The Budget has lowered the financial incentive for going back to work for many categories of unemployed persons, the Irish National Organisation of the Unemployed (INOU) said yesterday.
A new tax incentive scheme for the long-term unemployed announced with the Budget was also criticised. It is less attractive financially to the unemployed than existing schemes in virtually every case, but is more attractive financially to employers.
This will increase the "mismatch" between the aims of employers and the unemployed, according to the INOU.
It would also engender confusion, said Mr Mike Allen, general secretary of the INOU. He said the current back to work allowance scheme was working well.
Mr Allen was speaking at the launch of a Budget analysis entitled Welfare to work: did the Budget make the journey harder? The INOU document was later handed to the social partners during a meeting of the secretariat to Partnership 2000.
The analysis looks at the effect of Budget changes on the take-home pay of persons at different income levels and different family sizes. It includes consideration of the very low rates of pay which Mr Allen said were the type of incomes being offered by indigenous industries.
A recent survey by the Small Firms Association had found that 36 per cent of small companies currently pay less than £4 per hour (£8,000 per annum), he said.
A married couple with no children were £53.69 per week better off before the Budget if one member took up a job paying £9,000 per annum. After the Budget, they are only £51.93 per week better off, a drop of £1.76.
At an annual wage level of £8,000, the financial incentive for a married couple with no children is down £3.29, from £43.02 to £39.73.
In some cases the increases in the financial incentive for taking up a job are very small. For example, as a result of the Budget the financial incentive for a married couple with two children will be 42p per week greater in the case of a job paying £9,000 per annum. It will increase from £61.30 to £61.72 extra per week.
Mr Allen said that if the suggestion from the INOU and other bodies that the Budget concentrate on increasing tax free allowances rather than cutting tax rates, had been accepted by the Government, the increases in financial incentives for unemployed people to take up low-paying jobs would have been significantly greater.
