Social Welfare (Miscellaneous Provisions) Bill 2024: Second Stage

Minister for Social Protection (Deputy Heather Humphreys)

I move: "That the Bill be now read a Second Time."

I was delighted in recent weeks to bring the long-awaited auto-enrolment legislation through the Dáil. It is an historic piece of work that will benefit 800,000 workers who currently have no occupational pension. Today, I am bringing forward legislation for another landmark reform of our social welfare system in the form of pay-related benefit. At the moment, if people who have worked hard for 20 years suddenly lose their job, they will receive the same rate of unemployment payment as people who have never worked a day in their life. That is wrong. We need to reward the people who have worked hard, paid their dues and contributed to society. That is what pay-related benefit is about. It is about supporting workers who lose their employment by ensuring they do not suffer that cliff-edge drop in income. The reality is that people enter into financial commitments that are commensurate with their income. I saw that at first hand when I was in the credit union. When people who had good jobs and who worked hard suddenly lost their jobs, they faced a cliff-edge drop in income and were not able to meet their mortgage repayments. It puts families under great stress. Pay-related benefit is about giving those people a safety net.

This legislation has been drafted following an extensive consultation process, the responses to which were strongly supportive of the principle of linking benefit payments to previous earnings. Pay-related benefit is the norm across EU member states. Under this scheme, the weekly rate of payment for people who have at least five years of paid PRSI contributions will be set at 60% of previous gross earnings, subject to a maximum of €450 for the first three months. After that, the rate will reduce to 55% of earnings, subject to a maximum of €375 for the following three months. A further three months will be paid at the rate of 50%, up to a maximum payment of €300.

For persons who have between two and five years' paid contributions, the rate will be set at 50% of previous gross earnings, subject to a maximum of €300 per week, for up to six months. This means that workers on average incomes will receive €450 for the first three months of unemployment, which represents half of their prior earnings. These figures compare with the current jobseeker's benefit personal rate of €232. The Bill sets out the legislative framework for the new scheme. It also contains regulation-making powers that will allow the full details of aspects of the scheme to be developed in regulations. It is intended that jobseeker's pay-related benefit will be for employees who become fully unemployed from the date the scheme is introduced. Those working on an atypical basis, for example part-time or casual workers, will continue to be eligible for the existing jobseeker's benefit scheme or appropriate schemes such as the working family payment. Self-employed people will also continue to be catered for under the current jobseeker’s benefit self-employed scheme.

My intention with this legislation is to get the train on the tracks by getting a pay-related benefit system up and running. That will be a seismic shift and reform of our social welfare system. Over time, I believe future governments will be able to build on this. Pay-related benefit will evolve - I have no doubt about that. For example, I absolutely believe we should have pay-related maternity benefit and I think that is the logical next step. As Minister, my priority was to get the principle of a pay-related benefit agreed by the Government and to get this legislation before the Dail. If I had tried to introduce a Rolls-Royce, all-singing, all-dancing pay-related benefit system that covers every base, that legislation would not be seen for years and it certainly would not be before the House today or within the lifetime of this Government. This legislation is about establishing the principle of pay-related benefit in Ireland. Full-time workers who lose their jobs will be the first to benefit but over time, we can build on and expand this and we are opening the door today for that progress in the future.

The PRSI system plays a fundamental and supportive role in our society. The Bill provides for the implementation of a programme of gradual and incremental increases in PRSI from 2024 to 2028, inclusive. These increases, agreed by the Government in the context of the analysis of the actuarial review of the Social Insurance Fund and the Commission on Pensions, will support the retention of the State pension age at 66 years, help address the long-term sustainability challenges facing the Social Insurance Fund and provide for the jobseeker's pay-related benefit. All classes of PRSI - employee, employer and self-employed - will increase by 0.1 % from October 2024; by a further 0.1 % in October 2025; by 0.15 % in October 2026 and again in October 2027; and by 0.2% in October 2028. To put this in context, a 0.1% increase works out at around 90 cent per week for a worker on average earnings and around the same for the employer.

Department officials had constructive engagement with the Joint Committee on Social Protection, Community and Rural Development and the Islands in April 2023 and January 2024 as part of the pre-legislative scrutiny process. I thank the committee for its deliberations and valuable feedback, much of which has been incorporated into the design of the pay-related scheme.

