Troika: Cut benefits for long-term unemployed

on 19/09/2012 00:00:00

It also warned that global growth was slowing and cut Ireland's growth forecast for next year from 1.9% to 1.4% of GDP. It said the Government should not rule out any opportunity to cut costs and raise more money in the budget for next year.

The document, prepared by the European Commission troika staff, said that less than a quarter of the €543m health savings in the 2012 budget have been achieved, and that the Government is finding it difficult to reach the target. It blames pharmaceutical and private health insurance sectors for some of this. The near 15% unemployment rate is also partly responsible.

It suggests that those out of work are too comfortable, saying the difference between what they get in benefits should be much less than what they get when employed.

The report describes the benefits system as being an unemployment trap. It says de-coupling housing support from unemployment status "should be rigorously pursued". It points to the growing numbers out of work for more than a year and says part of the reason could be that benefits - such as medical cards and housing - could be a disincentive to seeking work.

The numbers being penalised with a 23% cut in benefits under the new policies for not taking up training offers is very small still at just 0.05% of those out of work, and urges that this be stepped up considerably.

However, it also points out that there is little hope of the economy making a recovery sufficient to generate enough new jobs.

The unemployment forecast for next year has been revised up from 13.9% to 14.4% with long-term unemployment still rising.

The Government must close the legal gap to allow banks to repossess homes because of unpaid mortgages "as a matter of priority", and warns that the country's banks continue to be a worry despite all the money poured into them.

The report noted the Government intends to reform the medical card scheme and maximise the flexibility under the Croke Park agreement.

Getting back to the markets could still be a problem, if the global situation worsens, it says, even after the recent successful raising of money on the markets.