A very interesting paper on lifetime income inequality

[Sarenco]

If you are referring to my brothers holiday in Madrid, it was primarily financed out of his own savings.

I wasn't actually but, since you've raised the issue, I don't think somebody with meaningful savings should qualify for a (means tested) welfare benefit.

So why aren't they being filled? Because of luxurious lifestyles on the dole or because employers are now struggling to find suitable candidates.

In my opinion it is because, in a significant number of cases, JSA recipients calculate that they are economically better of not taking up those employment opportunities.

Why don't you quit your job then? Take up the luxury lifestyle on the dole, holidays abroad and fine dining..

I take pride in paying for my expenses out of my own resources. I've no interest in living a lavish lifestyle as it happens.

Doesn't that happen?

Not that I'm aware of. What I had in mind was that the JSA would automatically reduce by, say, 10% every six months until it hit a subsistence level.

 

[Protocol]

The German system is generous for 12 months. After that, the Hartz IV dole is under 100 pw.

We pay more to long-term unemployed than to short-term unemployed. Crazy.

 

[Sarenco]

Incidentally BS,, I think you may have misread Protocol's post - the German JSA rate is apparently only €400 per month - that's about half the Irish personal rate for JSA recipients over the age of 26.

Edit - crossed with Protocol's post.

 

[TheBigShort]

If your brother has savings and can afford to head off to Madrid, then in my view his social welfare benefits should be cut.

Even after working 30yrs+ paying taxes and PRSI?
But if he had no savings, spending on drink, partying, flash clothes, tv's, gambling on horses etc...then he should have full welfare?

On the other hand, others here think that your welfare benefits should be related to your income of your last job?
Which is it?

 

[Gordon Gekko]

The Swiss system is quite interesting...I think that circa 80% of your salary is paid out for a reasonable period in the event that you lose your job. From memory, there's a cap, but it's high (maybe €100k or €150k).

 

[Gordon Gekko]

Shortie, are you being difficult deliberately?

The two positions are mutually exclusive. One can want to see the guy on €60k a year get €40k a year whilst he gets back on his feet and still want to see malingerers hammered and prevented from milking the system. Having said that, I'd want to see €60k man exhaust his savings before the State kicked in.

 

[TheBigShort]

Incidentally BS,, I think you may have misread Protocol's post - the German JSA rate is apparently only €400 per month - that's about half the Irish personal rate for JSA recipients over the age of 26.

Perhaps, but seeing as there are so many varying views as to what unemployed people should be, or not be, entitled too, does it make any difference?

 

[Sarenco]

Perhaps, but seeing as there are so many varying views as to what unemployed people should be, or not be, entitled too, does it make any difference?

Of course it makes a difference!

I agree with Protocol that it is crazy that we pay more to the long-term unemployed than to the short term-unemployed.

I would have no difficulty if we moved to something akin to the German system. In my opinion, our JSA is (somewhat) too generous and our JSB should be (somewhat) more generous.

 

[TheBigShort]

Of course it makes a difference!

I agree with Protocol that it is crazy that we pay more to the long-term unemployed than to the short term-unemployed.

I would have no difficulty if we moved to something akin to the German system. In my opinion, our JSA is (somewhat) too generous and our JSB should be (somewhat) more generous.

Neither would I.

The Swiss system is quite interesting...I think that circa 80% of your salary is paid out for a reasonable period in the event that you lose your job. From memory, there's a cap, but it's high (maybe €100k or €150k).

Apparently neither would Gekko.

Shortie, are you being difficult deliberately?

The two positions are mutually exclusive. One can want to see the guy on €60k a year get €40k a year whilst he gets back on his feet and still want to see malingerers hammered and prevented from milking the system. Having said that, I'd want to see €60k man exhaust his savings before the State kicked in.