I will now go through the Bill section by section. Section 1 provides for the Short Title and construction of the Bill, as well as the commencement provisions. Section 2 defines “Principal Act” as meaning the Social Welfare Consolidation Act 2005. Section 3 amends sections 13, 21, 29, 30B and 30F of the principal Act by the insertion of a new table to give effect to the cumulative increase of 0.7% in PRSI rates from 2024 to 2028, effective on 1 October in the respective years. The amendments substitute the old PRSI employer, employee and self-employed rates for the newly applicable rates in the principal Act in each successive year. PRSI classes A, K, P and S are affected by these provisions. The changes in the rates of other PRSI classes will be made by regulations.

Section 4 amends section 21(1) of the principal Act by substituting the new minimum annual self-employment payment of €650 for the old rate of €500, effective from 1 October 2024. Section 5 amends section 26 of the principal Act by substituting the new annual voluntary contribution payment for former self-employed persons of €650 for the old rate of €500, effective from 1 October 2024. Section 6 amends section 29 of the principal Act, which relates to the payment of class P contributions - which are paid by "optional contributors", meaning persons engaged in share fishing - to refer to a new section 38BA of the principal Act, which is provided for in section 8 of the Bill.

Section 7 amends section 30F of the principal Act, which relates to the payment of class K contributions, excluding those paid by public officeholders, to refer to a new section 38BA of the principal Act which is provided for in section 8 of the Bill. Section 8 inserts a new section 38BA into the principal Act to give effect to a blended proportionate rate of PRSI, which is based on a formula, charged on applicable income liable under Revenue’s self-assessment system, where the applicable PRSI rate changes during the contribution year. This provision is necessary because the PRSI rate increases are effective from October, rather than the usual time of January. Under sections 4, 5, 6 and 7 of this Bill, this new section 38BA interacts with sections 21(1), 26(1), 29(1) and 30F of the principal Act, as those provisions relate to the classes of PRSI where the application of such a blended rate would be required.

I turn to the new jobseeker's pay-related benefit scheme. Sections 9 to 11, inclusive, provide for amendments to the existing jobseeker's benefit and jobseeker's benefit self-employed schemes that are required subsequent to the introduction of the new pay-related scheme. Regulations will provide for those who will no longer be eligible for jobseeker's benefit as they become eligible to apply for the jobseeker's pay-related benefit scheme. Section 12 inserts a new Chapter 12AA in Part 2 of the principal Act to provide for the new scheme. This will result in new sections, sections 68KA to 68KJ, inclusive, being inserted into the Act. The new section 68KA contains a number of definitions for the purposes of the new Chapter 12AA. Section 68KB sets out the key conditions for entitlement to jobseeker's pay-related benefit, which is a weekly payment. Similar to the existing entitlement rules for jobseeker's benefit, a person must be available for and capable of work and genuinely seeking employment. The entitlement conditions include that the person meets the age requirements, the required PRSI conditionality, is unemployed or has experienced a loss of employment for the purposes of the scheme. Section 68KC provides regulation-making powers for the purposes of the previous section. This includes matters such as the circumstances in which persons are considered to be unemployed or have lost their employment, or otherwise, for the purposes of jobseeker's pay-related benefit. The section includes a number of policies and principles that I will have regard to when making any such regulations, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform. These include the person’s nature, duration and pattern of employment, the nature of the employer, the typical employment patterns in the sector, and the extent to which the person has lost earnings or levels of employment.

Section 68KD sets out the PRSI contributions required for the purpose of qualifying for the benefit. These are: at least 104 employment contributions since the person’s entry into insurance; at least four employment contribution in the ten weeks immediately prior to making the application; and at least 26 employment contributions in the 52 weeks immediately prior to the beginning of the claim for unemployment.

These requirements can be modified by regulation to deal with matters such as persons moving from other social welfare payments including maternity benefit or illness benefit and who could not meet the stated requirements for jobseeker's pay-related benefit due to this. Regulations made under this provision will be required to be laid before each House of the Oireachtas and will require a resolution. Section 68KE sets out how the amount of pay-related benefit is to be calculated and the maximum and minimum amounts that will apply. The rate will be calculated using the person’s reckonable earnings in the 52-week period ending eight weeks before the first date of unemployment and divided by the total number of qualifying contributions in that period. This differs from existing arrangements under jobseeker's benefit where earnings from some two years previously are used.

