ESRI withdraws living costs report

Tue, Jun 12, 2012, 01:00

A study on the cost of going to work which suggested that up to 44 per cent of people with children would be better off on the dole has been withdrawn by the Economic and Social Research Institute.

The institute tonight issued a statement stating the document had been issued as a “work-in-progress document” on May 22nd and that it should “not be regarded as an ESRI report”. The "unprecedented" step had been taken because of concern the public might be "misled" by the content.

The research paper - entitled The Costs of Working in Ireland - suggested that someone with a job incurred five times the costs of an unemployed person when factors such as transport, clothing, food and childcare were taken into account.

It stated that an employed person without children faced additional costs of €7,000 per year (some €140 per week) and that this increased to €9,000 (some €180 per week) when there were young children in the household.

It said transport costs amounted to an average of €106 per week for those in employment, with food adding an extra €49 in expenses each week and clothing a further €36.

The paper also said childcare costs in Ireland were the joint highest in European and OECD nations, on a par with Switzerland, at an average of 29 per cent of net family income. In its conclusion, the paper stated that a comparison of take home pay showed that it did not pay to work for 1 per cent of the population when the extra costs were overlooked.

“However, a comparison of take home pay plus extra expenditures shows that 15 per cent of the people without children, and 44 per cent of people with children, are better off not working,” according to the paper, co-authored by Niamh Crilly, Anne Pentecost and Richard Tol.

It said the finding that employed people incurred five time the costs of those out of work is “important for policy as it substantially affects the incentives to work”.

In a statement, the ESRI said the decision to withdraw the paper had been made "as it has emerged that the underlying analysis requires major revision and that the paper's estimates overstate the numbers of people who would be better off on the dole than in work”.

“The Institute has taken the unprecedented step of withdrawing the paper because of its concern that the public could be misled by its content. The institute understands that Professor Tol is planning to revise the working paper,” the statement added.

It said such working papers represented “un-refereed work-in-progress by researchers who are solely responsible for the content and any views expressed therein”.

Responding to the report before its withdrawal this evening, the Department of Social Protection said the “great majority of people on the Live Register have a significant financial incentive to work” with some 289,000 receiving a weekly social welfare income of €188 or less. It said three quarters of those on the Live Register had no dependents.

As an example, it said a working married person with four children earning €28,000 per year had a net annual income, after benefits but excluding rent, of €43,092.

This was some ¤12,000 more than an unemployed person with a dependent adult and four children when rent was excluded and, depending on location, some €3,000 to €6,000 more when rent allowance was included.

The Irish National Organisation of the Unemployed said the report highlighted the need for an “entitlement and employment service that really strives to support unemployed people to make the transition from welfare to work in a constructive manner”.

The organisation also said the report failed to take into account the costs incurred by people on Jobseekers Benefit when seeking work, which is a requirement they must be able to demonstrate to retain the payment.

Sinn Féin earlier called on the ESRI to withdraw the report.

The party’s social protection spokesman Aengus Ó Snodaigh said public debate should be focusing on “creating jobs and making work pay rather than being twisted to beat social welfare dependents whose morale and situation are at an all-time low”.

He said the claims in the report had “wrongly prompted the usual suspects to attack our social welfare system”.