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”.
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:
4 comments:
Kevin, what are you views on the likely impact of the minimum wage reduction?
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
Is that question a complete non sequitur Peter or a very clever reference to the post?
Haha, great cartoon!
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