Why do we pay people social welfare?

Nat O'Connor: We pay people social welfare because, in a democracy, every participant is entitled to a minimum share of our national wealth to provide themselves with the essentials for survival.

In which case, we should be worried if a proposed Government policy threatens to undermine the democratic basis for the social welfare system.

It is reported that the Minister for Social Protection has announced a new scheme for recipients of Jobseekers Allowance (JA) to engage in social employment "for 19.5 hours work every week by helping out with local after-school and childcare services, sports clubs, services for older people and environmental projects".

Note: JA is the allowance people apply for once the period of their Jobseekers Benefit (JB) expires. JB is an entitlement, based on social insurance payments, whereas JA has to be applied for and payments are means-tested. It is worth noting that recent budgets have shortened by three months the period for which people can claim JB, as well as doubling the amount of social insurance contributions required to receive it in the first place. So more people have been pushed towards JA, where payments to people under-25 have been much reduced.

The Minister is quoted as saying "We must create a better future for people who find themselves without a job; to provide them with work activity in the short term, to up-skill them and give them opportunities to get back into the mainstream workforce as speedily as possible."

These are real incentives and it is to be welcomed that people should have an opportunity to do some useful work while unemployed. However, the carrots are matched with a big stick. It is reported that "Those who fail to show up or miss hours will be struck off the dole under the plans."

The above report is not backed up by the official press release, which simply reports that employment schemes are being transfered to the Department of Social Protection, which was already flagged by the Taoiseach when he 'reshuffled' the cabinet recently. So, we can assume the Irish Independent had a further interview or some other information to draw on.

Anyway, if someone is flying a kite about 'workfare' there are a host of problems to be considered with this approach, including:

1. Forcing people to engage in 'voluntary' work may undermine the volunteeristic spirit of those already taking part;
2. Forcing people to work may result in very unhappy people with an attitude wholly unsuited to the role they are meant to play in voluntary activity;
3. Cutting off welfare payments undermines the basic principle that in a democracy, we are all participants in decision-making and we all share the resources of our country;
4. Cutting off welfare payments will lead to people suffering poverty, deprivation and a host of other problems - which could lead to increased mental ill health, addiction, crime, suicide, etc;
5. It is likely that certain people will be badly affected, such are people who are already long-term unemployed due to mental health problems, including addiction. Neither forcing them to work, nor cutting off their dole, is in any way an intelligent or humane response. Dealing with our failing mental health system would be preferable. Offering people the option of work could be very constructive, but not as part of a work-or-else approach;
6. These schemes are likely to rely on existing community and voluntary bodies providing supervision, training, etc in exchange for labour. This could overwhealm some of these bodies;
7. There are other costs to be considered, such as insurance, transportation, etc.

To pick up on the final point, how will the additional costs be paid for? One of the reasons why many Western governments do not provide large schemes offering people useful work to do is because the operation of these schemes is likely to be significantly more expensive than simply giving people a basic umemployment payment. This is not to say that the longer-term benefits, in terms of upskilling, keeping people active, useful work achieved, etc. might not outweigh these costs, but it helps explain why the idea of 'workfare' hasn't be much developed.

I dislike the negative tone that so often surrounds the discussion about offering people on welfare some form of community work. It feeds into tired and disingenous arguments about forcing 'lazy scroungers' to work. But people receiving JA are not lazy scroungers. The vast majority of people who are unemployed want to work. The problem is economic. There are no jobs.

In economic terms, the supply of jobs is less than the demand for them. Hence, there is unemployment. In fact, in a well-functioning economy, there will always be an element of unemployment as people move between jobs. And moving between jobs is part of the vaunted flexibility we are supposed to be encouraging in our labour force.

The supply of jobs is low because (a) there is a lack of credit for businesses and (b) there is a lack of demand in the economy. The Government has done little to solve the credit problem, and has crushed demand with a will, by lowering welfare payments, cutting public pay and encouraging the private sector to cut pay. If people have less money, they spend less, so there are less jobs.

If the Government wants to fund thousands of worthwhile jobs in the community, then this should be a positive step towards addressing the unemployment crisis. Any such scheme would probably be over-subscribed by willing volunteers.

We don't need to cast a shadow over this by making community work manditory. This feeds into negative stereotypes about people claiming welfare payments and encourages sadistic diatribe about forcing 'lazy' people to work. That way lies the Gulag.

Posted in: Welfare • Labour market

Tagged with: unemployment • social welfare