The impact of the recession on the Irish Social Welfare State
• Increased demand for social welfare
The worst aspect of the Irish recession has been the sharp and prevailing rise in job losses and shrinking wages since the economic crisis really kicked off in 2008. These have both put a huge demand on social welfare spending.
Unemployment has increased from 4.7%in 2007 when the crisis commenced to 14.8% where it currently stands. There are 437,300 people on the live register – this is the register of people who are either not engaged in paid employment or who are ‘under-employed’. Long-term unemployment has reached an all-time high of 200,086 people, six times the long-term unemployment rate back in 2007.
According to the European Commission Vacancy Monitor published earlier this year. We have 50 jobseekers for every single vacancy. And this is growing tempered only by tragically high emigration.
A report by retail sector Trade Union Mandate published in May found that 39%of its members reported a fall in take-home pay with an average fall of€109 per week and average retail workers’ hours have declined by 4.3%over the last year alone.
So the numbers needing jobseekers payments is rising and the numbers requiring in work benefits to supplement their falling earned income is also rising.
• Cuts to social welfare payments
The response of both governments since the commencement of the recession has been almost identical. It has been to cut social welfare payments, greatly undermining the adequacy of the payment levels and extent of coverage and pushing the majority of households who depend on social welfare below the poverty line.
Initially the Fianna Fáil/Green Party government began by cutting social welfare with broad strokes. They began by eliminating the traditional Christmas Bonus paid to social welfare recipients. They then made successive cuts to the primary welfare payment rates of almost all working age payments.
Latterly the Fine Gael/Labour government, under the direction of a Labour Party Minister have been much sneakier in their approach pretending to protect welfare rates while in reality slashing secondary payments for vital things like fuel and changing the rules of schemes with the effect that social welfare incomes are drastically reduced and relentlessly attacking the softest targets e.g. lone parents.
The government announced a social protection cut of €811 million last December and their intention is to cut a further€1 billion between 2013 and 2014.
The entirely predictable consequence of all of these cuts is the social welfare spending has continued to rise. The social welfare cuts have further depressed demand in the domestic economy so more businesses have fold, more jobs have been lost and more people require social welfare. The approach is completely counter-productive.
Instead of viewing social welfare spending as something to be cut at this time it should be seen for the necessary life-line that it is and as part of the stimulus that our economy so desperately needs. Social welfare spending buffers falling consumer demand in the domestic economy thereby retaining jobs and protecting state revenues by extension.
• Government, media and certain business interests conspire to demonise social welfare recipients in order to soften for cuts
Headlines focus on welfare fraud despite the fact that it only accounts for about 1% or the social welfare spend. No sooner had the Labour Party Minister taken office she publicly pronounced unemployment a ‘lifestyle choice’, feeding into the regular media depiction of social welfare recipients as lazy, scroungers and wasters.
In fact despite the media portrayals, much of wider Irish society does not share this malevolent view of social welfare. The Labour Party was elected on a ticket of promising to defend of social welfare. Even some Fine Gael candidates made things like defending child benefit their key pre-election promise. The Labour Party election result actually demonstrates a degree of popular support for social welfare.
• Troika and European Commission in particular are seen to be actively driving the agenda to cut social welfare.
Recent ‘leaked’ European Commission reports are targeting the few universal benefits that we do have e.g. child benefit and free travel for the elderly. However comparisons of payment levels in the 26 counties against those of other European countries are not comparing like with like. Some of our payments may be nominally high, child benefit is often singled out as the example, but our childcare costs are the highest in Europe often amounting to a second mortgage and there is no such thing as free education or free health care for children.
It suits the government to blame the Troika for the social welfare cuts. But this is very disingenuous. I met with the Troika’s representatives in Ireland and they informed me that it was only after the government made its choice to balance the books primarily by making cuts that the Troika began to offer advice targeting social welfare.
If the government were to instead choose to balance the books by raising revenue from taxes targeting the wealthy or through growth generating investment then the Troika would be issuing very different advice.
• Privatisation in the field of social welfare
A number of offices are contracted out. Pathways to Work hints at greater use of outsourcing but it is not yet clear whether this will be limited to not-for-profit community based organisations in the shorter term or if it will be a ‘free for all’ carve up. Irish governments traditionally follow British examples blindly which doesn’t bode well for us.
JobBridge is the main plank of the government’s so-called jobs strategy essentially it’s the provision of free labour funded by the social welfare system. The head of Hewlett Packard – one of the most anti-trade union companies operating in Ireland is the chair of the Committee that the Minister has appointed to monitor its operation.