44% of workers with children may be better off on dole

Tuesday 12 June 2012 14.47
ESRI working paper says childless workers need €7,000 a year for expenses
ESRI working paper says childless workers need €7,000 a year for expenses

Up to 15% of single people and 44% of workers would be better off on the dole than working.

This is according to a working paper by the Economic and Social Research Institute.

"The Costs of Working in Ireland" paper factored in the cost of work related expenses like transport, childcare, clothing and lunches.

However, the ESRI described the document as "work in progress" and added that the figures are still being worked on. 

The Department of Social Protection has stressed that the great majority of people in the Live Register had a significant financial incentive to work.

It said that of the 429,255 people signing on in May, around 289,000 or 67% had a total social welfare income of €188 per week or less.

It said the final report is expected to show lower numbers would benefit from staying on social welfare.

The research found that working people incur five times the expenses as unemployed people - and that they have to pay those expenses from after tax income. Those expenses include childcare, work clothing, lunches, and transport.

A childless worker would need €7,000 a year to cover expenses like lunches and commuting - working out at €140 a week. That cost would rise to €9,000 for those with young children. It notes that up to 30% of a monthly wage can be spent on childcare.

Overall, the working paper concludes that a comparison of take home pay for those working and on welfare shows that work does not pay for 1% of the population.

However, a comparison of take home plus extra expenditures shows that 15% of people without children and 44% of those with children are better off not working.

The findings - if correct - would discourage significant numbers of the 430,000 on the Live Register from taking jobs and make it harder for the Government to tackle the jobless crisis.

However, the ESRI stressed that while it had put the working paper on its website, this was a "work in progress" - and that the figures are still being worked on.

It said the final figures were likely to show a far lower figure for those who would benefit from staying on social welfare rather than working. The working paper was co-authored by Niamh Crilly, Anne Pentecost and Richard Tol.

Department of Social Protection responds

The Department of Social Protection, in its response to the working paper noted that people on the Live Register may also qualify for other payments but said these were a small minority - with 43,600 (10.1%) getting rent supplement and 10,400 (2.4%) getting mortgage interest supplement.

However, it noted that those people with dependents and people getting rent or mortgage interest supplement were least likely to leave the live register.

It says that long term unemployment remains high, but says that for many unemployed people it is a short term experience - with 143,079 leaving the live register in the year to April 2012.