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Unemployment Benefits

Dáil Éireann Debate, Thursday - 19 December 2013

Thursday, 19 December 2013

Questions (175)

Terence Flanagan

Question:

175. Deputy Terence Flanagan asked the Minister for Social Protection the action she is taking to deal with the fact that some persons are better off on the dole rather than working; and if she will make a statement on the matter. [54959/13]

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Written answers

The 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.

Replacement rate analysis 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 1.3% 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.

In addition, the Benefit of Work Ready Reckoner, recently launched on www.welfare.ie, will highlight the difference for jobseekers between potential income from work and the welfare payments they currently receive. It will help jobseekers assess the benefits of taking up work opportunities as the economy recovers.

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