Majority of jobseekers better-off working, ESRI research shows

The majority of jobseekers would earn more in employment than from benefits, a new survey from the ESRI has found. However, there is still a small cohort of families who can earn more by staying out of work.

"In the vast majority of cases, unemployed individuals would be financially better off in work than out of work", said Michael Savage, co-author of Making Work Pay More: Recent Incentives.

More than eight out of 10 jobseekers would earn at least 40 per cent more in employment than from benefits, while about six out of 10 jobseekers would see their incomes at least doubled by taking up a job.

However, this does not apply across theboard and there are some families for whom the gap between in-work and out-of-work incomes is small, and in a small percentage of cases out-of-work income can exceed in-work income. Among jobseekers, such families are typically jobless couples, particularly those with children.

But, the Back to Work Family Dividend, which was introduced in Budget 2015, if fully utilised, could lead to “significant improvements” in the financial incentive to work facing such families, the ESRI found. The scheme means that jobseekers get to keep almost € 30 per week for each child for one year, followed by a half-rate payment for a further year.

Medical cards are also frequently cited as an obstacle to taking up employment, given that the value of holding such a card in relation to healthcare and medicine costs has been cited as being, on average, € 630 per year. For example, having a medical card for a 35-year-old couple with two children aged under five would save them about € 1,565 per year.

Nonetheless the research found that this does not arise for those who are long-term unemployed and able to retain a medical card for three years when taking up a job. And, for families making average use of a card, losing it would have quite a limited impact.

For those with chronic illnesses however, the impact could be greater, the ESRI found, but noted that this would only apply to relatively small numbers of families.

Speaking on RTE radio, Professor Tim Callan said that the research shows that unemployment problems are not to do with welfare paying more than work, and for those who are young and single without children it makes sense to go to work.