Monthly Archives: June 2012

The cost of working – Has the ESRI got it wrong?

Probably not a happy Minister

 

 

 

 

 

Expect to see Joan Burton administering the ESRI a slap over the next few days. It’s never an edifying sight when a government minister takes issue with figures produced by the government’s own think tank. But on this occassion it could well be justified.

44% of people with kids would be financially better off out of work and claiming dole – is the disturbing claim from “The Cost of Working in Ireland”. It’s an ESRI working paper who’s lead author, Richard Tol, is the academic some will remember in January took flight for the UK and advised us all to do the same.

Professor Tol’s paper tots up some of the unavoidable costs of work like transport and childcare and subtracts them from what people told the CSO’s Household Survey they were earning. Their conclusion is that 15% of the childless population would be better off on the dole. And 44% of those with kids under 5 would do better by being out of work. Though they don’t say it the implicit conclusion is that this is so because welfare is so generous. Though you could equally conclude that salaries are also out of sync with the cost of living, but it will be a long time before wage claims get any kind of a decent hearing.

So with the agenda already set for a microscopic examination of the Department of Social Protection’s budget this is a very significant piece of research. It probably makes the Troika’s argument for them ….. Dole is a disincentive to work. Case proven, debate over, now slash social welfare payments and lets move on.

Except that the ESRI told me this afternoon that they can’t stand over the figure of 44%. In fact … when the Working Paper is reviewed, they told me, that figure will probably be revised downwards.

How far down?

“To single figures”.

How did they end up publishing such a figure in the first place? Regrettably Richard Tol no longer works for the ESRI so they can’t get an answer to that question. I contacted him this afternoon in his new job in Essex but he is on holidays at present.

So for the moment, and presumably for long enough for that figure to take hold in people’s minds, the suggestion that almost half of parents of young children would be better off on the dole represents official thinking on the part of the ESRI. But for the record it is based on data gathered in 2005. There have been three social welfare reductions in that time and no comparable decreases in transport, food or childcare.

Richard Tol is a highly respected academic. It’s hard to see why he would publish results which would have to be revised so drastically almost immediately upon publication. But it is equally hard to see why the ESRI would pour cold water on figures it has just allowed to be released. Does Richard Tol agree that the figures need revision? Who decided that they should be revised … and downwards? Who knows what the resolution to this will be, but it almost certainly won’t come before the first week in December. And that can’t make Joan Burton a happy Minister.

Richard Tol: No longer with the ESRI

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