Why should benefits be short in duration? If you have worked for 30 years and lose your job, I think it's only fair that your benefits last longer than those paid to someone who has worked for only 5 years.
Don't shoot the messenger!
The Commission reasons that:
“Pay-related benefits are of advantage in maintaining the short-term expenditure commitments of people with higher previous earnings, but it is arguable that, in the first instance, an individual’s own resources should be drawn on to maintain expenditure patterns. At present, individuals with greater means (including savings) can qualify for and receive Jobseeker’s Benefit, even if they have the means to support themselves without recourse to State support.
This element of deadweight is a design feature of social insurance where an entitlement to a benefit comes as of right once the contingency has been established.
Pay-related benefit is premised on the notion that previous earnings are used to determine a rate of payment. By paying different levels of benefit based on previous earnings, pay-related benefits may not confer the same level of benefit on people whose contributions are of lower monetary value but who have an identical contribution record.
People with similar needs (i.e. they have recently lost their employment and need income support) are currently treated similarly but will be treated differently if payment rates are based on past earnings. There are a variety of models, across Europe and elsewhere, of pay-related benefits – each with distinctive features and, as a result, different costs associated with their delivery. If a pay-related jobseekers payment is to be introduced, the Commission recommends that the following points should be borne in mind during the policy design phase:
- The design of pay-related benefit should have regard to the incentive to work and such benefits should only be payable for a limited period of time. This period should be shorter than the current duration of Jobseekers Benefit, which is currently six or nine months depending on the recipient’s contribution record.
- A pay-related benefit should be designed having regard to the existing funding challenges facing the social insurance fund.
- In the interests of equity, a pay-related benefit should be subject to an earnings cap.
- Existing and new linkages between DSP and Revenue could be progressed to design a process to deliver a pay-related benefit.
In addition to Jobseekers Benefit there is a case for linking other benefits to previous earnings. For example, linking Maternity Benefit to new mothers’ previous earnings could reduce the gender wage gap, while a similar reform to Illness Benefit could have public health benefits.
Furthermore, if a system of pay-related benefits is introduced, and if such payments are taxable, consideration should be given to exploring the application of PAYE by DSP as the payments are being made."