There are two changes in the social welfare code which have affected the entitlement to unemployment payments of the workers concerned. From July 1992 the earnings of all insured persons have been assessed as means for unemployment assistance purposes and from January 1993 applicants for unemployment benefit have been required to show that they have sustained a loss of employment.
The underlying purpose of the unemployment 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 in 1993 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 ways the scheme became, for certain categories of workers, simply a top-up for what in some cases were 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 income had to 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 assessement as means for unemployment assistance purposes of earnings from insurable employment. The effect of this provision is that, with effect from 29 July 1992, people 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 that there is a consistent approach in this matter by treating employees and the self-employed in a similar way. This is in line with the overall objective of reducing the anomalies and the complexity of the social welfare system.
In implementing the new arrangements, a degrees of financial incentive was provided for unemployed people to take up occasional employment where the opportunity arises. This has been done through certain disregards 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 £15 per day. For example, a married man with three children working a three day week will have £111.55 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.
The loss of employment provision was introduced in the Social Welfare Act, 1992, and became effective on 4 January 1993. It was introduced in connection with the extension of insurance cover to part-time workers and in recognition of the long-established principle that unemployment benefit provides a replacement income only where there is an actual loss of employment. Whether a loss of employment has actually occurred is determined, in practice, by comparing the period for which benefit is claimed with the applicant's normal level of work.
The original provision provided that the extent of the loss required was proportional to the previous level of employment. I reviewed the level of the loss required and decided that it should be reduced to one day in all circumstances.
Any person who is adversely affected by the changes in entitlement to unemployment benefit may instead claim unemployment assistance. From April 1993, I revised the regulations governing the assessment of insurable earnings so that the amount a person can earn and still receive unemployment assistance for the days not worked has been substantially increased. This measure has significantly improved the position of those who are involved in casual or part time employment.
I am conscious that the operation of the loss condition may have had particular consequences for those engaged in casual employment. I am currently reviewing the impact of the provision in the light of the experience of its operation over the past year. Should it emerge that changes are necessary I will accordingly seek Government approval to the necessary amendments to the legislation.
