Dáil Éireann Debate, Thursday - 17 October 2013
41. Deputy Peter Mathews asked the Minister for Social Protection her plans to ensure that persons are financially better off in employment rather than on welfare; and if she will make a statement on the matter. [43140/13]
View answerThe replacement rate for given income levels is a tool used to measure the degree to which out-of-work benefits when unemployed replace take home income from work. While there is no pre-determined level of replacement rate, which would influence every individual’s decision to work, higher replacement rates may indicate lower incentives to take up employment. In this regard a replacement rate in excess of 70% may be considered to be excessive. The Department will shortly make available an online "Better Off in Work" ready reckoner which will give an indicative estimate of the difference between a customer's potential in-work and current out-of-work payments based on information input by the customer. I expect this to be of significant practical help to jobseekers. Replacement rate analysis, as supported by research by the ESRI, demonstrates that the great majority of people on the Live Register have a strong financial incentive to work and significant numbers leave the Register each year.
In this regard it may be noted that almost three-quarters of the people on the Live Register are only claiming a personal rate for themselves. They are either single or may have a spouse or partner who is working. In addition, 53% of the people on the Live Register receive less than the maximum personal weekly rate.
High replacement rates are generally associated with a relatively high number of dependent children and/or receipt of rent or mortgage supplement. However, it is important to note that only some 9% of persons on the Live Register are in receipt of rent supplement, with a further 1.5% in receipt of mortgage interest supplement. The vast majority of jobseekers do not receive these additional supports. Significant moves have already been taken to address the impact of housing entitlements upon replacement rates. Arising out of commitments in the Programme for Government to review the operation of the rent supplement scheme, proposals to integrate the systems for providing rent supplement and social housing support have been advanced. It is intended to transfer responsibility for the provision of rental assistance to persons with a long term housing need from the Department of Social Protection (currently provided through rent supplement) to housing authorities using a new housing assistance payment.
The effect of this transfer and the introduction of a new form of housing assistance payment will be to address one of the significant disincentives to accessing full-time employment that exists under the rent supplement scheme. This will have a positive impact on replacement rates.
