There is little doubt that many of those on disability benefit would like to have a job, write John P Martin and Christopher Prinz
Unemployment has fallen to historically low levels in recent years in many OECD countries, including Ireland. Yet nowhere has the drop in unemployment translated into more jobs for disabled people. On the contrary, their employment levels have fallen further in most countries. In Ireland, for instance, they dropped from 40 per cent in 2002 to 37 per cent in 2004 despite overall employment growth of almost 6 per cent over that period. Employment levels of people with a long-lasting health problem or disability are, therefore, 40-50 per cent lower than those of their non-disabled peers in Ireland and elsewhere.
The result is that too many people of working age are trapped on disability benefits. These are a trap for (potential) recipients who, once on benefit, typically stay there until retirement age. Politicians, for their part, have generally preferred to preserve the status quo; unfortunately, there are few votes to be gained by reforming disability policies.
Only when the policy begins to collapse under the weight of its own contradictions do governments summon up the courage to introduce change. And these contradictions are legion: a policy designed for permanent disability having to cope with medical conditions which may be temporary; a benefit policy designed for those who cannot work, yet in practice most recipients wish to work; an integration policy suitable for people with physical conditions but insufficiently adjusted to new and often mental diseases; and so on.
At the turn of the century, incapacity-related public spending in OECD countries was 2.3 per cent of GDP, more than twice as high as spending on unemployment benefits. In several countries, including Ireland and the UK, incapacity-related cash spending was several times higher than unemployment-related cash spending.
Without policy changes there is every reason to believe that disability benefit recipiency and public spending on benefits will continue to rise over the coming years in most OECD countries - and that employment levels of disabled people will remain low.
Reducing disability benefit receipt is only one policy target, of course.
An overly restrictive policy, which denied benefit to those in need, would be unacceptable. Still, no one should be sanguine about a continued rise in disability benefit receipt which could, if unchecked, undermine public support for an effective compensation package for those in need. High and increasing disability benefit recipiency will hold back any significant growth in the employment of people with reduced work capacity.
As in other areas of social policy, the challenge for the future is to transform the disability benefit scheme from a passive benefit programme into a flexible labour market programme with the aim of promoting employment for disabled people. In this context, it will be important to make cash benefits a flexible in-work tool which offsets any labour market disadvantage of persons with reduced work capacity rather than providing permanent out-of-work income.
Work must pay under all circumstances so as to raise work incentives. At the same time, active support to help disabled people to find work and to make (or keep) them employable will require a more individualised approach. But such an approach can be costly and needs to be monitored vigilantly to ensure its effectiveness.
A particularly important and potentially controversial element in such a strategy is the introduction of mutual obligations, as have been successfully implemented in other transfer programmes. To make a real difference to the work prospects of people with disabilities, society will sometimes have to put more resources into helping them than it currently does. If it does so, however, it is only fair to expect more from persons with reduced work capacity themselves. This is necessary not only to ensure political support for increased investment in activation measures, but also because such an approach has been shown to change the attitudes of both benefit recipients and those managing the benefit caseload.
There is arguably no area of social policy where policy has been as ineffective in achieving its goals as disability policy. Incomes of households in which disabled people live are less than the rest of the population, though in many countries they are not significantly lower. But the major failing of policy is the inability to help disabled people to get jobs.
There is little doubt that people on disability benefit wish to work. Governments pay lip service to the view that they would like more people with disabilities to work. But the sad fact is that, on average, only 1 per cent of those on disability benefits find a job every year.
This is a tragedy for those who never have a chance to fulfil their potential, and a tragedy for society, with increasing expenditures and loss of potential labour supply being the price of policy failure. It is time to put an end to this.
• The authors are, respectively, Director for Employment, Labour and Social Policy and Senior Economist at the OECD, but the views expressed here are personal ones.
• "A Strategy of Engagement - Towards a Comprehensive Employment Strategy for People with Disabilities" is to be launched in Dublin today by the Minister for Enterprise, Trade and Employment, Micheál Martin.