Unemployment Benefit in Comparative Perspective

Box 1.1 in the European REO covers labour market institutions.  Relative to most European countries, Ireland comes across as having good labour market institutions.  The box highlights one exception – the high unemployment benefit replacement rate for long-term unemployed.  Note: the figure is based in 2008-2009 data and takes the average of net replacement rates over 60 months of unemployment for four family types and two earning levels (67 percent and 100 percent of average worker earnings), including social assistance. The box notes that Ireland’s replacement rate is relatively low at one-year duration but benefits are stable over time, making them higher than average over a fiver-year period.

18 thoughts on “Unemployment Benefit in Comparative Perspective”

  1. Does this include, for example, housing/rent supplement, medical card, and sundry other income-related benefits that are very important in Ireland?

  2. Apologies for going slightly off topic: (I will go back on topic later in the posting)

    Unemployment figures in Ireland today reveal that September saw the first annual decrease in unemployment since April 2007.

    Predictably there was very little reference to unemployment figures in the media (I do not even think RTE even mentioned it) and none of the three main media outlets I looked at highlighted that Seeptember 2011 saw the first decline since April 2007.

    The nine month general Government deficit (excluding bank bail outs) appears to have declined quite significantly year on year according to figures released earlier in the week, once again with very little specific detail in the media.,

    At least Ireland is concentrating on getting itś “own house in order” amid a very confusing time throughout Europe.

    IMHO there are only three domestic social resources Ireland can rely on during international (this time it is an Economic one) crises Democracy, Stability and Respect for our fellow men.

    While unemployment can be a devastating experience unlike most “progressive countries” we do not marginalise people and expect them to eat out of garbage bins if they can not re-enter the market quickly enough.

    Of course ironically this may explain why there has not been “a rush to the airport” by many of our immigrants (who know exactly how “green the grass is on the other side”) and why unemployment has remained stubbornly high.

    However if (we can prevent a brain drain) this places Ireland in a position to capitalise on any recovery which eventually emerges as our labour force will still be available, our infrastructure is in place, levels of education are high and, needless to say, we do not have a shortage of housing.

    IMHO International politics and economy are now so severe that economic”stagnation” is no longer an option.

    The only two options are international economic recovery or economic depression and we all know how the last depression ended in Europe. Hopefully recovery will be the option and (in either event) Ireland is probably the best place to be while everything unfolds.

    Unfortunately only our immigrants seem to fully appreciate that fact.

  3. Doesn’t ring fully true to me. At least not for all groups.

    Maybe people get a fixed unemployment benefit not related to pay during employment or what you pay into – but that looks high relative to “average worker” earnings.

    I was once involved (as both a layoffee and implementer) in a pan-European “restructuring” – the French/Belgians/etc got MUCH more generous treatment from unemployment/social insurance (something like 80% of pre-layoff salary for a year for highly paid people). Italians couldn’t really be laid off. Scandies too – the driver for getting back to work seemed much more social embarassment than penury.

    Irish got €188 a week or so. If you’re laid off from a graduate /professional job that pays, say, €50-60,000 – the Irish Dole is a massive drop in living standards. Your _pay-related_ social insurance in European places is often a much higher replacement rate – at least initially.

    I think there’s devil in the details in these numbers and comparisons that goes beyond Sindo-style stats.

  4. the plot is severely misleading, at least for Germany.
    One year maximum , 60 % of former net pay is standard case, at low income levels .

    For me (in DEU) it was more like 35 % a few years ago, just half in total what I had payed into before, and half of a package some US colleagues got.

  5. If they cut the dole substantially again – the remaining private debt contracts will collapse into a heap of nothingness.
    Fiscal austerity debates are a joke until the state divorces itself from the banks.

  6. @Livonian

    Excellent and thoughtful contribution. I would have some disagreement with the last part of your contribution

    Hopefully recovery will be the option and (in either event) Ireland is probably the best place to be while everything unfolds.

    Unfortunately only our immigrants seem to fully appreciate that fact.

    More than our immigrants recognise this. The swathes of people in secure and very well remunerated positions (public and private) are fully aware of it and are prepared to concede very little while they remain in the ‘best place’.

    Eg Salaries of bankers, regulators, central bankers, namas, ntmas, high level mandarins, ESB workers, university staff (full time), ESRIs, quangos, union bosses, Bord Gaisers, top level gardai, DPPers, consultants, Semi-State bosses and staffers and last but not at all least private sector employees in export companies who are doing very nicely and in some cases so nicely that it will eventually lead to the demise of the companies in this country.

  7. @Philip Lane

    Would it be possible to produce the graph for short term unemployed to see how Ireland fares in that catagory?

  8. Interestingly and in the same box, they also note that the tax wedge is only half that of the US, a third of the OECD average and a fraction of the French or Germans.

  9. 84K of the 442K on the Live Register in Sept were part-timers or casuals.

    There were 75,000 non-nationals.

    In 2006, the LR in June was about 159K – – in the peak year of the bubble – – 20K were part-timers or casuals .

    In 2006, Ballina in County Mayo had the highest unemployment rate among large Irish towns, with 15.8% of its labour force out of work. Tralee (14.2%) and Dundalk (13.9%) also had high unemployment at the time of the 2006 census while at the other end of the scale Malahide (4.3%) and Leixlip (4.4%) had the lowest rates.

    The unemployment rate was calculated using the responses to the question on Principal Economic Status in the 2006 Census. The national rate was 8.5%, with urban areas (9.5%) having higher unemployment than rural areas (6.9%).

    Disability payments have been an issue in recent days and its not clear how many of the long-term unemployed are available for work.

    The ESRI reported earlier this year that those who are assisted by the State while unemployed were less likely to return to work than the average welfare recipient. The researchers say that welfare recipients may have learned “as a consequence of the process, that they were unlikely to face monitoring or sanctions as a result of failure to search actively for, or obtain, employment, leading to some decline in job search intensity.”

  10. @Aidan R

    Scroll down to one of the previous threads

    @all

    Could be worse – could all be in Rick Perry’s Texas

  11. We have it back to front. Benefits for short-term unemployed should be higher than for the long-term unemployed.

    In particular, medical card and rent allowance are extremely difficult sacrifices for returning to work.

    I know it myself, when i go to the shops, my unemployed neighbours are buying luxury goods that I can never seem to stretch to. They just have more jingle in their pocket and there is a negative incentive to go into low-paid work.

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