Monday, March 15, 2010

Danny McCoy on Supply Side Incentives

Danny McCoy picks up on a theme made in the preceding post.

"We know from history that when growth comes it can be jobless growth. Our success will be shortening the distance between growth resuming and employment increasing. Our social welfare system can be a drag in terms of ensuring that employment comes along significantly."

Social welfare rates – even after reductions to some payments in December's budget – are a disincentive to some people returning to work, he said, and added that the government needs to look at the amount of time for which those on the dole can claim the full allowance. So how long should that period be? One year, two years?

"Nobody wants to see people left destitute or anything like that, and there should be safety nets, but there is no tapering off in social welfare benefits. We can't afford, for their human dignity, to leave them on the dole for the rest of their lives. If two years is what people believe that they could stay out of the labour market, it's far too long. Businesses would like to see people having the facility to get back [to employment] at rates which employers can afford."

The full interview is from yesterday’s Sunday Tribune.

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