Regulation-making powers are provided, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform, to provide flexibility to adjust the rates and the manner in which the rates are calculated. Any such adjustment cannot result in the weekly amounts exceeding or falling below those outlined above. This will be used to provide for atypical employment should the Government decide to extend the scheme, or to protect persons moving to or from other social welfare payments.

As is the case with other jobseeker's schemes, reduced rates of payment shall apply if a person does not engage with activation requirements. In such circumstances, a claimant will receive 80% of his or her entitlement. Section 68KF sets out the duration for which benefit shall be paid. The main provision in this section provides that it will be paid for up to 39 weeks in the case of a person with 260 or more PRSI contributions, or 26 weeks for a person with fewer than 260 PRSI contributions. This is in line with existing timelines under jobseeker’s benefit. Similar to existing jobseeker provisions, time spent on other jobseeker payments shall count as if it were time spent on jobseeker's pay-related benefit.

Regulations will provide for breaks in claims. This will facilitate a person to take up short durations of employment and resume his or her entitlement. Where a person who has had a previous claim for jobseeker’s pay-related benefit, or another jobseeker’s payment, makes an application for the jobseeker’s pay-related benefit, the overall entitlement to the benefit will be limited to within a two-year period. This condition does not apply if a minimum period, to be prescribed, has elapsed. Payment of other jobseeker payments during the specified period will be taken into account. The detail will be set out in regulations, with the consent of the Minister for Public Expenditure, National Development Plan Delivery and Reform. In certain circumstances, shorter periods of duration may be prescribed.

Sections 68KG to 68KJ, inclusive, contain the requirements to engage with activation and participate in prescribed schemes, programmes or courses, as well as the disqualification provisions for the new jobseeker’s pay-related benefit. These measures replicate those in place for other jobseeker’s supports.

Section 13 of the Bill provides for a Schedule to the Bill, which contains a number of consequential amendments elsewhere in the principal Act that arise as a result of the introduction of the jobseeker’s pay-related benefit. The Bill contains the following miscellaneous amendments. Section 14 amends section 126 of the Taxes Consolidation Act 1997 to include jobseeker’s pay-related benefit as a taxable benefit. This has been agreed by the Minister for Finance. Section 15 allows the Criminal Assets Bureau, CAB, to seize social welfare overpayments following the conclusion of an investigation by CAB. Section 16 relates to the interface between the post-2012 single public service pension scheme with some of the more recent family benefits of paternity benefit and parent's benefit.

I am pleased to say that following consideration and agreement by the Government of a range of measures to reduce costs for small and medium-sized businesses, the employer PRSI threshold will increase from €441 to €496 per week with effect from 1 October 2024. This will ensure that employers with employees working full time on the national minimum wage will not be required to pay the higher rate of employer PRSI of 11.05% and will instead pay the lower rate of 8.8%. I will bring forward this legislative change as an amendment on Committee Stage.

I firmly believe the introduction of a pay-related benefit system in Ireland will be a lasting legacy for this Thirty-third Dáil to leave behind. We all know friends and family who lost their job out of the blue after many years of hard work. This is about recognising the contribution those people have made and giving them an extra helping hand when they need it most. As I said earlier, I recognise that there is more to do in this area but what we are doing today is opening the door for more progress in this area in the future. lf we can get this legislation passed, I have no doubt but that pay-related benefit in Ireland will evolve over time. I commend the Bill to the House and I look forward to hearing Deputies' contributions.

Deputy Donnchadh Ó Laoghaire

There are two primary elements to the legislation. One relates to the pay-related job seeker's benefit, which we welcome, and the other relates to the PRSI increase, which we are not in favour of, and consequently we will be voting in favour of the legislation. I will deal with them separately. They are connected but I will deal with them one after the other.

