely clear?

  9. joannespain

    March 16, 2010 3:34 pm

    I’d appreciate that Donagh, because I would not like to see the site abused by people wanting to have a pop at political parties via contributors who happen to be their members. The enemy is out there, not on here.