We do not need to have so many workless households

Nearly one in four people under 60 years of age lived in a household without a working adult in 2010, a far higher proportion than in any of the 31 European countries for which figures are available. This is shocking. But in the context of the biggest decline in employment in the OECD in the three years to 2010, it is perhaps a little less dramatic than it might seem at first.

What is astounding is that before the crash – in 2007 – Ireland had the second-highest rate of jobless households among the same countries, after Bulgaria. These figures point to Ireland having one of the largest, if not the largest, permanently workless underclass in Europe.

Before 2007, the two ingredients necessary to allow people to escape from such misery – jobs and money to fund a big, coherent public policy response – existed in spades.

Between 2000 and 2007, this economy enjoyed the biggest increase in employment in the rich world. The number of people at work grew by 500,000. Over the same period, governments had unprecedented resources to address the problem. Social transfers of all kinds increased from €10 billion in 2000 to €24 billion in 2007– the biggest percentage increase in the EU.

Not only did these developments fail to make matters better, however, the proportion of jobless households actually rose between 2004 (when the figures were first collated) and 2007.

Any analysis of why Ireland has such a high proportion of its population living in jobless households requires examination of what is going on in that part of the adult population that is not at work. An ESRI report this week pointed to the specific reasons when it urged that the mechanisms and policies to prepare people for work “be reconfigured to include the total jobless population of working age adults, including recipients of disability allowance and one-parent family payments”.

Disability

In the period to 2007, Ireland stood out from the European average in two respects: it had a high percentage of the population not working because of disability or illness, and a low number of mothers at work.

Between 2000 and 2007, the number of people on disability or illness benefits rose by more than half. Some of this increase was hidden unemployment, with some people who might have signed on instead accessing disability or illness benefits.

This phenomenon has in the past been particularly marked in the Netherlands, so Ireland is not unique in this regard. The difference is that the Dutch did something about it. Precious little has been done to revamp the training system here so that the disabled can improve their chances in the labour market. Instead, money was simply thrown into the system that existed without any thought to the incentive effects of rapidly rising benefits. (Total spend on disability and illness benefits tripled in the 2000-07 period).

The second area where Ireland stands out is the low level of working mothers. Single-parent households account for one in eight of all households. This is on the higher end of the range among rich countries.

Working mothers

In 2007, Ireland had the fourth-lowest rate of working mothers in the OECD. A combination of relatively high numbers of single-parent households and virtually no system of State-funded childcare causes a serious problem. Again, little has been done to address it. Big increases in single-parent benefit rates during the boom reduced want in many of these households, but in the absence of childcare and – again – better-designed training programmes, the perpetuation of joblessness down the generations is almost guaranteed.

Here’s what the Department of Social Protection thinks about all this. In a report in 2010 it said: “Trends in the social welfare population of working age indicate persistent welfare dependency and poor outcomes for some people and this is so despite an earlier sustained period of economic growth.”

Although there is little acknowledgement that system-design failings are a problem, the report goes on to say: “It is considered that significant change in the current arrangements is required over the next five to 10 years to ensure better outputs and outcomes.”

The envisaged timeframe speaks volumes.