On the Generosity of Ireland's Welfare System

Posted on April 23, 2014 by Micheál Collins

OECD Replacement Rates 2

Earlier this week, the OECD launched their preliminary review of the Government’s Action Plan for Jobs. The review rightly complements the significant labour market progress of recent years – a point we highlight in the most recent NERI Quarterly Economic Observer. There we anticipate unemployment will continue to fall reaching 10.2% by 2016.

Although the document itself (link below) does not point towards the Irish welfare system as being ‘generous’, some media reports have suggested it does. However, it is worth examining any such claim on the basis of the data available to us.

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Posted in: IncomeJobsLabour costsWages

Doing, learning and teaching political economy

Posted on April 20, 2014 by Tom Healy

Tom Healy, Director NERI

Some years ago a fellow economist queried why economic inequality is a problem. He suggested that people are born with different endowments of talent and opportunity and a degree of social difference in outcomes is not only natural but good as a spur for economic performance. In any case, he argued, if someone chooses to live a simple life in a remote island at a level of income deemed to be below the poverty level that’s their choice. What right has some analyst or bureaucrat, it is asked, to say that you can’t earn less than €8.65 an hour by law?  He went on to emphasise that markets use prices to ration goods among individuals who behave in mostly rational ways to maximise their interests as they buy and sell commodities including their own human capital. Such frank views from an economist reflect an interesting perspective on the world and reflect deeply held assumptions about the human condition. Behind the maze of complex equations and sophisticated logical reasoning many economists are quite simple people. Many claim to be neutral in the battle for ideas or economic interests.

However, a few can’t resist taking sides with the ubiquitous ‘consumer’ who is poorly served by monopolies or special interest groups that rig markets or institutions to their advantage. The villains in the piece are typically colluding bankers, trade unions, politicians, the public sector etc.  The use of complex modelling and copious reference to economic statistics and facts is used to reinforce the view that economists, by and large, know what they are talking about and what they offer is values-free, robust analysis which ‘policy makers’ and market actors can use or ignore as they wish (usually the latter).

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Funding Options for Higher Education

Posted on April 16, 2014 by Daragh McCarthy


The April NERI seminar took place this afternoon in the INTO Learning Centre. Tom Healy provided an overview of a recent paper, co authored with Austin Delaney, " We need to talk about Higher Education ". The paper argues the current model of funding for higher education is unsustainable. It outlines a range of financing options that could be utilised before concluding that a publicly funded system is the option that can best safeguard the contribution of Higher Education to economic development. A copy of the slides used in the presentation are available here.

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Posted in: InvestmentJobs

Mixed signals from the NI Labour Market

Posted on April 16, 2014 by Paul Mac Flynn

As with buses, in Northern Ireland you wait and wait for economic statistics and then two come at once. Today the figures for the Northern Ireland Composite Economic Index were released. The NICEI is the latest attempt by statisticians to come up with a figure for economic growth in Northern Ireland. Today we learnt that in the final quarter of 2013 growth was +0.6%, marginally below the +0.7% recorded for the UK for the same period. The main increase came from the services sector, while the main decrease came from construction. There is nothing particularly surprising in these figures, it more or less confirms trends most of us are aware of. The main point to take from these figures is that while UK GDP is now 1.5% below where is it was before the recession, Northern Ireland is still 11.2% below its peak. All growth is welcome, but Northern Ireland has some way to go and we would want to pick up the pace.

The second release of statistics was for the labour market. The Labour Force Survey measure of unemployment increased from 63,000 to 68,000 or from 7.3% to 7.7% in the three months ending February of this year. However, the latest statistics were also released for the Claimant Count which showed the 14th consecutive monthly fall in that measure of unemployment. At first it may appear that these two statistics are entirely contradictory, but they are both very different measures.

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Posted in: JobsNorthern Ireland

Investment, Jobs, Young Workers, Living Wage

Posted on April 12, 2014 by Tom Healy

Tom Healy, Director NERI

Last week the Northern Ireland Committee of the Irish Congress of Trade Unions held its Biennial Delegate conference in Derry. Over 230 delegates attended to debate a wide range of motions and issues.  The detailed programme and accompanying documentation is available here.  The economy report (pages 75-101) is taken directly from articles, blogs and QEO publications by NERI staff. It is very welcome to see the research work of the NERI, North and South, been taken up in many trade union fora. A reading of the economy report provides a detailed overview of some key areas of work where NERI has made a contribution over the last two years:

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Posted in: InvestmentLiving wageNorthern Ireland

Improving women's access to the labour market could create 65,000 jobs

Posted on April 08, 2014 by Rory O'Farrell

A new paper (available here) highlights some of the most prominent features of the Irish labour market; a polarised labour market with relatively low labour market participation for women. The implication for this is that, by increasing labour market access for women, roughly 65,000 jobs could be created.