We have long called for social insurance-based payments such as jobseeker's benefit to be pay related. It is welcome that the Government has moved on this. The scheme announced by the Minister was not terribly dissimilar to a scheme that was submitted by my predecessor, Deputy Kerrane, with regard to the various consultation processes. One of the flaws of the initial model the Minister brought forward was the difference between the six months and the nine months, and this has been rectified, which I welcome. That is a welcome step in reflecting on that. The Minister's proposal is in line with the intended reforms we would envision for the social welfare system to ensure it is fair for all and that people are protected from poverty. We can all think of examples of people who lost jobs very suddenly during the recession and still had the mortgage to pay, potentially childcare to pay and still had rent to pay. They had big outgoings. Within the family income and the family budget there are very few who have a lot to spare and very few who can afford that kind of cliff edge or that kind of loss in income. There is no question about that.

We want to see the transition of social insurance payments from a flat rate to a percentage of previous earnings to ensure that workers who paid into the system are treated fairly and protected from a sudden push towards poverty. Tá sé i bhfad ó shin in Éirinn. Tá Éire an-difriúil ó thíortha eile sa mhéid nach bhfuil mórán gnéithe den chóras leasa shóisialaigh bunaithe ar phá. Tá cuid mhaith dóibh bunaithe ar na sean-social assistance payments seachas ar an gcóras árachais sóisialta, faoi mar atá i gceist leis an íocaíocht seo. Déanann sé ciall go mbeadh a leithéid ann. Nuair a chailleann daoine a bpoist, tá a gcuid caiteachais díreach mar an gcéanna ach tá titim shuntasach ar a n-ioncam.

In the context of our social insurance payment, our replacement rates do not compare well against many other countries. The rates contrast poorly with other EU countries and particularly where social insurance-based welfare benefits are pay related and designed to secure a worker's normal living standards during periods of employment as well as during sickness, maternity and family leave. In countries such as Belgium, the Netherlands, Austria Denmark and others there is a cap on the maximum weekly payment and the payments reduce the longer the person is out of work. The replacement rate is the amount of in-work income that is replaced by social insurance and other social welfare benefits when a person becomes unemployed, which is the percentage of previous earnings that is covered by social insurance mechanisms such as jobseeker's benefit or illness benefit.

Social insurance payments are critically important in supporting people who find themselves out of work and in need of financial assistance until they can find a new job, recover from an illness, or while caring for a loved one. These protections are in place as a safety net for times of crisis and should provide sufficient support to those who need them. Put simply, rent, mortgage payments, electricity, heating, food bills and much more, will continue whether a person is in work or not. Our social protection system should provide supports to ensure that workers or families do not fall off a financial cliff edge because they lose their job or have to leave their employment through no fault of their own. The current flat rate payment jobseeker's benefit means that the scheme is not responsive enough and does not support workers as much as it should. We know it is possible to have social insurance schemes that are responsive in times of need. We have seen how many people require urgent financial assistance, particularly in the context of the Covid-19 pandemic. The introduction of the pandemic unemployment payment, PUP, emphasised the need for income protection benefits that are designed to support those who face a sharp decline in income as a result of losing their job. It was acknowledged by the Government that it was a good scheme but it was also acknowledged by the Government that flat-rate benefits do not provide adequate income protection for workers when out of work, or at least at the level of income they were at.

Providing people with an income that will allow them to get back on their feet without imposing additional worries or financial stress should be the norm within our social protection system. Commencing with jobseeker's benefit, we proposed linking the rates of PRSI-related social welfare supports to a percentage of previous earnings as is the norm in many other countries. This would ensure that those who are leaving work due to illness, to care for a loved one or through unexpected unemployment do not experience a sudden collapse in income. We would also like to see an approach based on hours rather than days when it comes to calculating jobseeker's benefits for part-time workers. It is also worth looking at schemes of this kind for other areas including for carers and other categories like that.

There is one other point to identify. Some contributions in this House highlighted that the minimum weekly payment is €120.

Some people have made the point that this would be nowhere near adequate and that people on low incomes would therefore be severely disadvantaged. That is largely based on a misunderstanding of what is possible because people on lower incomes will still be entitled to apply for the jobseeker's allowance at the full rate. I am referring to the social assistance payment. However, I am keen to have the Minister reassure me there is no category of people stuck in the middle. I do not expect so but this should be examined and responded to. Fear has been expressed in the House that people might be disadvantaged by the system because they are on a lower income and because the percentage they would be getting would be below what they might expect to earn. My sense is that they would be entitled to the jobseeker's allowance and therefore entitled to the full €230 per week or whatever it is. That would be significantly in excess of €125, but I would like the Minister to clarify the matter. We might need to discuss this further on Committee Stage.

