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 almost 54,000 families in respect of some 122,000 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 up to and including 3 days per week, jobseeker’s schemes provide in-work income support through daily disregards and tapered withdrawal of payments.
Further reducing the “hours worked” requirement would have potentially significant expenditure implications which are difficult to quantify. The number of families working between 15-18 hours and are earning below the relevant WFP thresholds is currently unknown. Also, 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 would be 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.
It is crucially 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 without ever-increasing and perhaps ultimately unsustainable levels of subvention.
Any plans to reduce the WFP hours-worked threshold below 19 hours would have to be considered in the overall budgetary context.