asked the Minister for Social Welfare if his Department has made any assessment of patterns of social welfare abuse, particularly in relation to a practice whereby some workers appear to work for eight or nine months of the year, then take sick leave or unemployment assistance for the remainder of that year, in order to take advantage of the PRSI/tax system, thereby obtaining an increased level of annual income over that which they would have earned had they remained at work; and if he will make a statement on the matter.
Written Answers. - Social Welfare Abuses.
51.
An insured person who falls sick or becomes unemployed is entitled to disability benefit or unemployment benefit, including increases for dependants, and to pay-related benefit. In addition he may qualify for a rebate of income tax, the amount of the rebate depending on his earnings and on the time of year at which he becomes sick or unemployed.
The replacement ratio i.e. the ratio between the level of payment and the level of pre-sickness or pre-unemployment take home pay depends on a number of factors, including the level of earnings and the number of dependants. The levels of replacement ratios have been kept under review in the Department over the years and a number of adjustments have been made in the schemes to keep replacement ratios at a reasonable level. The problem of benefit levels in excess of pre-sickness or pre-unemployment earnings now occurs in only a relatively small number of cases, involving in the main claimants on low earnings who have a large number of dependants.
Improvements in systems of control within the social welfare system to prevent unwarranted recourse to the disability and unemployment benefit schemes are also being made. Furthermore the transfer of responsibility for short-term sickness payments to employers is intended to improve absenteeism control by giving employers greater and more direct responsibility in this area. It will also have the effect that sickness payments will be subject to income tax in the same way as earnings generally, thus reducing any incentive for persons to claim benefit in order to take advantage of the tax system in the last quarter of the year.