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Social Welfare Payments

Dáil Éireann Debate, Thursday - 25 November 2021

Thursday, 25 November 2021

Questions (2)

Seán Canney

Question:

2. Deputy Seán Canney asked the Minister for Social Protection if she will consider ending the reduced rate of jobseeker’s benefit in favour of full rate pay for those who qualify for the benefit given that the reduced rate is below the minimum social welfare rate and is penalising persons who were in low-income jobs; and if she will make a statement on the matter. [57011/21]

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Oral answers (6 contributions) (Question to Social)

Will the Minister consider ending the reduced rate of jobseeker's benefit in favour of a full rate of pay for those who qualify for the benefit given that the reduced rate is below the minimum social welfare rate and it is also penalising people who are in low-income jobs? This is something I have come across within my constituency. People are suffering because, having worked in low-pay jobs, they are now not even getting the minimum social welfare benefit.

I thank the Deputy for raising this issue. The social insurance contribution-based jobseeker's benefit and the means-tested jobseeker's allowance provide income support for people who have lost their jobs and are unable to find full-time employment. The rate of jobseeker's benefit is graduated accorded to an applicant's previous average earnings and graduated rates are applied where the person's average reckonable weekly earnings are less than €300. Recipients with average weekly earnings of less than this amount will be paid a personal weekly rate, ranging from €91.10 to €159. Recipients with average weekly earnings over €300 receive a personal rate of €203 per week, which is aligned with the maximum personal rate of jobseeker's allowance. The vast majority of recipients, almost 80%, are paid the maximum rate.

Further to budget 2022, the maximum rate will increase by €5 per week with effect from next January, with pro rata increases applied to the graduated rates.

It would not be appropriate for a person to receive a weekly social welfare benefit payment that exceeded his or her income from employment. Graduated rates of payment mean that there is no financial disincentive to return to work. This is particularly relevant for those who work on a part-time basis, as many people on graduated rates do. To do otherwise would have a negative impact on the labour market.

It is open for a person on a graduated rate of jobseeker's benefit to apply for the means-tested jobseeker's allowance if that is financially more beneficial. Approximately 630 such recipients are currently being paid a higher rate on the jobseeker's allowance scheme. The programme for Government, the national economic recovery plan and the Pathways to Work Strategy 2021-2025 all include a commitment to consider the development of a pay-related benefit. Similar pay-related social insurance schemes are already in place in other European countries. The pandemic unemployment payment, PUP, rate is linked to a person's prior earnings and, under the Pathways to Work Strategy 2021-2025, the Government has committed to using the experience from the PUP to inform the design of a pay-related social insurance-based short-term jobseeker payment that may be developed by quarter 3 of 2023.

I thank the Minister for her response. I welcome her mention of a pay-related scheme. Given that people who lose their jobs might have their earnings fall to €203, it is important that there be a graduated reduction to ease the transition into unemployment status. However, it is also important to keep in mind that the maximum rate of benefit is €203. This is the most that some people can get at the moment. In today's world of rising prices and an increased cost of living, that is pretty low. Could this matter be considered?

I welcome the introduction of a pay-related scheme. We should put a floor of €203 on all payments so that people do not fall below that level. If they are part-time workers, that could be taken into account. At the same time, it is important to ensure that work pays and that people can return to work and benefit more from that. When people pay PRSI, it is important that they get a reasonable response when they are made redundant.

Some 80% of people on jobseeker's benefit receive the full rate of €203. This amount will increase to €208 in January following the budget changes.

The position is clear, in that, if someone has been working a sufficient number of hours and has the required number of PRSI contributions, he or she will get the full payment rate. If anyone is on a reduced rate, it is because he or she was working a limited amount beforehand, meaning that he or she had not built up the requisite PRSI record. For example, he or she could have been a part-time worker who only worked one night per week.

We do not want to distort the labour market. If we paid people more through jobseeker's benefit than they got while they were working, there would be no incentive to go to work. We must balance the two. Work has to pay. Anyone who is on a reduced rate of jobseeker's benefit can apply for the means-tested jobseeker's allowance, the floor of which is €208. It might be more favourable for some people.

I welcome the Minister's positive response. I believe the Minister said that she would have the pay-related scheme in place by March for people who had been put out of work for one reason or another. This would be important. People who exit employment status come to a cliff edge and their incomes fall abruptly. I would accept a scheme wherein the benefit rate they received was graduated over time and related to their pay. The problem is that, when people in community employment schemes and the like finish their time on those schemes and go back on the benefit, they get reduced payments.

In the overall context, I agree wholeheartedly that we must ensure that work pays, that we create an incentive for people to return to work and that the income gap between working and not working is substantial.

To clarify, I will look at a pay-related support for people who are made unemployed. This is something to which we must give consideration. Such a scheme is the right thing to do, but it will take some time to design that system. We will take the lessons from the PUP. I am committed to developing a pay-related benefit whereby someone gets a percentage of his or her earnings upon losing a job. This would help to avoid the income cliff edge. When I worked in the credit union, I saw how people's incomes dropped suddenly when they lost their jobs. It was very difficult for them. This is a question of how to help people overcome that initial shock. There is a role for a pay-related benefit and it is something that I am committed to considering in order to find a solution.

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