The primary reason we do not support the proposal is our concern over the PRSI increases. In principle, a pay-related jobseeker's benefit system makes absolute sense, but we do not agree, in the context of the current cost-of-living crisis, with increases to employees' PRSI. We have long argued for ensuring the sustainability of the Social Insurance Fund through fair changes to our PRSI system. These calls have been ignored and criticised by Fine Gael and Fianna Fáil over many years. In 2020, the then leader of Fine Gael, Deputy Varadkar, said increases in PRSI would cost jobs; however, Fine Gael performed a U-turn and this legislation has proposed a series of PRSI hikes for the next five years. The Government has decided to increase payroll tax on workers, beginning this year, with no regard for the cost-of-living pressures they are facing. Under these plans, a worker earning €40,000 per year would lose €280 per year in disposable income. Sinn Féin would not increase taxes on low- and middle-income earners' wages, recognising that it would disproportionately affect those who rely on every cent of their pay to cover basic living costs.

We also know that small businesses are facing substantial increased costs, from energy and input costs to labour costs, and that is why Sinn Féin would not increase employers' PRSI for these businesses this year or next to support them as they contend with rising overheads and labour costs. There is a fairer way to ensure the sustainability of the Social Insurance Fund, that is, by not increasing PRSI on workers' wages and by introducing a more progressive system of social contributions from employers. As is widely acknowledged, our rate of employer social contributions is among the lowest in the EU, with the average European rate standing at 20%. While the rate of employer PRSI should not increase this year or next, in recognition of the increased costs faced by so many SMEs, the contribution rate should increase from 2026. However, our PRSI system can and should become more progressive, recognising that some businesses can afford to contribute more towards the Social Insurance Fund and social safety net. That is why Sinn Féin would introduce a higher rate of employer PRSI on the portion of salaries in excess of €100,000.

There are areas within our PRSI system that should be reformed but that the Government has chosen to ignore. While there is an employer PRSI charge for virtually all forms of employment income, share-based remuneration is largely exempt. This is out of line with the practice in many other European and OECD countries, which generally charge employer social insurance contributions on share awards. Approximately €235 million is lost to the Social Insurance Fund as a result of this exemption. That is why we would restrict the employer PRSI exemption for share-based remuneration to our SMEs, raising at least €145 million each year for the fund. Sinn Féin would not increase employee PRSI and would support workers rather than reduce their disposable income. It would not increase employer PRSI in 2024 or 2025, recognising the increased costs small businesses face this year and next. We believe there is scope to increase employer PRSI from 2026 and to introduce a higher rate of employer PRSI for the portion of salaries above €100,000, recognising that some businesses have greater resources than others.

Sinn Féin's approach is fair, supports workers' incomes, and recognises the immediate cost increases that Irish businesses face, ensuring the sustainability of our Social Insurance Fund in the long run. We are very keen to do the latter, and the approach I have outlined would achieve it. Our approach would put our fund on a more sustainable footing than the Government's approach would put it.

The principle behind the pay-related jobseeker's benefit is one we agree with. If the Minister were to remove the PRSI increases for employers in this legislation, we would be in a position to support it, but in its current form we cannot, particularly during the cost-of-living crisis and with increased taxes on workers.

Deputy Ruairí Ó Murchú

As Deputy Ó Laoghaire said, we have for a long time been in support of a pay-related jobseeker's benefit and the idea of payments being made on the basis of money earned. In fairness, we will support this general idea. It was highlighted in respect of Tara Mines. Deputy Ó Laoghaire spoke about how many people fell into really difficult circumstances owing to the financial crash. Their personal finances crashed in a major way, putting them under severe pressure regarding other costs, including general costs, childcare costs and mortgages. We know we need to ensure we can provide people with an absolutely necessary helping hand, as it has been called. As Deputy Ó Laoghaire said, unfortunately the twinning of the proposed benefit with the PRSI increases is not beneficial at this point, particularly when dealing with a cost-of-living crisis. The Minister, like all of us here, is out knocking on doors at the minute, so I have no doubt that she is hearing about the various issues people are facing, be it the increases in fuel prices or regular running costs. That is long before we talk about our housing and accommodation crisis, the cost of housing and the cost of rent. We all deal with people who are only too delighted with rents and payments that are absolutely through the roof. On daft.ie or any such site, there are not very many places to rent in the likes of Dundalk or any other town in Ireland. That is the reality we are dealing with.

