Public consultation on pay-related benefit for Jobseekers - closing date 28th February

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 earnings1).

• 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).

Comparison with Existing Jobseeker’s Benefit Scheme:

• Under the Strawman model the basic qualification requirement (2 years paid contributions (104)) remains unchanged from the existing Jobseeker’s Benefit scheme but the payment calculation is changed and is linked to earnings and contributions, rather than being set at a flat rate with allowances for dependents, for all people claiming the benefit.

• In addition, rather than being linked to earnings or contributions in what is known as the Governing Contribution Year (for most people the calendar year two years prior to claim), contribution records and earnings will be based on up-to-date data available from Revenue. This will mean that payments under PRB will be based on current or very recent earnings rather than earnings which are two years’ old.

• The duration of benefit would be 6 months compared to 6–9 months for Jobseeker’s Benefit. On expiry of benefit, after 6 months, any person still unemployed would be eligible to apply, as now, for the Jobseeker’s Allowance scheme or any replacement to that scheme. (The average duration of a jobseeker on Jobseeker’s Benefit is about 14 weeks).

• As with Jobseeker’s Benefit, people will be able to opt for a Jobseeker’s Allowance payment if that is more favourable to them.
 
SOME SUGGESTED QUESTIONS TO CONSIDER

1. Is the rationale for the introduction of PRB sound?

2. Are there other arguments that could be made for or against the introduction of a PRB?

3. What are the risks (including fiscal, labour market, social inclusion, equity) that need to be considered in introducing a PRB?

4. How can the potential risks be mitigated?

5. Do you agree that social insurance rates, for employees and employers, should be increased to cover the additional costs to the Social Insurance Fund (SIF) or the Exchequer (which is the residual financier of the SIF) that may arise as a result of the introduction of a PRB scheme for jobseekers?

6. What are the implications of extending a PRB model to other short-term income supports such as Parents Benefit, Maternity Benefit, or Illness Benefit? Are there deadweight effects?
 
• Self-employed people will continue to be catered for under the current Jobseeker’s Benefit (SelfEmployed)
Scheme.


3. Self-employed people will continue to be catered for under the current Jobseeker’s Benefit (Self-Employed) Scheme. This reflects the lower contribution rates for self-employed people; the fact that the current Jobseeker’s Benefit (Self-Employed) Scheme is not pay-related; and the absence of real-time information
on self-employment earnings to underpin a pay-related system.
 
STRAWMAN PROPOSALS



Level of Benefit

• In line with European norms, it is proposed that the level of benefit a person receives under the PRB will be calculated as a set percentage of gross earnings, rather than using payment bands as under PUP and Jobseeker’s Benefit.

• For people who qualify with two years but less than five years of paid contributions this will be set at
50%.

• For people who qualify with at least five years of paid contributions this will be set at 60%.

• It is also proposed that a weekly cap will apply to the level of benefit a person can receive. The
proposed payment caps are €300 (50% scheme) and €450 (60% scheme) per week.

• A weekly floor, or minimum payment, of €100 per week will also apply.

• As it is a pay-related model, no additional payments will be made for qualified dependents

• People who do not qualify for PRB will, as at present, be eligible to apply for Jobseeker’s Allowance.

• Similar to the approach used for the current Jobseeker’s Benefit (and State Pension (Contributory)), people who would qualify for a higher payment under the means tested Jobseeker’s Allowance scheme (or any replacement to that scheme), will have the option to apply for that higher payment.
 
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SOME SUGGESTED QUESTIONS TO CONSIDER



16. What is your opinion of the proposed approach to the level of benefit payable under a PRB, i.e., that the rate of payment a person receives under the scheme is directly linked to their previous employment earnings using a fixed percentage of previous earnings rather than using bands?

17. What is your opinion of 60% of prior gross earnings as an appropriate rate of payment for people with five or more years of paid contributions? If you favour an alternative approach, please set that out and explain your rationale.

