This manager talks of new claimants\’ shock at hearing the dole is just £60.50. "They are totally incredulous," he says, as well they might be. "They ask, \’how can I live on that?\’" This punishing workhouse rate must be raised before there are bread riots.
Err, no. Richard Layard:
If you pay people to be inactive, there will be more inactivity.
And Polly again:
But unlike the 1990s, there is no longer an option to put older or less employable people on invalidity benefit: the Conservatives used it to cut numbers, but it was often kinder to give higher benefit to those likely to stay on it for ever.
Consider for example policies to encourage early retirement. If we start at the sustainable rate of unemployment and labour supply is then reduced by early retirement, unemployment will fall at first. But then, as labour shortages bite, inflation will rise and aggregate demand and employment will be cut back until employment is back in line with the now reduced supply of labour. Alternatively, if we encourage more older people to work and labour supply increases, inflation will at first tend to fall, permitting a rise in aggregate demand and in the number of jobs. This is the direction in which Europe has to move if we are to support an ageing population from a reduced flow of births.
Sorry Polls, nul points there I think.