NEW RESEARCH HAS shown that in cases where people would be better off financially claiming welfare than staying in employment or taking a job, 70 per cent of people choose to work.

The findings from social and economic think tank the ESRI confirm that work pays more than welfare for close to six out of seven unemployed people — even when costs like childcare and travel are taken into account.

The research is being released today, as the organisation hosts a pre-Budget conference in Dublin.

According to the ESRI:

Policy initiatives to improve the reward from work are worthwhile, but will have only a limited impact on overall unemployment.

More substantial reductions in unemployment will require a revival of international and national demand, and activation measures providing skills and training in areas where new jobs will arise.

Most people who receive Jobseeker payments are single and don’t have children, and work, even at minimum wage, pays  more than welfare for these groups, the research found.

But for those with families, extra payments for children and in respect of a non-working spouse can mean that the net rewards from work are reduced.

However, the ESRI research concluded:

Even those who, on a “snapshot” basis, would be “better off on the dole” tend to choose work.

A number of reasons for this were given, including:

• The fact that prolonged unemployment tends to reduce future wages.
• Being in employment provides opportunities for wages to grow
• That there are non-financial  benefits to being in work, including social and psychological benefits
• That there are also compliance costs associated with welfare payments – like requirements to attend training and to search for work – and penalties associated with non-compliance.

The ESRI’s Professor Tim Callan, who was one of the study’s authors, said that while policies that improved the reward from work were welcome, “they cannot be expected to have a major impact on overall unemployment”.

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