We absolutely support the linking of jobseeker payments to the percentage of previous earnings. We must examine the wider issue of job activation. When talking about social insurance and trying to capture people, we must consider best practice. I understand the current state of the economy, that we have what at times is called full employment and that we have employers that give out because they cannot get enough staff, particularly in certain sectors. Even this week, I learned from dealing with the Minister for Transport that we do not have a sufficient number of bus drivers or mechanics, which creates its own issues in the public transport system. We need to examine this.

We know about the various issues that arise with local employment services. Many talk about privatisation and say certain entities involved in job activation have always aimed at the low-hanging fruit. There is work to be done in this regard, which is sometimes done by our local employment services, to deal with harder-to-reach communities and individuals. We have a wider piece of work to do to ensure people caught in the poverty trap can be facilitated in returning to employment.

Sometimes the way we deal with these things, involving a lowest-cost tender, does not always work for the State. Everybody understands one example of this that is featuring at the minute. We would all have been happier had the national children's hospital been tendered on the basis of something more than the lowest cost.

That is a matter for another day, and perhaps, unfortunately, for many other days as we wait for it to be built.

We need to look at the entire system. We are talking about trying to protect people and ensuring we can provide. We want a minimum essential standard of living and beyond that, we want to be able to facilitate people into education and the workforce, and provide them with supports. Many of us know that at times people can face a cliff edge. To do this properly, it is not just about social protection payments but also relates to medical cards. We all deal with issues and everyone has a story about their mother or grandmother who was on a medical card when they were going through cancer treatment and saw their support cut off. In those circumstances, people come to their local elected representatives, including some of us here. At times, we would go to the Minister and get the issue resolved. However, it is a bad system and we must introduce proper universal healthcare and ensure we are providing a service to everybody. We sometimes hear gripes from people who think they pay for everything but get nothing. That is a failure of the system across the board. We need to ensure there are protections for people who lose work and that those protections give them what is necessary. We must also facilitate people into lifelong education because education now looks different from what it looked like when I was in college and school. Between courses through the post leaving certificate, PLC, programme and apprenticeships in different fields, there are multiple means for one to get to where one needs to go. However, a considerable number of people are still locked out due to poverty and the circumstances into which they are born. We need to facilitate that change, and there has been a mass failure in that regard.

We must provide those supports and facilitate people into the workforce and education, and get them out of poverty. A major contributing factor in that regard is the housing crisis. Some people would not be able to afford housing in any way, shape or form without access to the housing assistance payment, HAP. Some people are lucky enough to be eligible for HAP and if their circumstances change, they will be okay and can stay on the housing list, which is beneficial. People at certain times and in certain places are faced with very bad choices and we need to ensure they do not face that cliff edge. We have always said that we do not need the auction politics that can happen in respect of social protection payments across the board. We need to ensure payments are index linked.

I previously spoke to the Minister about some of the teething problems for the hubs. We had a number of such cases which, in fairness, the Minister dealt with. In some cases, information had been lost, which had slowed applications. My office has an issue about the length of time that some of the appeals are taking. I will send the relevant information to the Minister later but I know of a number of cases in which appeals have been outstanding since December and January. That is far too long to wait.

As I said earlier, we all welcome the direction indicated by the legislation because it helps people and offers pay-related jobseeker's benefit. However, we cannot support the Bill on the basis of the PRSI increases. That issue needs to be revisited.

Deputy Duncan Smith

The Labour Party welcomes the introduction of the pay-related benefit for jobseekers. I heard what the Minister said in her opening statement when she stated that the Bill is about establishing the principle in the first instance and a Rolls Royce Bill would, as she said, probably mean we would not be having this debate now or introducing the principle in the first place. We welcome that, and it gives us a solid foundation block on which to build, progress and modernise our social welfare and social protection system.