Overall in Ireland there are a high proportion of those in employment with a third level degree and the low level of labour market participation for women aged 35 and over, in particular such women without a third level education. Policies directed at enabling such women to participate in the labour market have the ability to increase Ireland’s economic potential.

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Posted in: GenderJobsWages

Why should taxpayers pay for ‘free’ higher education?

Posted on April 06, 2014 by Tom Healy

Tom Healy, Director NERI

Why indeed? Data published by the CSO and OECD show much better earnings and employment outcomes for third level graduates.  The cost of providing higher education is not small. At approximately €9,000 on average per student per annum the true total cost varies by location, type of course and field of study. Tuition fees and the ‘student charge’ are sizeable but when added together are less than half of the overall cost in the case of undergraduate courses. The rest is financed by the State. Last week a NERI Working Paper ‘We Need to Talk about Higher Education’ explored the evidence in relation to the funding of Higher Education in the Republic of Ireland and how it compares with other countries. It concludes with some proposals for future funding.

One matter on which most, if not all, commentators, analysts and providers of Higher Education agree on is that we need a debate on the future financing of Higher Education because the current arrangement is not sensible and is not sustainable. Only a little over one half of full-time undergraduate students pay the student charge which is currently €2,500 per annum. This is set to rise to €3,000 by the Autumn of 2015. At the same time, part-time and postgraduate students pay very high tuition fees and these are trending upwards year by year in most colleges.

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Posted in: InequalityTaxation

Poverty, Wages and Violence

Posted on March 29, 2014 by Tom Healy

Tom Healy, Director NERI

The publication – coincidentally – of two reports in Northern Ireland in the last week has drawn attention to the importance of wages in the Northern economy. While the reports received very extensive media coverage in the Northern media, there was very little in the South. This is regrettable as poverty, wages and community tensions constitute a triad with implications for long-term economic and social stability on the islands of Ireland and Britain. One report, entitled ‘Monitoring Poverty and Social Exclusion in Northern Ireland’, was published by the Joseph Rowntree Foundation (JRF) and drew attention to the extent of low income and the growth in poverty in Northern Ireland over the last 8 years. The other report, the NERI Quarterly Economic Observer (Spring 2014), focussed on the extent of low pay in the North. Both reports draw attention to the problem of low pay in the UK and Northern Ireland in particular. As the JRF report states: ‘Wages and hours matter, as does the distribution of work across households.’

The causes of poverty are complex and multi-faceted. However, it is clear that low pay, involuntary part-time work, joblessness and precarious employment in general are key drivers of poverty. Raising wages in sectors of the economy where rates of pay are traditionally rock bottom or near rock bottom would provide an important social policy to address poverty. Clarifying the concept of a living wage or a living income across different household types; Measuring a living wage/income and Implementing upward pressure on wages in low-wage sectors are important societal response to a growing and widespread problem. In an earlier Blog (‘A serious challenge that businesses and the government must address’) I wrote I exxamined these issues in a little more detail.

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Posted in: JobsNorthern Ireland Wages

1 in 4 Northern Ireland workers do not earn enough for a decent standard of living

Posted on March 24, 2014 by Paul Mac Flynn

The Nevin Economic Research Institutel published its latest Quarterly Economic Observer today Tuesday 25th March. In it, we examine the extent of low pay across Northern Ireland:

  • 25% of workers earn less than the 'Living Wage' (169,000).
  • 17% are officially classified as low paid (115,000) and 9% (61,000) earn only the National Minimum Wage or less.
  • Young people, women and those in part-time work are most at risk
  • Upper Bann, North Antrim, East L'Derry and Newry & Armagh are hotspots for low pay.
  • Low Pay is widespread in sectors such as Accommodation, Food, Retail, Residential and Social Care.

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Posted in: InequalityJobsLiving wageNorthern Ireland Wages

The temptation of Odysseus

Posted on March 21, 2014 by Tom Healy

Tom Healy, Director NERI

In the ancient Greek epic poem Odyssey, the ship of Odysseus sails past dangerous rocks as his ears are tortured by the sweet song of the Sirens.  This song drove Odysseus mad with desire, and his sailors had to tie him to the ship rail, prohibiting him from giving in to temptation.  If it were not for this the ship would have crashed on the rocks. Picking on this story during a recent address I gave here, I suggest that all talk of income tax cuts (as distinct from tax reform) is a dangerous form of modern day political temptation for the following reasons:

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