Éamon Ó Cuív (Galway West, Fianna Fail)

The social welfare system supports people of working age by providing income and other supports and by facilitating them in taking up employment, training, education or development opportunities. A key concern in this regard is to ensure that social welfare payments provide adequate income replacement and maintenance for the customer and their family, while also providing that sufficient incentive exists for persons to progress from the social welfare system to the workforce. Return to work patterns are often a function of more than financial rewards and include such considerations as work availability, family commitments, travel to work time and the type of available employment. However, financial incentives are important and these depend on the balance between the individual or family's disposable income when employed and when unemployed.

The replacement rate for given income levels measures the proportion of out-of-work benefits received when unemployed against take home pay if in work. While there is no predetermined level of replacement rate which would influence every individual's decision to work, clearly the higher the replacement rate, the lower the incentive to work. In this context most literature on the subject of replacement rates works from the assumption that a replacement rate significantly in excess of 70% may be considered to be excessive, while a replacement rate significantly less than 70% may be considered inadequate. In particular, high replacement rates are usually considered to be unsustainable in the absence of relevant and timely labour activation such as appropriate education, training or job placement measures and sanctions where claimants do not engage with activation processes.

In July 2010 detailed analyses of the net incomes of 327,827 people on the live register, who received a payment for a full week of unemployment compared their social welfare income to the net incomes of typical household types in the workforce. This demonstrated that the majority of social welfare recipients have replacement rates of less than 70%. In particular, when measured against the national minimum wage, 91% of recipients have a rate of less than 70% and 9% have a rate of less than 80%.

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