Michael Taft: Getting It Wrong On Welfare

at | 57 Replies

From top: Presidential hopeful Peter Casey; Michael Taft

So, Peter Casey has decided to continue inflicting his presidential campaign on all of us. And now he has stepped up his wannabe-Trumpism by showing off his ignorance of social protection.

In a Sunday Independent article he described Ireland as a ‘welfare-dependent state’, stating:

‘We have become a nation of people who expect, no demand, that the State looks after them. Pay all of their bills, provide them with homes, provide all sorts of social benefits.’

To be fair, Casey is not alone in getting social protection wrong. In my last post I showed that the Government projected a real (after inflation) cut in social protection.

This led someone to comment that I didn’t understand that when unemployment falls, so does social protection expenditure.

What this commentator didn’t know was that unemployment benefits make up only 12 percent of total social protection spending.

It is not fully appreciated what makes up social protection spending. Total Social Protection expenditure in 2017 was €19.9 billion.

What was it spent on?

The biggest category is pension expenditure – and this will continue to rise. Is Casey suggesting that the elderly are a needy, demanding group even if they have paid social insurance contributions their whole working lives?

The next biggest category is the sick, people with disability and those in need of care – another needy, demanding group in Casey’s opinion I suspect. And most child-related expenditure goes to households in work.

Another widespread misunderstanding is that social protection is paid out of taxes. Only a little over half of the total budget is paid out of taxes (€10.9 billion); the rest is paid out of the Social Insurance Fund which is financed by insurance contributions from employees, employers and the self-employed.

If you exclude the only universal payment – Child Benefit – then only a minority of the Social Protection budget is paid out of taxation.

This is not to say that there aren’t issues regarding access to, and participation in, Social Protection:

1. The social protection system works overtime to compensate for high levels of market inequality.

There is higher Irish inequality in the ‘market’ (that is, before social transfers) than in the Eurozone. Therefore, in order to achieve more equality (and reduce poverty) we need to spend more on Social Protection payments.

2. Ireland’s employment rate is low compared to most of the other EU peer-group countries.

Irish employment rates would always struggle to reach the higher levels of participation given the high proportion of households with dependent children (such households have lower employment rates in all countries).

However, the lack of affordable childcare and uncertain work hours exacerbates this. This leads to higher unemployment and non-activity.

3. Ireland suffers relatively high levels of chronic long-term unemployment.

Even though it has fallen substantially since the depths of the recession, there are still 70,000 long-term unemployed. The longer many people are unemployed the more difficult it is to return to work (e.g. skill erosion, reputational, etc.).

There are other issues, notably the relatively high level of unemployment among people with a disability. And it is worth noting that Ireland pays a much a higher level of housing allowances than in the Eurozone – a feature of subsidies chasing rising rents in a dysfunctional private market.

Addressing difficult issues with populist sound-bites (entitlement-culture, etc.) only means we don’t get any closer to resolving these issues.

Collective bargaining and ending precariousness can help in addressing market inequalities, affordable childcare can help in addressing sustainable access to a job, employer of last resort programmes (with the state and civil society organisations working in partnership) can help in reducing chronic long-term unemployment.

But, ultimately, what Casey’s ignorance overlooks is that, instead of having too much social protection, we don’t have enough.

In other countries, workers benefit from pay-related unemployment benefit and pay-related sickness benefit; women receive 100 percent of their pay in maternity benefit (in Ireland it is relatively small flat-rate payment); while in other countries workers receive pay-related pensions through the social insurance system unlike Ireland where workers are forced on to the private pension industry to top up their flat-rate state pensions.

In other words, social protection is just that – fully social and fully protective.

Peter Casey could have spoken to these issues and helped inform the debate. Instead, he just threw out nonsense on matters he didn’t understand. Unfortunately, there are a lot of Caseys out there.

Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front.

Rollingnews

57 thoughts on “Michael Taft: Getting It Wrong On Welfare

    1. Worlds Biggest Ranter

      Incorrect. They’ve always been visible. You don’t need a lula to expose this. What it did do was show a Trump effect happens here too. Most right minded people have no qualm with genuine social welfare recipients. What Trump tapped was the people who were afraid to say anything negative for fear of getting tarred themselves so they silently went to ground. Why? Because they were ostracized for having an opinion. Maybe some of it is correct. Yeah its not cool to get hard on the supposedly hardest up in society. Truth is spongers are actually taking from those very hardest up. All encompassing sweeping statements work both ways. Saying all social welfare recipients are in their rights irrespective of circumstances is every bit as ignorant as saying they’re all vermin.

      Cue outrage :-)

      Reply
      1. Col

        But is this group growing?
        Are there more people struggling to pay rent or buy houses and thinking that “loads of scroungers” are getting “free” houses?
        I worry that the Casey effect could be bringing these opinions out in more people and making them more confident to spout their misinformation.

