Thursday, November 25, 2010

On a lighter note


Peter Carney said...

Kevin, what are you views on the likely impact of the minimum wage reduction?

Martin Ryan said...

Moving the minimum wage down to €7.65 a hour - €298 for a 39 hour week or €15,500 a year is certainly compromised by the attractiveness of welfare at the margin (if one is concerned that work should be more valuable than welfare).

The dole is currently €198 a week. Even if that is cut by €20 (10%) in the Budget on December 7th, that means a minimum wage employee would be working a 39 hour week for €120 more than they would get for doing nothing (or at least shirking). And of course, I have not mentioned many other benefits which must be relinquished if one takes up gainful employment.

Without knowing the precise nature of the relative trade-off between welfare and work in Ireland, we can still (in principle) ask whether we should follow the UK in establishing a single universal (welfare) credit?
According to George Osborne:

“The limit will be set according to this very simple principle: Unless they have disabilities to cope with, no family should get more from living on benefits than the average family gets from going out to work”.

Osborne Announcement: 4th October

Of course the interaction between the U.K. minimum wage and the proposed universal credit is important. From what reading I have done so far on this, the emphasis seems to be on reducing benefits *gradually* as unemployed individuals enter the workforce, and work longer hours.

The White Paper from the U.K. Department of Work and Pensions related to this topic can be read here:

Universal Credit: Welfare That Works

Some concerns about the universal credit are raised by the IFS in this article in the Telegraph:

Telegraph article

Mark McG said...

Is that question a complete non sequitur Peter or a very clever reference to the post?

Anonymous said...

Haha, great cartoon!