I pay tribute to colleagues in the trade union movement who have led the charge on getting this onto the agenda. Ms Laura Bambrick of the Irish Congress of Trade Unions, in particular, has done great work on the issue.

We in the Labour Party believe in a welfare system that empowers workers to move between jobs and to bounce back from unplanned, short-term unemployment secure in the knowledge that the welfare system will adequately support them and their families in the transition. I do not think it is unfair to say that our current system needs long overdue reform and this legislation, with its introduction of pay-related benefits for jobseekers, is a part of positive reform in this area. The current system offers a below poverty line level of support. It is designed to get people back to work as quickly as possible by giving them no more than the bare minimum. It is a cynical and adversarial premise on which to base a social welfare system and we believe it to be outdated. We need to move on from it.

A pay-related benefit is a more compassionate and sensible approach. It prevents workers from facing a cliff edge when made unemployed. It should serve, if working correctly, to cushion the blow for households experiencing the loss of income brought on by unemployment. It helps to maintain living standards and prevents people from accumulating debt and arrears on vital outgoings. It also allows us to sustain demand in the economy by ensuring that those facing temporary unemployment do not see a significant fall in their degree of spending power relative to that they previously enjoyed, which is vital to maintain macroeconomic stability.

Equally important is that the benefit allows workers to take the time to find a job that best matches their skill set. That is perhaps an underappreciated element of unemployment and people returning to the workforce. It does not make sense to force people who may be highly qualified in one area into another area because it is the first available job. People will have spent years in training, education and work to build up a skill set to apply to a particular area, and it is only fair to them and their experience that they are given support by the State to have an adequate amount of time to find work to continue their journey in that area. We in Ireland are lucky to have a highly skilled and highly educated population that is adaptable to a diverse employment market. Supporting people and allowing them the time to get a job that matches their skills ensures that a qualified and capable workforce can continue to flourish and grow.

In most of our neighbouring EU countries, some form of pay-related benefit already exists, though it should be noted there are significant variations in welfare systems and taxation models. At present, jobseekers in Ireland qualify for the flat rate jobseeker's benefit following two years of PRSI contributions. I am glad we are now moving beyond that approach to something more in line with many of our EU counterparts and to something more progressive that protect workers.

While the Labour Party welcomes and supports the introduction of pay-related benefit, we have some concerns about the proposal under the terms outlined. The two-tiered system proposed in the Bill is at this point unnecessarily restrictive compared with the systems in place in other high-income EU countries. It may have the unintended consequence of creating a discriminatory system that penalises women and young people, in particular. Tackling that issue does not necessitate a Rolls Royce Bill, to use the Minister's language, but could be done in the context of this Bill and we hope to see changes on Committee Stage. For workers in sectors with a higher than average turnover of staff, such as the retail or hospitality sectors, it may be more difficult to meet the five years of contributions qualification to receive the higher rate of benefit. The same applies for those working on temporary contracts.

Women and those aged under 25 are disproportionately represented in the retail and hospitality workforce, while those under the age of 30 make up the majority of workers employed on temporary contracts. This is something that also needs to be addressed. The Bill has the potential to be one of the most progressive pieces of workers' rights legislation we have seen for some time in this country in the area of social protection and we do not want to see it undermined by unintentionally discriminating against some of our most vulnerable workers.

The Government raises the flag that we have so-called full employment in this country. We have many people in good jobs but we also have an awful lot of people in underemployment in the so-called gig economy and in extremely insecure employment. While I welcome that there will be an income floor under which no one can fall, there is an anomaly whereby part-time workers who do not meet the PRSI contribution criteria and earn between €250 and €300 per week could see their replacement rate fall as a result of these changes. In the present system someone earning €300 per week has a maximum payment rate of €181.70 but under the proposed system they will receive the lower tier rate of €150. This needs to be examined and fixed as the Bill progresses through the House.

I would like clarity on whether additional allowances for dependents will be maintained under the new system. Many people working part time who have to take extended breaks from employment are carers with dependants, be they adults or children. We cannot have a situation whereby these people, some of our most financially vulnerable workers, lose out in the new system, particularly when it is a new system that is in essence positive, which the Minister, I and everyone else hope will work for the betterment of all workers and not leave anyone behind.