So someone on €60k, has €5,000 in savings. uses that up, so I move onto a €40k welfare fund for next year. There are employment opportunities but they;

calculate that they are economically better of not taking up those employment opportunities.

as they only pay say, €45k. So they take a holiday to Madrid, eating out on welfare payments, quite luxurious.

 

[Sarenco]

BS

Just so we're absolutely clear:-

• I've absolutely no problem with somebody going on holidays if they pay for it out of their own resources;
• I've absolutely no problem with enhanced JSB for people who have made the appropriate PRSI contributions;
• I do have a problem with (means tested) welfare benefits being made available to recipients with meaningful savings (and I would certainly consider the cost of an overseas holiday to be meaningful); and
• I do have a problem with JSA being set at a level that would allows recipients to take overseas holidays or that otherwise allows for anything that bears any resemblance of a luxurious lifestyle.

Hopefully that is now crystal clear.

 

[Gordon Gekko]

Neither would I.



Apparently neither would Gekko.



So someone on €60k, has €5,000 in savings. uses that up, so I move onto a €40k welfare fund for next year. There are employment opportunities but they;



as they only pay say, €45k. So they take a holiday to Madrid, eating out on welfare payments, quite luxurious.

Except a functioning system comes down on them like a ton of bricks when they turn down gainful emoloyment.

 

[TheBigShort]

Except a functioning system comes down on them like a ton of bricks when they turn down gainful emoloyment.

Yeah, and like my brother, he attends interviews, but loses out to the younger guy. And why not? If I was an employer, would I pick the 20/30 something with rent, mortgage, kids who is more likely to put in the long shift, the weekends etc or the 50 something yr old who is overweight with a limp and hasn't worked for a considerable period?
Is that the fault of the 50 something yr old? Should he have welfare cut, despite having worked 30+yrs or should he have a 60% welfare rate, affording him a trip to Madrid?

I'm not opposed to reform of the welfare system to facilitate greater amounts to those who have contributed more. But that costs money, and I suspect, when you do the numbers, nobody will be willing to pay for it.

 

[Sarenco]

I'm not opposed to reform of the welfare system to facilitate greater amounts to those who have contributed more. But that costs money, and I suspect, when you do the numbers, nobody will be willing to pay for it.

Not necessarily.

If we halved JSA (to bring it into line with German and UK rates) and means tested JSA more rigorously that would free up a lot of funds to increase JSB significantly without requiring any net increases to PRSI contributions.

I'm not necessarily advocating that we go that far but we could change the balance between JSA and JSB without increasing the amount paid into the system.

 

[TheBigShort]

Not necessarily.

If we halved JSA (to bring it into line with German and UK rates) and means tested JSA more rigorously that would free up a lot of funds to increase JSB significantly without requiring any net increases to PRSI contributions.

I'm not necessarily advocating that we go that far but we could change the balance between JSA and JSB without increasing the amount paid into the system.

And I have no inherent objection to that. It boils down to the numbers and costs.
And it also requires reasoned discussion rather than nonsensical shouts earlier by another poster that welfare recipients shouldn't be able to eat a takeaway or buy a coffee!

 

[TheBigShort]

BS

Just so we're absolutely clear:-

• I've absolutely no problem with somebody going on holidays if they pay for it out of their own resources;
• I've absolutely no problem with enhanced JSB for people who have made the appropriate PRSI contributions;
• I do have a problem with (means tested) welfare benefits being made available to recipients with meaningful savings (and I would certainly consider the cost of an overseas holiday to be meaningful); and
• I do have a problem with JSA being set at a level that would allows recipients to take overseas holidays or that otherwise allows for anything that bears any resemblance of a luxurious lifestyle.

Hopefully that is now crystal clear.

That's all very good and again, no inherent objection to what you are saying.
But, once again on AAM, it's the practicalities of what is proposed that needs scrutiny.
Assuming that the current system is unfair, hence the need to reform, then based on that notion of unfairness, using your bullet points, how does the notion of unfairness sit when;

Two workers, earning €50k become unemployed after 20yrs employment. One has €5,000 in savings, the other €15,000 in credit card debt from drinking, gambling, golf trips, expensive holidays etc.