        Reply
        1. Worlds Biggest Ranter

          Yes but why? I personally know of incidences were an employer cannot get staff to work a full week because they forgo too many benefits from the state. He has staff on three day a week because if they work longer they’d pay too much tax and would lose their HAP payments and medical cards. Like surely that’s just not on. The employer does a full weeks work while the state subsidised employee plays golf on a Friday! Come on.

          I could fill this page with similar stories. Again should we get angry at every turn regarding social welfare recipients! No, of course not. This is the stuff that boils peoples blood though. Does that make me a Peter Casey supporter! Not a chance. I’m just suggesting that because he has conveyed the message so poorly doesn’t mean there’s not an ounce of truth in what he said.Silently a lot of people will agree and the longer that silence goes on the more likely we are to have our own version of Trump here sooner or later. Now that’s the most dangerous thing of all.

          Reply
  1. Cian

    Great article Michael –

    One quibble: you have a bar chart in #2 (Employment Rate 2017 – across EU) and this doesn’t start at 0 – making the differences between Sweden and Ireland look larger than they should. Bar charts should always start at zero.

    Your Belgium line (63%) is only half the length of Sweden (77%) – in reality is should be four-fifths the size.

    Reply
    1. Michael Taft

      Cian – I take the point. It came up that way on Excel (not that I’m an expert in that software) and I rushed through the charts. I’ll watch out next time.

      Michael

      Reply
  2. Worlds Biggest Ranter

    I won’t be voting for him. His all encompassing statements essentially insinuating every social welfare recipient is a sponger are hugely wide of the mark. People end up in bad situations and circumstances due to no making of their own. The state is expected to, and rightly so, provide for these people.

    What Peter should have done was go less Trump and actually attempt to appeal to working class/middle class Ireland that’s expected to pay for everything. Had he actually produced correct analysis and statistics regarding the message he’s trying to convey he might just have escaped the generally easily outraged brigade who, rather than assess what it is he was trying to say (badly) they might actually have seen a moniker of sense in what he was attempting to say. He is on to something.

    Social welfare is supposed to be a safety net, not a way of life. Sadly in Ireland for many the later has become the norm. My taxes should be spread equally and fairly to help the disenfranchised in their hour of need. That the particular hour of need seems to last unnecessarily a lifetime for some is a craw for most middle ground tax payers who watch actual spongers have their homes, bills, college fees etc paid for while same said “victim of society” buys a new Nissan Qashqai on a PCP deal and parks it in the driveway of their state sponsored house. Does it happen? Of course it does and I for one am fed up paying for it.

    Anyway ….

    Reply
    1. Col

      Well… I’m no expert, but I believe there is a valid argument that they should.
      Specifically in relation to the pension expenditure above, low birth rates are a problem across the western world.

      Reply
  3. Jeffrey

    “Peter Casey” – Your man did a good job, his name is every-effing-where since he open his clap-trap, BS falling for it too of course, as is everyone else.

    Reply
  4. Jake38

    What both Mr Casey and Mr Taft do not understand, in their own quite divergent ways, is that the long-suffering taxpayer does not have a problem with social protection.
    They have a problem with the abuse of social protection.

    Reply
  5. scottser

    jaysus, why would anyone vote for someone who clearly hates people and is hell bent on entrenching divisions in society? i mean, if you want to pick on spongers and cheats then why not pick on big business that pays sod all tax, or bankers and vultures that gamble with taxpayer’s money? there are plenty of people to hate if you want to go down that route but picking on the vulnerable shows pretty low character in my book. people like casey with their tiny minds and narrow, spiteful outlook can never be fit for the office of president.

    Reply
  6. Cian

    One other quibble on unemployment benefits.
    In 2017 €2.4bn (of a €19.9bn) or 12.3% was Jobseekers;
    In 2010 €4.1bn (of a €20.9bn) or 19.6% was Jobseekers;

    So jobseekers has dropped by 40% – a saving of €1.6bn (per year)

    Reply
        1. Increasing Displacement

          your reliance on an office whose statistical analysis is so biased is hilarity itself

          basically what you said was, people already working are being taxed more because they’re now earning more and therefore are in higher tax brackets

          those 2 figures you provided have nothing to do with getting unemployed people back to work, ie a wage of 35l plus…lolz if you think they do

          Reply
          1. Owen C

            CSO labour force survey has gone from 1.42m people in full time employment to 1.798m in full time employment between 2012 and mid 2018.

            Those unemployed seeking full time work has dropped from 305k to 113k
            Those in part time work but underemployed has dropped from 159k to 128k

            So:
            1. those in full time employment has increased significantly
            2. those unemployed seeking full time work has dropped significantly
            3. those in part time work seeking more work has dropped significantly

            This clearly refutes the idea of only part time jobs or low activity zero hours contracts being the reason for reduced unemployment.

