Mr. R?n?n Hession:

I thank the committee for the opportunity to appear before it today to discuss the straw man proposal for a new pay-related jobseeker’s benefit. I am the assistant secretary general of the Department of Social Protection with responsibility for working age-income supports. I am joined by Eamonn Phelan and Karen Byrne.

The Minister published the straw man proposal in December. The proposal sets out the broad parameters of one potential approach to pay-related jobseeker's benefit; it is not a final design. Its purpose is to frame a constructive discussion and elicit feedback through a national public consultation process with stakeholders. The design of any proposal that may be brought to Government may differ significantly from that set out in the straw man consultation paper.

The main rationale for pay-related benefits is that people entering unemployment often do so with established financial and other commitments. Therefore, it is appropriate to provide a short-term cushion against income shocks while a person seeks new employment and adjusts their outgoings in the immediate aftermath of a job loss.

There are more than 32,600 people on jobseeker’s benefit, with the scheme costing €475 million in 2022. While for many people the scheme offers important income support during periods of unemployment or when working on a casual or part-time basis, it is not without its limitations. This became particularly clear during the pandemic when it was necessary to introduce the pandemic unemployment payment to cushion the income shock of employment lost because of necessary public health restrictions.

Reflecting o these points, and having regard to the pay-related systems that are common across Europe, the straw man sets out a possible model of reform for consideration. The straw man proposes that: for people who have been in insurable employment for at least five years, the benefit would be set at 60% of prior gross income up to a maximum payment of €450 per week; and for people who have been in insurable employment for at least two years but fewer than five years, the benefit would be set at 50% of prior gross income, subject to a maximum payment of €300 per week. In addition, a person must have had a strong attachment to the labour force, with at least 26 paid contributions in the 12 months immediately prior to making a claim, and four weeks of employment in the ten weeks prior to claiming.

It is proposed that payment duration would be limited to a maximum of six months. The current average duration of jobseeker’s benefit is 11 weeks - it can go up to 13 or 14 weeks - with more than 70% of customers exiting the scheme within six months. As with the pandemic unemployment payment, pay-related benefit would be for employees who become fully unemployed only. Those working part-time or on a casual basis would continue to be eligible for the jobseeker’s benefit scheme or other schemes such as the working family payment. Self-employed people would continue to be catered for under the current jobseeker’s benefit self-employed scheme, which was introduced in 2019.

While the straw man primarily focuses on job seekers, feedback will also help to inform the consideration of potential changes to other short-term schemes, such as parent’s benefit and illness benefit. The straw man also sets out initial high-level proposals for a working-age payment. This would be a means-tested jobseeker payment that includes casual or part-time work arrangements and that is based on the working family payment model.

As part of the consultation process, the Department hosted a public stakeholder event in Dublin on 10 February at which presentations were delivered by the Department, the Organisation for Economic Co-operation and Development, OECD, and the Economic and Social Research Institute, ESRI. The deadline for written submissions was 28 February. More than 80 submissions have been received from individuals, with a further 32 submissions from stakeholder groups. All feedback received is being collated and analysed by the Department. It will be used to inform the design of whatever proposals are brought to Government for decision.

The straw man is an important policy proposal. It follows from the programme for Government commitment to consider increasing all classes of PRSI over time to replenish the Social Insurance Fund to help pay for measures and changes to be agreed, including pay-related jobseeker’s benefit. In addition, the Government’s Economic Recovery Plan 2021 and Pathways to Work 2021–2025 include commitments to draw on the lessons of the pandemic in bringing forward proposals for pay-related jobseeker’s benefit.

In designing a new pay-related benefit, we have to be careful to balance the need to provide income supports while also maintaining work incentives. We must also be mindful of costs and impacts across the wider economy. The inputs we have received as part of the straw man consultation are an important part of this deliberative process. We look forward to hearing the committee’s views and we are happy to assist members with any questions they have.