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The Developmental Welfare State No The Developmental Welfare State no. 113 may 2005 National Economic and Social Council Constitution and Terms of Reference 1. The main tasks of the National Economic and Social Council shall be to analyse and report on strategic issues relating to the efficient development of the economy and the achievement of social justice. 2. The Council may consider such matters either on its own initiative or at the request of the Government. 3. Any reports which the Council may produce shall be submitted to the Government, and shall be laid before each House of the Oireachtas and published. 4. The membership of the Council shall comprise a Chairperson appointed by the Government in consultation with the interests represented on the Council, and • Five persons nominated by agricultural and farming organisations; • Five persons nominated by business and employers organisations; • Five persons nominated by the Irish Congress of Trade Unions; • Five persons nominated by community and voluntary organisations; • Ten other persons nominated by the Government, including the Secretaries General of the Department of Finance, the Depart- ment of Enterprise, Trade and Employment, the Department of Public Enterprise, the Department of Social and Family Affairs, and a representative of the Local Government system; 4. Any other Government Department shall have the right of audience at Council meetings if warranted by the Council's agenda, subject to the right of the Chairperson to regulate the numbers attending. 5. The term of office of members shall be for three years. Casual vacancies shall be filled by the Government or by the nominating body as appropriate. Members filling casual vacancies may hold office until the expiry of the other members' current term of office. 6. The numbers, remuneration and conditions of service of staff are subject to the approval of the Taoiseach. 7. The Council shall regulate its own procedure. The Developmental Welfare State May 2005 Published by the National Economic and Social Council Copies of this Report may be obtained from The National Economic and Social Council, 16 Parnell Square, Dublin 1 or the Government Publications Sales Office, Sun Alliance House, Molesworth Street, Dublin 2 Price: c15.00 Students: c5.00 Pn. A5/0621 ISBN: 0-7557-7079-X ii Membership of the National Economic and Social Council Chairperson Nominated by Business Nominated by Community and Employers Organisations: and Voluntary Organisations Mr. Dermot McCarthy Secretary General, Ms. Aileen O’Donoghue Fr. Sean Healy Department of the Taoiseach and IBEC CORI Secretary to the Government Mr. Brian Geoghegan Mr. Dónall Geoghegan IBEC NYCI Deputy Chairperson Mr. Liam Kelleher Ms. Deirdre Garvey Ms. Mary Doyle CIF The Wheel Assistant Secretary, Department of the Taoiseach Mr. Brendan Butler Mr. John Mark McCafferty IBEC SVP Government Nominees Mr. John Dunne Mr. John Dolan Dr. Sean Barrett CCI DFI Professor Brigid Laffan Nominated by the Irish Secretariat Professor John Fitzgerald Congress of Trade Unions Dr. Rory O’ Donnell Professor Eithne McLaughlin Mr. Dave Begg Director ICTU Dr. Peter Bacon Mr. Noel Cahill Mr. Tom Considine Ms. Sally Anne Kinahan Economist Secretary General, ICTU Mr. Bill Thompson Department of Finance Mr. Manus O’ Riordan Economist Mr. Sean Gorman SIPTU Dr. John Sweeney Secretary General, Mr. Peter McLoone Economist Department of Enterprise, IMPACT Trade and Employment Ms. Jill Matthews Mr. Jack O’Connor Served as a Mr. Brendan Tuohy SIPTU Social Policy Analyst in the Secretary General, Secretariat until March, 2005 Department of Communications, Nominated by agricultural and Ms. Aoife Halligan Marine and Natural Resources farming organisations Research Assistant Mr. John Hynes Mr. Seamus O’ Donohue Secretary General, ICOS Ms. Catherine O’Brien Department of Social Ms. Tracy Curran and Family Affairs Mr. Ciaran Dolan ICMSA Ms. Sheila Clarke Mr. Niall Callan Secretary General, Department Mr. Damian McDonald of Environment, Heritage and Macra na Feirme Local Government Mr. Michael Berkery IFA Mr. Con Lucey IFA Table of Contents Abbreviations viii Preface ix Acknowledgements xi Executive Summary xiii Chapter 1 Reasons for Revisiting and Reforming Ireland's Welfare State 1.1 Introduction 1 1.2 Social Challenges 2 1.3 Improving Responses 4 Chapter 2 Economic Performance and Social Protection 2.1 Introduction 9 2.2 Improving the Synergy Between Social and Economic Policies 11 2.3 Building a Social Model on High Levels of Employment 24 2.4 Conclusions 32 Chapter 3 Social Protection in Ireland — a Hybrid System 3.1 Introduction 35 3.2 The ‘Welfare Society’ and the Welfare State 36 3.3 A Broad View of Social Protection 39 3.4 Income Support Arrangements 44 3.5 Services Providing Social Protection 60 3.6 