With the permission of the House I would like to share my time with Senator Foley.
Adjournment Matters. - Unemployment Assistance.
Is that agreed? Agreed.
I welcome the Minister for Social Welfare to the House and thank him for taking this matter which relates to the means testing of unemployment assistance where people obtain casual insurable employment. This has been an issue since 29 June when a regulation was brought in as a result of which many people found themselves with drastically reduced unemployment assistance. I accept that many of them had worked from April to June but they did not anticipate that this regulation would be introduced and they had not budgeted for the change. They found themselves with a very reduced income and were unable to live on it. The casual dockers at the Foynes Harbour were affected by this. While I accept that a small minority of them are earning high income, the majority are not and they had not budgeted for this. Because of their circumstances, the health board had to intervene and pay them supplementary welfare to ensure they could feed their families and survive on the reduced levels of income. In Foynes at present 22 people have lost all unemployment assistance and 23 have had a reduction. I ask the Minister to review the situation.
The changes have accentuated the poverty trap in that now, the only incentive for somebody on unemployment assistance to go to work for a week is an increase of £10. People who got employment occasionally now find they cannot accept this work because if they earn £10 per week more than the assistance level it is counted as means and set against their social welfare entitlement.
This will also affect people working two-or three-day weeks. It has been a feature of the meat and dairy industries to place people on a three-day or a two-day week. We have experience of this in Rathkeale, Charleville and in Deel Vale in Ardagh. These people will now have a substantial decrease in income when they are put on a two-day or three-day week. It will not be to their advantage to work. They will go on unemployment assistance, which will cost the State because they will be paid for the periods they would have worked. I am referring to people who work short term in places like meat factories during September, October and November — generally for ten to 12 weeks. What they earn in that period will now be means tested.
This also happened in Coillte when people were made redundant and taken back on a sole trader basis to do contract work. The Minister stated that contract work should be means tested. The outcome was that people went back to their old jobs on contract and all the money they earned was deducted from their social welfare; they suffered a net loss. Coillte, like many private industries, is contracting out of its obligations to short term and, sometimes longer term, workers by employing them on a sole trader basis.
Would the Minister comment on the fact that the present calculation of means tests in County Limerick is based on the period from April to July of this year? My understanding was that the calculation was based on the previous year. I raise this matter because the harbour area in Foynes was exceptionally busy for the months of April, May, June and July and this is being used as the calculating period. I would question the legality or the practice of this because the usual way was to calculate on the basis of the P.60 for the previous year.
I will give an example of one of my constituents. From April to July this family man earned £1,300 and his unemployment assistance was reduced by £28. That money was spent meeting school requirements. We was unaware that this money would be means tested. In this case the health board intervened and assisted him because they saw the need for it.
I understand that most of the people affected have appealed to the Department of Social Welfare but I would like the Minister to review the situation. If he cannot see his way to change the law, would he look at ways of improving the incentive to work beyond the present level. If he does not, these people will not do this seasonal work. People who are self-employed or the sons of the self-employed will work in these organisations while the people who need it will not. This will cost the State more because they will be drawing unemployment assistance when they could have been working.
I thank Senator Neville for sharing his time and I welcome the Minister to the House.
My concern is for the dockers attached to the Port of Fenit situated seven miles outside Tralee. Under the new method of calculating unemployment assistance for casual earners, these dockers will be unfairly treated. They would be lucky to have one ship per month coming into Fenit. Many of these cargoes consist of crane parts for Liebherr in Killarney, coals for McCowen's in Tralee and fuel oil for Kerry Petroleum. In all there would be approximately 32 dockers to share this work. The number of dockers required on vessels at Fenit varies. For instance, two dockers work on a fuel oil vessel and 12 dockers work on all crane vessels. Work is casual given the low level fo activity in Fenit.
Recently under the review body set up to look at commercial harbours operating in this country, it has been recommended that Fenit harbour be handed over to Kerry County Council because of its low volume of traffic. This report was based on tonnage rates between 1989 and 1990 and the situation at Fenit has not changed. Incidentally, Kerry County Council rejected this suggestion last Monday.
I would like to quote the new method used for the calculation of unemployment assistance for casual earners, under which pre-tax earnings from casual employment will now be included. The new method for calculating unemployment assistance is as follows: start with the pay one is currently receiving, divide it by the number of days to get a daily rate, multiply the daily rate by the number of days worked in the week, add £10 to this total, deduct this figure from total part-time earnings for that week, take that figure from the weekly payout of social welfare, divide that by the number of days in the week to get the daily rate and multiply the daily rate by the number of day's unemployment assistance one is eligible to receive to reach the amount one is entitled to.
