BRITAIN and Ireland have broadly swapped positions in terms of benefit payments to the unemployed over the last 20 years, according to a new report from the Economic and Social Research Institute.
The report, edited by Mr Tim Callan, shows that benefit cuts in Britain between 1979 and 1997 helped increase the incentive to work and could have contributed to the rise in the gap between Irish and British unemployment rates. The gap has widened from about 2 percentage points in 1979 to close to 5 percentage points now.
However, the benefit cuts in Britain have also led to an overall increase in the numbers falling into poverty, the report notes.
The proportion of people falling below half average income rose by 11 percentage points in Britain, but by only 5 percentage points in Ireland.
The report outlines the "dramatic" shift in the relative levels of social welfare payments in the two countries.
In 1978, a three-child family on unemployment assistance would have received just under half the average wage in Ireland, but closer to 60 per cent in Britain.
By 1994 the British figure had fallen to 43 per cent of the average wage, while the Irish figure has risen to almost 60 per cent.
Measured as a proportion of the average wage in each country there was a "swing" in their relative positions of, between 20 and 27 percentage points.
In general, the authors note, income support in Ireland has moved upwards to the European average, while British supports have fallen well below the European average.
However, as the report points out, a major caveat is that housing, benefit and housing-related income supports were not taken into account. These are more important in Britain with a far larger section of the population benefiting from weekly payments averaging £40 sterling.
The report also offers two interpretations of the different moves in each country.
A "favourable" interpretation of the Thatcher years in Britain suggests that tax cuts and restrictions on welfare payments helped improve work incentives and led ultimately to a higher growth ink employment.
However, a critical interpretation suggests that the main effects were distributional with cuts in income tax favouring those at the top end with those at the lower end becoming increasingly marginalised, the authors note.
A critical view of the Irish experience suggests that increased welfare payments contributed to, worsening incentives and the maintenance of high unemployment. A favourable interpretation would stress that the policy struck a balance between improved income supports with maintaining and even improving work incentives, according to the ESRI.
