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.