Arrival of Troika led to major changes in social welfare system

The warnings came – but we didn’t take much notice.

For years, glossy policy documents by think-tanks and advisory groups told of how social security systems in other European countries had transformed into back-to-work springboards to help unemployed people through incentives and tailored training.

Ours, on the other hand, chugged along as it always did.

Ministers mostly ignored criticism that our system was characterised by poverty traps which discouraged a return to work. Or placed vulnerable people at risk of welfare dependency through passive payments. And that poor quality training simply didn’t meet the needs of job-seekers, never mind the economy.

None of that mattered during the good times.

Ministers simply upped welfare payments as part of an expensive game of auction politics, and left those policy documents to gather dust on the shelves of Government departments.

By the time the Troika arrived in Decompiler, 2010, time had run out.

We couldn’t ignore the warnings any longer. Unemployment was heading towards 500,000, and the ballooning cost of welfare spending was unsustainable. The troika’s memorandum of understanding stated baldly that as well as dismantling poverty traps and reducing the risk of long-term unemployment, the Government would need to cut some €750 million in welfare spending in the very first year of the bailout. Five years on and many of those long-fingered reforms are finally works-in-progress.

As part of a series of “pathways to work” reforms, old-style dole offices are also being replaced with public employment offices. These “Intreo” centres provide provide jobseekers with tailored job-search assistance and progression plans. By the end of this year it is estimates that 43 such centres will be operating, involving the transfer of as many of 2,000 staff members into new roles. It’s too early to tell if it is a success, but it’s a major culture shift in our public services.

In addition, there are also tough new rules for those trying to milk the system. New penalties include cuts in welfare of up to €44 per week or full suspension for up to nine weeks for those who refuse to engage with training or education options.

Some nettlesome poverty traps are in the process of being uprooted. The rent supplement – one of the single biggest disincentives for returning to work – is about to be changed into a “housing assistance payment”, which means those moving from welfare to work will not lose rental subsidies.

Casualties of reform
But the reforms have also have their casualties. The massive cost-cutting has disproportionately taken its toll on young people. Already saddled with poor job prospects, young jobseekers have seen jobseekers' payments slashed by up to a third.

The idea behind the move – to encourage people into training or education – might have made more sense if we had the places available. But latest figures indicate there are only half the number of places for young people who need them. As a result, emigration, for many, may will be a more realistic prospect than a well-paid job.

People with disabilities and their families have also seen social supports reduced through petty cost-cutting. There has been a steady erosion of vital programmes that allow them to live lives with dignity, choice and independence, despite Government rhetoric of protecting the most vulnerable.

Inequality
While core welfare rates for many have been protected, cuts to other supports have reduced people's real incomes. It's little surprise, then, that inequality between the richest and poorest in society has increased, with most indicators showing the less well-off proportionately have taken a bigger hit over recent years.

Ministers have focused much energy and money – about €1 billion next year – on providing more training places and work placements. Some 85,000 places are expected to be available next year, for example. JobBridge, the internship programme, and JobPlus, which provides cash grants to businesses which hire long-term unemployed, are imaginative schemes. But ensuring training and education programmes for those most at risk of unemployment are of good quality and meet the needs of the economy is a far bigger challenge.

The ESRI, among others, has warned that many are being shoe-horned into inappropriate courses which seem designed to meet the needs of trainers rather than trainees. We still spend hundreds of millions of euro on inefficient community employment schemes. They help hard-pressed communities, but aren’t effective at improving employment prospects.

But the most important indicator of all is the headline jobless rate.

For the first time in years, there are reasons to be hopeful. Unemployment has fallen below the 400,000 mark for the first time since May 2009. While some of this is related to emigration, there is undoubtedly real job growth out there. Employment offers the single most effective route out of poverty.

The figures are still too high, of course. Levels of unemployment among young people – as high as 30 per cent – are alarming, and many are now classified as long-term unemployed. If they become stuck in joblessness, there is a real risk of creating a lost generation of people – especially in disadvantaged communities – unless pathways to work and education are of high quality.

What should happen next? There is a strong case to be made, for example, in front-loading welfare supports during the initial period of joblessness – to lessen the impact of losing an income – and then tapering them over time – to increase the incentive to get back to work. Also, many poverty traps remains which penalise jobseekers – especially the parents of low-income families – still need to be removed. The quality of training and education need to be tackled.

We’re still a long way off the kind of transforming our social welfare systems into something resembling the comprehensive, Scandinavian-style ones outlined in all those policy documents of years ago. But we are headed, slowly, in the right direction.