Public Capital Spending and Social Protection 75 3.7 Tax and Social Protection 78 3.8 A Provisional Balance Sheet 83 Chapter 4 Ireland's Social Protection in a Comparative Context 4.1 Introduction 95 4.2 Welfare State Differences in Practice 95 4.3 The Adequacy of Public Social Spending in Ireland 104 4.4 Public Social Spending and Outcomes 117 4.5 Conclusions 136 iv Chapter 5 The Structure of Ireland’s Welfare State and the Principal Strategies Advanced for Reforming it 5.1 Introduction 139 5.2 Ireland’s Welfare State as Differentiated 141 5.3 The Case for More Universalism 143 5.4 The Case for a Stronger Insurance System 146 5.5 The Case for more Targeting 150 5.6 The European Context 152 Chapter 6 Re-conceptualising Ireland’s Welfare State 6.1 The Developmental Welfare State in Outline 155 6.2 Service Delivery in the Developmental Welfare State 159 6.3 Income Supports in the Developmental Welfare State 172 6.4 Activist Measures in the Developmental Welfare State 186 Chapter 7 The Developmental Welfare State: A Framework for Reform 7.1 Introduction 197 7.2 The Argument of This Report 197 7.3 The Essential Framework 201 7.4 Strategic Requirements for Effective Reform: How 205 7.5 Operational Requirements 211 7.6 Getting There: Priorities and Time Frame 214 7.7 Towards a More Comprehensive Approach 226 7.8 A Successful Society 228 References 232 National Economic and Social Council Publications 236 contents v List of Tables Table 2.1 Total Taxes (including Social Contributions) as a per Cent of GDP 14 Table 2.2 The Proportion of The Population Living in Working-Aged Households (Head aged under 60) Whose Equivalent Income is Below 50 per cent of Median Equivalent Income 21 Table 2.3 Educational Profile of Employment in the Irish Economy 25 Table 2.4 Employment/Population Ratios, Total Population and Defined Sub Groups, Selected Countries, 2002 29 Table 3.1 Public Current Expenditure on Social Protection In Ireland, 2002 41 Table 3.2 Population Dependent on Social Assistance and Social Insurance, 1993 and 2002 47 Table 3.3 Child-contingent State Income Support: Number of Child Beneficiaries and Expenditure Totals, 1993 and 2002 52 Table 3.4 Approved Consultant and NCHD Numbers, 1990–2003 64 Table 3.5 Projected Costs of Health Care and Pensions 67 Table 3.6 Students (Full-time Equivalents) and non-capital Public Expenditure per Student, 1985 and 2002 69 Table 3.7 Costs of ALMPs and Numbers of Participants, 1998–2002 73 Table 3.8 Public Capital Expenditure on Social Protection in Ireland, 2002 75 Table 3.9 The Taxation of Earnings in Ireland 79 Table 3.10 The Distributive Impact of Budgets 80 Table 3.11 Estimated Cost of Tax Allowances and Tax Reliefs for Social Purposes, 1993/94 – 1999/2000 (dm) 82 Table 4.1 Service Effort and Transfer Effort in European Welfare States, 1993 and 2001 97 Table 4.2 Service Emphasis and Reliance on Means-Testing in European Welfare States, 1993 and 2001 99 Table 4.3 Implicit Tax Rates on Consumption and Labour in European Welfare States, 1995–2002 101 Table 4.4 Implicit Tax Rates on Capital and Business Income and on Corporations in European Welfare States, 1995-2002 103 Table 4.5 Social Spending per capita and GNP per capita, d, constant 1995 prices 105 Table 4.6 Social Expenditure per Capita and GDP Per Capita, in PPS, EU 15 Member States, 2001 108 Table 4.7 Expenditure on Social Benefits by Function, 2001, PPS per Head of Relevant Population Sub-group 109 Table 4.8 Taxes and Social Spending in Ireland and Selected Comparator Countries (1997) 111 Table 4.9 Proportions of National Populations Aged 0–19 and 60 plus in 2002, and Changes in Those Proportions 1980–2002 115 vi Table 4.10 Expenditure on Health in Ireland and EU Member States, 2002 119 Table 4.11 Annual Public Expenditure on Educational Institutions in Ireland and EU Member States (2001) 121 Table 4.12 Indicators of Income Poverty for 2001 124 Table 4.13 Trends in Real Household Income at Different Points of the Income Ladder 126 Table 4.14 At-Risk-of-Poverty Rate, People Aged 65 years and over, 1998 129 Table 5.1 Economic Performance: Ireland and Comparator Countries Selected in 1992 145 Table 6.1 Overview of the Shift in Paradigm Governing Service Delivery 169 Table 6.2 Benefit Dependency Rates and Employment Rates among the Working-Age Population, and Unemployment Rates 1999 174 Table 6.3 Benefit Recipiency Rates in the Population of Working Age, by Types of Benefit Received, 1980, 1990 and 1999 176 Table 6.4 Overview of the Shift in Paradigm Governing Income Support Systems for People of Working Age 185 Table 6.5 Overview of the Shift in Paradigm Governing Activist Measures 195 Table 7.1 Monitoring Progress Towards the Development Welfare State 227 List of Figures Figure 2.1 Total Tax As Percentage Of GDP, 1965- 1997 13 Figure 2.2 The ‘Golden
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