For example, a married man with three children earning £90 over three days — this applies to Fenit — would qualify for £129 unemployment assistance. That sum divided by six days gives approximately £21.50 per day; £21.50 by three days is equal to £64.50; £64.50 plus £10 is equal to £74.50; £90 minus £74.50 leaves £15.50; £129 minus £15.50 equals £113.50; £113.50 divided by six days equals £18.92 per day and £18.92 by three days equals £56.76. The total unemployment assistance for that family will be £56.76, so this man's gain for three days work would be £90 plus £56.76 which equals £146.76, minus £129 that he would receive on unemployment assistance if he did not take up employment. That gives him a net gain of £17.76 for his three days.
Further reductions in social welfare entitlements for these people will create severe hardship. Fenit is a rural community with no manufacturing industry and people are dependent on casual work in Fenit docks to supplement their very low income from social welfare.
I thank Senators Neville and Foley for raising this matter.
The motion put down by Senator Neville relates to the need for the Minister for Social Welfare to ensure that people employed on a part-time basis for one, two or three days per week receive a reasonable level of unemployment assistance. Both he and Senator Foley raised the question of casual dockers. This matter has been brought to my attention in the past couple of weeks and I have answered questions in the Dáil regarding same.
The underlying purpose of the unemployment assistance scheme, which is a means-tested social assistance scheme, is to assist people who are out of work by ensuring that they have an income which is in line with their needs as determined by legislation. Being a social welfare scheme, it is designed to be applied in an equitable manner to the various categories of claimants.
The legislation establishing the scheme provided that persons could have their means assessed while still employed so as to avoid any delay in authorising claims if they suffered a loss of work. By excluding income from current employment, the assessment reflected the situation that would exist when they became unemployed. That was a necessary provision, at the time, in circumstances where entitlement to unemployment benefit was very restricted.
The unemployment assistance legislation was not updated in line with changing work practices over the years. In particular, the growth in part-time working meant that many people could work for a number of days and claim unemployment assistance for the remaining days of the week, regardless of the amount of their earnings for the days worked. In this way for certain categories of workers the scheme became simply a top-up for already substantial earnings from part-time working.
At the same time, a growing number of self-employed people began to claim unemployment assistance where their income from self-employment decreased. In their case, the legislation required that their income be assessed in full and deducted from the basic unemployment assistance in determining their entitlement. Furthermore, the scope of unemployment benefit has been greatly expanded since the assistance scheme was introduced, most recently with the extension of insurance cover to employees earning over £25 per week.
To reflect these changing circumstances, the Social Welfare Act, 1992 provided for the assessment as means for unemployment assistance purposes of earnings from insurable employment. The effect of this provision is that, with effect from 29 July last, persons claiming unemployment assistance and working on a part-time basis have their earnings from employment assessed as means.
The purpose of the change is to ensure equity of treatment as between employees and self-employed persons claiming unemployment assistance who, as I have said, have always had their self-employed earnings assessed as means. The consistent approach I am adopting in this matter is in line with my overall objective of reducing the anomalies and the complexity of the social welfare system.
In implementing the new arrangements, I have maintained a degree of financial incentive for unemployed people to take up occasional employment where the opportunity arises. This has been done through certain disregard of earnings in assessing a claimant's means. The amount disregarded each week is the equivalent of the person's appropriate daily rate of unemployment assistance for each day worked plus an additional amount of £10. For example, a married man with three children working a three day week will have £74.50 of his weekly earnings disregarded. The balance of earnings will then be assessed as means in determining the rate of unemployment assistance payable for days of unemployment.
I am satisfied that the arrangements for disregarding a certain level of earnings will ensure a reasonable level of unemployment assistance for those employed on a part-time basis having regard to their earnings and the number of days worked.
At the same time, I accept the need to ensure that the social welfare system does not discourage people from taking up work. Indeed, one of my main objectives as Minister for Social Welfare is to ensure that people are encouraged to take up employment where possible, thus reducing their dependence on the social welfare system. I believe the arrangements we have made for part-time workers in this regard are essentially equitable and achieve consistency and simplification.
The question regarding casual dockers at Foynes and at Fenit, which the Senators have brought to my attention, has been examined by me in recent weeks. I cannot tell Senator Foley what are the earnings of the Fenit dockers but some dockers employed in Foynes earn very substantial incomes and I gave details in the Dáil some days ago.
I will review the method of calculation etc. in order not to create any disincentive for people to take up some form of employment. If I make a special concession for dockers I will be asked to make a special concession for a myriad of other categories of workers also. Any review will have to be done in the national context. To give advantage to any group would be illegal and inequitable.
I accept that the Minister would need to include everybody, including firemen who are also affected here. Would the Minister comment on the calculation aspect which I raised?
That is one of the matters we are having examined.