      1. Cian

        Number of Claims Registered by Illness Benefit dropped from 309,000 in 2009 to 209,750 in 2015 and its now 209,384 in 2017.
        Numbers awarded went from 262,864 (2009) to 154,692 (2015) to 159,030 in 2017

        Micheal has a link above to all the numbers.

        Reply
        1. Cian

          Total cost for “Illness, Disability, and Caring” increased from €3,3bn to €3,9bn but most of this was accounted for by an increase in Carer’s Allowance, Carer’s Support Grant, and Domiciliary Care Allowance

          Reply
  7. SB

    I’d like to see a breakdown of Disability payments, and an explanation of why it suddenly doubled during the recession. I think there’s a misconception that there are hordes on Jobseekers benefit when they’re actually on long-term Disability benefit. I would hazard a guess that most people would only consider a portion of these to be “people with a disability”.

    Reply
      1. SB

        Yes, andy, I think it was that very article that brought it to my attention. I didn’t realise it was as long as 5 years ago! I don’t think anyone else in the media, anywhere else, has ever though to bring it up or investigate it. I think the welfare state is sacrosanct, anything critical of it means you support Trump or are a fascist or something.

        Reply
  8. Vanessa off the Telly

    Great Article
    although that whole PRSI fund needs to be taken apart
    analysised like a failed NASA mission
    and rebuilt with less PRSI classes
    Because for many it is just not value for money
    especially Maternity Benefit and the Statutory Pension
    the former is usually just a rebate of what the claimant via their EE and ER contributions put into it in the previous two tax years

    I’d also add that Peter Casey has made SFA contribution to the PRSI fund
    So is hardly one to be picking a fight with it or to be slagging off anyone who relies on it

    Reply
  9. Anomanomanom

    Our whole welfare system needs to be stripped to the foundation and built again. Childrens allowance is a joke, if I win the lotto I still get the allowance. If a pensioner is over 70 medical card automatically regardless of wealth. Just two examples of complete lunacy in our system.

    Reply
    1. Rob_G

      Children’s allowance is one of the few areas where high earners, who contribute a lot of money to the state, get actual cash back from the state. I imagine that it would be quite expensive to means-test, also.

      Reply
      1. Anomanomanom

        It costs next to nothing to means test. We just bring the system in for some strange reason, everything linked to your pps. Its in putted on system and every cent you earn, have saved, property you own is shown. Its that simple.

        Reply
          1. Anomanomanom

            Its there already. All information is available through pps numbers. When I brought this up in a meeting about waste in the Public service I was told privately, it’ll never be used like because its too stream lined and union’s would kick up because departments would not need as much staff. Its not like they’d be sacked just redeployed, but apparently that’s a non runner.

          2. Rob_G

            I find it very difficult to believe that any system that would account for several variables for 100,000s of parents would be as simple to implement as you suggest.

          3. Cian

            So revenue know all my savings? (Or lack thereof)? And all my properties? And all my investments?

            I think not.

            They know my (declared) income. And a valuation of my primary residence for property tax. But that’s about it.

          4. Anomanomanom

            Anything your pps is linked to they can and do know about. That’s why I said everything should be linked to the pps. There are so many different departments info gets lost or they just don’t care. Linking to PPS would stop this. Also stealing from the state is not a badge of honour, but you seem proud.

  10. Owen C

    Michael

    “Is Casey suggesting that the elderly are a needy, demanding group even if they have paid social insurance contributions their whole working lives?”

    Em, yes they are, as a group, needy and demanding, or at least their lobby group is. Study after study has shown how pensioners have suffered the least from austerity etc but yet continue to bizarrely benefit from the modest fiscal stimulus which the government decides to implement.

    Also, many people are in receipt of a non contributory state pension that they did not pay social insurance into. I’m not against this, but just to point out that lots of people’s state pensions are not self-funded either in theory (paid in something) or in practice (paid in more than paid out). Oldish (2013) figures from the Dept of Finance suggest 20% of total state pension payments are for non contributory pensions (probably c.€1.0-1.25bn at the moment)

    Reply
  11. Truth in the News

    Who was the guy that organised a campaign not so long ago about welfare fraud
    and then the chattering classes of the establishment get upset about Casey’s
    comments, What Casey has done is to inject a few home truths into the Irish
    body politic….and it also appears that part of syndrome has infected certain holders
    of high office

    Reply
  12. McVitty

    The mistake people make is allowing themselves to be divided into for or against welfare groups.

    Welfare abuse, exploitation and dysfunctional incentives to work challenge the very existence of a welfare system so we should all be collectively against it.

    There is a little thing called labour economics and much can be learned about optimum welfare policy where you can give people the supports required but also the incentives to work. I do not believe the department of social welfare is very efficient in how it operates or inspires people with confidence and I doubt they have labour economists guiding policy, given the power of various “stakeholders”, i.e. the govt of the day

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *