Tuesday, 18 June 2019

Questions (631)

Willie O'Dea


631. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the estimated full year cost of reducing the hours required to qualify for the working family payment from 19 to 15 hours for lone parents; and if she will make a statement on the matter. [25128/19]

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Written answers (Question to Employment)

The Working Family Payment (WFP) is an in-work support which provides an income top-up for employees on low earnings with children. WFP is designed to prevent in-work poverty for low paid workers with child dependants and to offer a financial incentive to take-up employment. Estimated expenditure on WFP in 2018 is approximately €430 million and it is currently paid to 53,327 families in respect of some 120,142 children.

To qualify for WFP, a person must be engaged in full-time insurable employment which is expected to last for at least 3 months and be working for a minimum of 38 hours per fortnight or 19 hours per week. A couple may combine their hours of employment to meet the qualification criteria. The applicant must also have at least one qualified child who normally resides with them or is supported by them. Furthermore, the average family income must be below a specified amount which varies according to the number of qualified children in the family.

The “hours worked” eligibility criterion has been reduced significantly since the introduction of the scheme in 1984, from 30 hours per week to 19 hours per week in 1996. Indeed, a recent review of in-work supports found that the current range of supports works very well for the vast majority of families and facilitates an element of choice which allows them to select the option which best suits their needs.

For low income workers with less than the minimum hours of employment for WFP and working on a casual basis (that is, up to and including 3 days per week) the Jobseeker’s Allowance (JA) scheme provides in-work income support through daily disregards and tapered withdrawal of payments .

Apart from the jobseeker schemes if a person cannot meet the 19 hours WFP threshold or if their hours vary significantly from week to week, the Department offers a number of other schemes which can provide income support that can be combined with earnings from employment, subject to each individual’s circumstances. These include One-Parent Family Payment (OFP) and the Jobseeker’s Transitional Payment (JST), and the Part-Time Job Incentive (PTJI) scheme

Further reducing the hours worked requirement would have a number of effects. The number of families working between 15-18 hours and are earning below the relevant WFP thresholds is currently unknown which means it is not possible to estimate a full year cost of reducing the hours. Reducing the numbers of hours worked required to access WFP from 19 to 15 could have a number of behavioural effects, the increased cost of which is difficult to predict. These effects include:

- reducing the incentive to increase part-time hours, resulting in recipients on the minimum 19 hours threshold reducing their hours of work;

- attracting new recipients currently on higher wages above the WFP threshold, who might decide to reduce their hours in order to qualify.

- greater dependency on WFP to support very low earnings.

It is important that WFP does not inadvertently subsidise unsustainably low earnings or encourage employers to offer minimal hours of employment. The longer term goal of WFP, as an incentive to take up and remain in work, could be compromised if the nature of the work taken up is not ultimately sustainable.