The proposal to lower the replacement rate at the higher tier over nine months should be reconsidered. The benefit should be paid at the full rate for its entire duration. We are running the risk of losing the spirit of what a pay-related jobseeker's benefit should be about. It should be about supporting people during periods of unemployment and as they transition into new employment. It should not be used as a stick to beat them into what could be inappropriate jobs for their skill sets. Perhaps we are seeing a bit of a hangover from the attitudes that govern the system we have in place.

Another rationale is that we do not want to create a disincentive to returning to work. In my experience, the belief that people do not want to work is vastly overplayed in the system. People want to work. They want to be in work and they want to be rewarded for their work. When they are not in work, they want the very basics of dignified protections from the State before they get back to work again. There is little evidence to show this would be the case when we look at other European countries that have a pay-related benefit in place. Many of our EU neighbours pay a much higher rate and they do so for longer. This should be about supporting recipients of the benefit in finding employment that best matches their skills, benefiting the workers and the economy in the long run.

I will touch briefly on pay-related benefits on the whole with regard to our social support system. The Labour Party would like to see the extension of pay-related benefits to other short-term income supports, such as maternity and paternity benefits, parents' benefit, carer's allowance and illness benefit. Ireland is one of only two countries in the EU to pay maternity benefit at a flat rate, leaving it to employers to make up the difference. There is a risk that this negatively affects hiring decisions. In fact, there is little doubt in any of our minds that it does. Paying flat-rate paternity benefit to new fathers has meant that many face a cliff edge in income and, as a result, we see a low uptake of paternity leave among those in the private sector. Similarly, women are twice as likely as men to claim parents' benefit. Relating paternity and parents' benefit to pay would improve uptake and promote a more equal distribution of parental care in a household that has two parents.

Individuals who need to take a break from their careers or reduce their hours to provide care for someone close to them should not have to be concerned about the financial implications of doing so. At present carer's allowance is means-tested, adding unnecessary bureaucracy to an already complex welfare system. I acknowledge the Minister is making large strides with the Bill. We also acknowledge the work she is doing on pension provision in the country and having a long-term view on it. We believe the next big nettle that needs to be grasped, whether by her or someone else in the next government, is to remove the means test for carer's allowance. Carers are workers. They are workers in our economy, community and society who work in our homes. They provide unbelievable care through their work for their loved ones and those they care for. In particular, the work of Family Carers Ireland on the means test needs to be heeded.

We need to see the same step change we are seeing the beginnings of in other areas, as I have mentioned, with carer's allowance. If we are to learn anything from the referendums several months ago, it is that carers and disabled people feel they are not being listened to and they are not being understood. Part of this relates to how we approach pay and allowances for carers in this country. People eat into their savings to provide crucial care for loved ones. This should not have to be the case. Moreover, it is heavily gendered. Women make up the majority of care providers, meaning they are disproportionately affected by falls in income caused by a means test with regard to this payment.

A few years ago, the Labour Party welcomed the introduction of statutory sick pay requirements, also welcomed the recently announced improvement in entitlements. However, we vehemently oppose the idea being floated by Fine Gael to delay these much-needed improvements for many of those facing a prolonged period of illness. Illness benefit does not provide an adequate level of income to support and prevent a cliff edge. A flat rate of payment and lower replacement rate when taking the average salary forces many people back to work early out of financial necessity and not because of what is best for their health or long-term recovery. This poses a harm for the individual through greater potential for relapse or disimproved health, and for their colleagues in terms of infectious illness, their health and the risk of workplace accidents.

The Labour Party welcomes the Bill. We are glad to see the Government is making a progressive move, at least in principle, in the right area. I have highlighted areas which we feel are deficient where changes could be made in the context of the Bill. We need to get over the attitude that people would rather stay on social welfare than go back to work. This is not the reality. It is overplayed by a culture in our social protection system that in many cases demonises and punches down on social welfare recipients, irrespective of what payment they are on. It is a manifestation of a culture that needs to change. Pay-related benefits, if implemented correctly, will help to change this culture but it must be done correctly and it must be built upon once the Bill passes.

Debate adjourned.

Dáil Éireann debate - Thursday, 30 May 2024