Are some people really allergic to work?

Michael Noonan thinks there are some people who are work shy, people who, if a job was a bed, they’d sleep on the floor, people who run from employment like upper middle class people run from foods with gluten in them because of their ‘allergies’.

This week, during a Kilkenny Chamber of Commerce lunch, The Minister said “we all know there will be people who will never work. They're allergic to work.”

Language is so important. Let’s dig a little bit into how Mr Noonan made his assertion. He started by saying ‘we all know that’. ‘We all know that’ is a very dangerous piece of language. It tells us a few things. The Minister thinks his opinion is shared by a majority of people. Maybe it is. Maybe it isn’t. The Minister thinks his opinion isn’t just an opinion but knowledge—we all ‘know’—and the finality of the rest of the sentence, ‘ who will never work’. Not ‘they might never work’ or ‘they could never work’. They will never work.

Let’s read that comment again.

“…we all know there will be people who will never work. They're allergic to work.”

 

Minister Noonan is referring to a hard core of generationally jobless families who see the State as the ultimate sucker customer, who exist only to extract benefits at the cost of society as a whole. If they exist, the principle of social justice tells us these free riders on other people’s taxes need to be punished for their laziness by having their social protections removed, and rewarded by taking jobs and training courses when told to do so.

Let’s not take Mr Noonan’s comments too far, or caricature them. At an unemployment rate of 10%, nobody is seriously saying the people at the end of the queue, those will get into the labour market when the unemployment rate moves from 10% to 8%, are in that hard core of jobless households. It’s when you get below the government’s full employment target of 7%-- more than 150,000 of Ireland’s citizens aged 16 to 64—that this hard core is supposed to show up. Getting from 10% to 8% is relatively easy. But getting from 6% to 4% is really hard, because both hard and soft skills are absent.

Ireland has some of the weakest labour market activation programmes in Europe. Despite this there are more than 89,000 people on training programmes, presumably working hard to get back into the labour force. The people who have been unemployed for longer than 18 months become discouraged and cease applying for jobs they never hear back from or, if they are lucky, going to job interviews where they are rejected. A newly-unemployed person has a 50% chance of leaving the Live Register in their first twelve months of unemployment. This chance falls to under 20% during the second twelve months of unemployment and to less than 10% in the third year. As duration increases, the chances of getting out of unemployment get lower and lower. This is not an allergy but a policy failure. Society and the individual suffer.

One young unemployed person interviewed by the national council of youth in Ireland put it well :

...I hate it (being unemployed). It looks like you are doing nothing but after a year of it (unemployment) I actually felt more tired now than I ever did after a week’s work on the (construction) site. It just seems to get in on you....It’s very wearing...”

The data on discouraged workers is, no pun intended, discouraging. The impact of unemployment on confidence, identity and outlook is enormous. So is the idea that jobs are for someone else, or somewhere else, or not for people like you.

In a famous paper on the economics of information and job search in 1970, John McCall worked out that workers became discouraged when the cost of searching for a job went too high. This is precisely what we see in the Irish case.

The paradox is that the costs of searching for jobs increase as the length of unemployment increases. As lifestyles adjust downwards, there can also be an element of lock-in, where it becomes harder and harder to break back in.

What about populations that experience mass joblessness? These are red-herrings in the debate. If they exist at all, they are so tiny they are a rounding-error. During the boom years of 2005, 2006, and 2007, long-term unemployment levels averaged 1.3%. There wasn’t much of an allergy then. The data show that when jobs were there, the vast majority of people took them up. The crisis changed Ireland’s labour market. Since 2009, the absolute numbers of those signing on to the live register has been steadily falling, while those signing on for more than one year rose from 100,000 in 2009 to 200,000 in 2010 and has remained relatively static, only beginning to drop during 2015. As of last month, there are 160,403 people signing on for more than one year.

The government’s Pathways to Work strategy is a little-read document. It is a fine piece of economic and social analysis, that discusses the problem of joblessness from a number of angles. In the entire document, the word ‘hope’ is not used once. Politicians exist to give hope that change is possible. This government prioritized the nation’s finances and the balance sheets of the banks over the unemployed. That was understandable but there are consequences, and long-term unemployment, and the social damage it causes, are some of those consequences. The Minister’s comment is unfortunate, as it shows us those consequences are not fully understood by the men at the top.

Published in the Sunday Business Post, 10/05/2015