Under the German style system, each is entitled to 60% of income for 1st 12 months.
But would the worker who saved €5000 be expected to use up what they have worked hard to earn before they get their entitlement?
How much per week would they be obliged to use? Equal to 60% of weekly wage? What if he uses less, being prudent, how long before welfare entitlement kicks in? What if he uses more than 60%, e.g. places €5,000 on red at the casino? Loses, no worries, welfare will kick in?
Would the debt worker be obliged to pay down debt? Is it fair that the State pays down his debt, but requires prudent saver to use own resources?

The list goes on, I appreciate the sentiment surrounding welfare entitlements, but like most social policy, it is hugely complex and almost impossible to suit everyone.

 

[Sarenco]

BS

What I am suggesting is really not that complicated - simply rebalance the JSA and JSB rates so that JSA is (somewhat) less generous and JSB is (somewhat) more generous.

I don't have a strong view as to what should be the exact balance between the two or at what rate benefits should diminish over time. I'm really just trying to establish the principle that the current balance is wrong.

If you don't accept that JSA is overly generous then we are at an impasse.

 

[Gordon Gekko]

And I have no inherent objection to that. It boils down to the numbers and costs. And it also requires reasoned discussion rather than nonsensical shouts earlier by another poster that welfare recipients shouldn't be able to eat a takeaway or buy a coffee!

But they shouldn't be able too; if a welfare recipient is eating takeaways or buying a coffee, he or she is being paid too much. And if a welfare recipient has savings and can head off to Madrid on a whim, his or her payments should definitely be cut. I'd argue that no payments should be made until those savings are exhausted. I'd even go further and pay social welfare in the form of vouchers which could only be spent on the bare essentials.

As for your brother's case, it's sad, but he is reaping what he sowed to an extent. It's amazing how someone can adopt a devil-may-care attitude to their career and then cry "woe is me" when it all blows up. Recklessness is a high risk strategy, but unfortunately it's made easier by an overly generous welfare system funded by people who haven't been reckless.

 

[Protocol]

Here'a another suggestion.

Abolish JSA, and replace it with an offer of work to all long-term unemployed.

20-30 hours per week, to allow time to search for jobs.

Instead of paying people to not work, offer them paid work.

If they don't want it, then they transfer to SWA, the anti-poverty payment.

 

[Protocol]

I don't really accept that 188 pw JSA is overly generous.

It is much higher than the UK, yes.

But note that the UK have a different mix of benefits: housing benefit, NHS, etc.

What I feel strongly about is not so much the level of JSA, but rather the duration.

 

[TheBigShort]

I don't have a strong view as to what should be the exact balance between the two or at what rate benefits should diminish over time. I'm really just trying to establish the principle that the current balance is wrong.

In the absence of any specifics, I have no inherent objection to what you are saying. I'm merely pointing out, as you can see from other posters, that there is a wide variance of ideas and, to my mind, contradictory set of ideas being put forward. From German style welfare programs to monitoring the coffee habits of welfare recipients!

Those who contribute more should get more out of the system - that is the mantra, again I have no issue there. But if someone who has contributed more then books a cheap flight to Madrid and funds a break from their own resources, then it's 'cut their welfare!" In other words, those that have contributed taxes are not to get more out of the system. They are to get the same, or even perhaps less than someone who hasnt contributed as much, or someone who has worked but squandered their own resources.

In the end, it's a complex business. I'll simply calling out the stupidity of thinking where a person who works 30yrs + working long shifts, supplementing that income at weekends, paying taxes, paid off mortgage, put two kids through college, is considered as someone with a 'devil may care' attitude and is reaping what he sowed! If you can't agree that that level of thinking is nonsense, then yes, we are at an impasse.