18. What is your opinion of 50% of prior gross earnings as an appropriate rate of payment for a person with at least two but less than five years of paid contributions? If you favour an alternative approach, please set out the detail and rationale.

19. Do you agree that the rate of payment should be based on previous earnings gross of tax and other statutory deductions rather than net of such deductions? – If not, why would you prefer a calculation based on net salary?

20. Do you agree with proposed weekly payment cap (€450/€300) and proposed weekly payment floor (€100)?

21. The proposal is for a flat rate of payment over the duration of the claim. Do you support this approach, or do you believe that the rate of payment should be graduated (e.g. in some countries a higher payment is made initially, which decreases over time)?

22. Do you agree with the approach to using a 12-month period for calculation of average salaries? If not, what alternatives would you propose, and why?
 
STRAWMAN PROPOSALS


Duration


• It is proposed that PRB will be paid on a weekly basis and entitlement to a payment under the
PRB scheme will last for a duration of up to 6 months.

• If a person is still unemployed when this entitlement expires a person will, as they are now, be
eligible to apply for a means-tested payment such as Jobseeker’s Allowance.

• Requalification will be permitted for a person who previously claimed PRB but then returned to work, subject to a maximum duration on PRB of 6 months in any 24-month period.
 
SOME SUGGESTED QUESTIONS TO CONSIDER

23. Do you agree with the proposed duration for a PRB (6 months)? If not, what duration would you propose and why? If you would prefer a longer duration, how would you propose that the extra duration be funded?

24. Would you prefer a staggered approach where payment rates drop incrementally the longer you remain on the payment? e.g. after 3 months?

25. What are your views on the potential impact of the PRB on the labour market, and whether the payment of the support for a shorter period will mitigate the negative effect that increased replacement rates can have on work incentives?

26. What is your view of the proposed rules for requalification for the scheme, i.e., that a person will be eligible for PRB for a maximum of 6 months in any 24-month period?
 
I wonder how this proposal compares to the PRB that existed in the 1980s ( I know it did exist in 1984 anyway !)?
 
Why is there a cap?
If there's no cap on what someone pays in why is there a cap on what they get?
 
Hi Purple

I raised that issue at the meeting.
I said it was unfair that someone aged 60 who had worked for 35 years got the same 6 months benefit as someone who is 30 and worked for 5 years.

I said that the benefit should be something like one month for every year of service.
I argued that it was much easier for a 30 year old to get a job than a 60 year old.

The Secretary General of the Department replied with Clubman's argument that it was social insurance and not individual insurance.

I suspect that I will be the only one making a submission on the issue. The rest will come from the organisations for the unemployed and those claiming social welfare so it will appear that there is a wide consensus saying that welfare payments should be increased and contributions for the higher paid should be increased.

I will be arguing that it is not insurance and it is not pay related - except on the contribution side. In effect, it is just another tax.
I agree with protecting those who need protecting but that can be done through the tax system.
The Benefits system should be done on a Savings Basis. Our contributions should go into a fund in our own name.

Brendan
 
Brendan Burgess said:
I will be arguing that it is not insurance and it is not pay related - except on the contribution side. In effect, it is just another tax.
Click to expand...
I agree that, at present, PRSI is just another tax, which doesn’t encourage people to work.

Payments could be split so that a percentage could go to the Social Insurance Fund and a percentage towards a personal savings fund of the individual contributor.
 
Sophrosyne said:
Payments could be split so that a percentage could go to the Social Insurance Fund and a percentage towards a personal savings fund of the individual contributor.
Click to expand...

Yes that is the way I am thinking. The idea of a pure savings fund seems to have no support.

Brendan
 
If the principle were to be adopted then online PRB personal accounts could be set up to show:

Social Insurance Fund

  • Contributions made.
  • Benefits received.
Savings

  • Savings contributions
  • Value of Saving Fund
Some consideration might be given around draw down of savings.

For instance, savings could not be drawn down for 5 years – to be decided.

