In our pre-budget submissions the INOU has consistently called for the re-introduction of a pay-related Jobseeker Benefit payment; and the restoration of the duration on Jobseekers Benefit to pre-2008 crisis changes: when the maximum duration was 15 months or 12 months depending on the person’s number of PRSI contributions. Currently, JB is paid for a maximum of 9 months or 6 months.
Proposed Pay Related Benefits Payment
It initially appeared that the proposed Pay Related Benefit payment for people who are unemployed and eligible for a Jobseeker’s Benefit payment would answer a long standing key ask for the INOU. However, what the organisation had hoped for and what has been announced are quite different.
Of particular concern to the INOU is the proposed duration an unemployed person could be on this payment: a maximum of six months in a twenty four month period. Such a duration could leave people who remain unemployed excluded from employment supports and services because they are not in receipt of a qualifying payment.
On the income front, the INOU is particularly concerned for people who work in low paid employment. In some cases the person making the claim may well be better off seeking to access an alternative payment, for example Jobseeker’s Allowance or a One Parent Family Payment. However, these payments are means tested, have a range of qualifying conditions and are not automatically open to people who may apply for them.
According to the proposal in the Strawman the Rate of Benefit would be set as follows:
- For people who have at least five years paid contributions (of which six months must have been in the 12 months prior to claim), be set at 60% of the person’s prior gross income subject to a cap of €450 per week (almost 50% of the gross adjusted average industry weekly earnings).
- For people who have less than five years prior contributions but at least two years (of which six months must have been in the 12 months prior to claim) be set at 50% of the person’s prior gross income subject to a cap of €300 per week (about 33% of gross adjusted average industry weekly earnings).
In our submission we look at a number of scenarios: people working at the National Minimum Wage (€11.30 ph); the campaigned for Living Wage (€13.85 ph); and the current average wage rate (€27.72 ph). The hours used in these scenarios are the weekly minimum required to be eligible for the Working Family Payment and a rounding up of the average working week.
With regard to the National Minimum Wage, everyone working only nineteen hours a week would be worse off under the Strawman proposal than they would be on the current Jobseeker’s Benefit payment. While for anyone working the average working week, only a single person who had worked for more than five years would be better off.
With regard to the Living Wage, again everyone working only nineteen hours a week would be worse off under the Strawman proposal. A single person working an average working week would be better off under the new proposal, as would a single person with a child who had worked for more than five years, but none of the other examples explored.
With regard to the average wage examples, a single person under the four scenarios given would be better off on the Strawman proposal; a single person with one child would be marginally better off if they were only working nineteen hours a week and had worked for less than five years, but if they had worked for longer or worked thirty-three hours a week they would be better off on the new arrangement. The couple with no children or with one child would only be better off if the claimant had worked an average working week of thirty-three hours. A similar situation arises for the single person with two children; while the couple with two children would be better off on a Jobseeker’s Benefit payment.
Looking To The Past
In the past an unemployed person eligible for an Unemployment Benefit payment (previous name for Jobseeker’s Benefit) could claim “ the aggregate of—
( a ) weekly rate of unemployment benefit, including any increase of that benefit payable under section 32 of the Act, and
( b ) the weekly rate of pay-related benefit payable, and
( c ) the weekly equivalent, as determined by the Revenue Commissioners, of the refund of income tax, if any, which is paid as a result of the unemployment, payable to a person exceeds seventy-five per cent. of the amount of that person's reckonable weekly earnings for the relevant income tax year, sub-article (2) of this article shall not operate so as to reduce the total amount payable to such person by way of the said unemployment benefit, pay-related benefit and refund of income tax. ”
The ‘ section 32 of the Act’ referred to in (a) above comes from the Social Welfare (Consolidation) Act, 1981 which covers what are now called the Qualified Adult and Qualified Child Increases. The lack of such additional supports in the Strawman proposal, whereby a claimant could claim only for themselves, will create significant difficulties for unemployed people with family responsibilities. This is an issue that the Department of Social Protection must revisit and revise constructively if this proposal is to be a positive and inclusive development.
With regard to ‘ the weekly rate of pay-related benefit payable’ referred to in (b) above, in the Social Welfare (Consolidation) Act, 1981, Section 73 it states that “The weekly rate of pay-related benefit payable to a person in any period of interruption of employment shall be an amount equal to—
(a) for any part of that period up to the 159th day of incapacity for work, or for any part of that period up to the 159th day of unemployment, 40 per cent.,
In the Strawman proposal the Department notes that the rationale for introducing a pay related benefit is to “ First, to recognise and cushion people against the ‘income shock’ that arises on loss of employment” and “Second, to provide a tangible return to people who make social insurance contributions as a means of better reflecting the contributory principle and strengthening the solidarity principle, both of which are at the heart of the social insurance system.” These arguments are to be welcomed, but a return to the system Ireland once had would be more constructive than the proposals made in the Strawman document.
Proposed Working Age Payment
At present if a person on a Jobseeker’s Allowance payment receives an offer of part-time work, they could find themselves in a dilemma if that work is spread over the whole of the working week, rather than concentrated over three days or less. In our pre-budget submissions the INOU has called for the introduction of a work-friendly social welfare system for people on a Jobseekers Allowance payment that is reflective of changing work practices, based on hours worked rather than days worked, and supports people to maximise their income.
The Working Age Payment proposed in Section 4.5 of the Strawman on the Pay Related Benefit consultation states that:
- The rationale in developing a Working Age Payment is to create a greater link between welfare payments and employment earnings such that a person will always experience an increase in income when they take on additional work.
- It is also intended to remove inconsistencies in payment rates between people in similar situations and to move away from the ‘days worked’ model whereby a person is disqualified for payment on a day where they might only work for 1 or 2 hours.
- Furthermore, a new scheme should be easier to understand and administer and should mitigate against distorted income effects for people returning to work, such as significant ‘income cliffs’ or loss of income.
- The proposed model would be based on the Working Family Payment model whereby a person receives a payment based on a percentage of the difference between their income and a specified threshold for their family type.
It will be important to see what is in the Strawman for this proposal when it is published later on in the year. If the changes are designed to support unemployed people to take up part-time work that they feel would strengthen their links with the labour market, it would be a very welcome development. In particular if point nine on page thirty of the consultation document is realised, which states “ This would be to guarantee a basic income floor and ensure that in all cases a person’s income increases when they work.” However, if the proposal is to completely merge Jobseeker’s Allowance with a reconfigured Working Family Payment, this could exacerbate income adequacy questions for some families, while improving the situation of others, this issue is explored further in our submission.
In the document entitled A Strawman Public Consultation Process for a Pay-Related Jobseeker’s Benefit Scheme in Ireland twenty-nine questions were posed and at the end of the INOU’s submission we respond to each of these questions. The full submission can be found ( linked here ).
While the INOU’s submission to the Department of Social Protection’s Statement of Strategy 2023-2026 can be found ( linked here ).