Or that a certain percentage – to be decided - had to remain in the savings account until retirement.
 
Brendan Burgess said:
I said it was unfair that someone aged 60 who had worked for 35 years got the same 6 months benefit as someone who is 30 and worked for 5 years.

I said that the benefit should be something like one month for every year of service.
I argued that it was much easier for a 30 year old to get a job than a 60 year old.
Click to expand...
You could argue this several ways. The 30 year old is potentially at much greater risk of financial difficulty. The likelihood of childcare and mortgage costs means they would have significant financial commitments. Missing a mortgage payment could have a severe impact on their future ability to move for new employment or trade up/down. In other words, potential for long lasting consequences of a short blip in employment.

While the 60 year old could be financially secure with mortgage paid and no dependants. If the benefit was too generous, like your suggestion of 30 months for 30 years, it would be very open to abuse. Having 2.5 years of 60% income sounds pretty good and would be a nice segway into retirement for many. There probably needs to be some additional support due to the increased difficulty in finding new employment but it can't be so generous that it no longer justifies working.

Brendan Burgess said:
I will be arguing that it is not insurance and it is not pay related - except on the contribution side. In effect, it is just another tax.
I agree with protecting those who need protecting but that can be done through the tax system.
The Benefits system should be done on a Savings Basis. Our contributions should go into a fund in our own name.
Click to expand...
To argue this properly, you probably need to compare it to other insurance models. Take private health insurance, the premium is fixed for all ages but the benefit is not. Effectively the younger policy holders subside the older. It's for a greater social good.

The same could be said of PRSI, those earning more subsidise those earning less. The PRB already rebalances the loading (what you get vs what you contribute) on higher earners by increasing the payment rate so why would an additional separate individual fund be considered just for the highest earners?
 
_OkGo_ said:
The same could be said of PRSI, those earning more subsidise those earning less.
Click to expand...

I have no problem with those earning more paying more.

(But I do object to PAYE employees paying 4 times what a self-employed person pays for virtually the same benefits.)

But that should be done through the tax system and it should be called a tax.

If it's some form of insurance, social or otherwise, it should not be levied like a tax.

But I think we should replace it with a savings scheme.

Part of the reason is that people will have to pay a lot more and if they see that they more they pay, the more they get out, there will be less resistance to paying it.

Brendan
 
Interesting to read about this.

I lived in Canada for a decade and they have national mandatory Employment Insurance scheme.

You pay about 1.6% tax on income up to a max of about $65k.

Then you can get pay out of 55% of what you insured. The length of time has to do with unemployment rate in area etc.

Max payout is about $650 a week.

I never used it but know some who did for a few weeks. However knowing it was there as a safety net was a huge comfort.

Payout was a bit lower a few years ago but still enough where I felt I would be able to cut back my spending should I lose a job and work within the payout if need be.

It felt very fair as it wasn't a tax but a group insurance scheme.

I don't think there were overly restrictive about qualifying. Yes you needed to have worked x hour in the last year. But I don't believe there was anything like needing to pay I'm for 5 years.

The proposal seem a little similar but very different.

It's definitely a step in the right direction. There needs to a move to really seperate it from jobseekers allowance.

It's highly likely many people will find themselves being unemployed for a few weeks or months a few times in a career. Lumping people in that situation in at the same rate as the long term unemployment is a failure of the state to provide services to tax payers.

The 5 years seems overly restrictive. I understand they don't want it abused but if someone moves to Ireland and works for 3 years for Facebook why shouldn't they be entitled to it at the higher rate while they look for another job.

Equally I don't agree there should be different rates for older people / people with more years working.

I don't believe it should be a fund you pay into where you get a little back when you are young but more if you have more contributions.

That doesn't align with peoples needs and what if you never claim.

Ultimately unemployment or the potential for it is part of modern society. As part of tax / social payments the state should provide support to people on a short term basis while they find a new job. And that safety net should be much better than what currently available.
 
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