Duncan Smith (Dublin Fingal, Labour) | Oireachtas source

The Labour Party welcomes the introduction of the pay-related benefit for jobseekers. I heard what the Minister said in her opening statement when she stated that the Bill is about establishing the principle in the first instance and a Rolls Royce Bill would, as she said, probably mean we would not be having this debate now or introducing the principle in the first place. We welcome that, and it gives us a solid foundation block on which to build, progress and modernise our social welfare and social protection system.

I pay tribute to colleagues in the trade union movement who have led the charge on getting this onto the agenda. Ms Laura Bambrick of the Irish Congress of Trade Unions, in particular, has done great work on the issue.

We in the Labour Party believe in a welfare system that empowers workers to move between jobs and to bounce back from unplanned, short-term unemployment secure in the knowledge that the welfare system will adequately support them and their families in the transition. I do not think it is unfair to say that our current system needs long overdue reform and this legislation, with its introduction of pay-related benefits for jobseekers, is a part of positive reform in this area. The current system offers a below poverty line level of support. It is designed to get people back to work as quickly as possible by giving them no more than the bare minimum. It is a cynical and adversarial premise on which to base a social welfare system and we believe it to be outdated. We need to move on from it.

A pay-related benefit is a more compassionate and sensible approach. It prevents workers from facing a cliff edge when made unemployed. It should serve, if working correctly, to cushion the blow for households experiencing the loss of income brought on by unemployment. It helps to maintain living standards and prevents people from accumulating debt and arrears on vital outgoings. It also allows us to sustain demand in the economy by ensuring that those facing temporary unemployment do not see a significant fall in their degree of spending power relative to that they previously enjoyed, which is vital to maintain macroeconomic stability.

Equally important is that the benefit allows workers to take the time to find a job that best matches their skill set. That is perhaps an underappreciated element of unemployment and people returning to the workforce. It does not make sense to force people who may be highly qualified in one area into another area because it is the first available job. People will have spent years in training, education and work to build up a skill set to apply to a particular area, and it is only fair to them and their experience that they are given support by the State to have an adequate amount of time to find work to continue their journey in that area. We in Ireland are lucky to have a highly skilled and highly educated population that is adaptable to a diverse employment market. Supporting people and allowing them the time to get a job that matches their skills ensures that a qualified and capable workforce can continue to flourish and grow.

In most of our neighbouring EU countries, some form of pay-related benefit already exists, though it should be noted there are significant variations in welfare systems and taxation models. At present, jobseekers in Ireland qualify for the flat rate jobseeker's benefit following two years of PRSI contributions. I am glad we are now moving beyond that approach to something more in line with many of our EU counterparts and to something more progressive that protect workers.

While the Labour Party welcomes and supports the introduction of pay-related benefit, we have some concerns about the proposal under the terms outlined. The two-tiered system proposed in the Bill is at this point unnecessarily restrictive compared with the systems in place in other high-income EU countries. It may have the unintended consequence of creating a discriminatory system that penalises women and young people, in particular. Tackling that issue does not necessitate a Rolls Royce Bill, to use the Minister's language, but could be done in the context of this Bill and we hope to see changes on Committee Stage. For workers in sectors with a higher than average turnover of staff, such as the retail or hospitality sectors, it may be more difficult to meet the five years of contributions qualification to receive the higher rate of benefit. The same applies for those working on temporary contracts.

Women and those aged under 25 are disproportionately represented in the retail and hospitality workforce, while those under the age of 30 make up the majority of workers employed on temporary contracts. This is something that also needs to be addressed. The Bill has the potential to be one of the most progressive pieces of workers' rights legislation we have seen for some time in this country in the area of social protection and we do not want to see it undermined by unintentionally discriminating against some of our most vulnerable workers.

The Government raises the flag that we have so-called full employment in this country. We have many people in good jobs but we also have an awful lot of people in underemployment in the so-called gig economy and in extremely insecure employment. While I welcome that there will be an income floor under which no one can fall, there is an anomaly whereby part-time workers who do not meet the PRSI contribution criteria and earn between €250 and €300 per week could see their replacement rate fall as a result of these changes. In the present system someone earning €300 per week has a maximum payment rate of €181.70 but under the proposed system they will receive the lower tier rate of €150. This needs to be examined and fixed as the Bill progresses through the House.

I would like clarity on whether additional allowances for dependents will be maintained under the new system. Many people working part time who have to take extended breaks from employment are carers with dependants, be they adults or children. We cannot have a situation whereby these people, some of our most financially vulnerable workers, lose out in the new system, particularly when it is a new system that is in essence positive, which the Minister, I and everyone else hope will work for the betterment of all workers and not leave anyone behind.

The proposal to lower the replacement rate at the higher tier over nine months should be reconsidered. The benefit should be paid at the full rate for its entire duration. We are running the risk of losing the spirit of what a pay-related jobseeker's benefit should be about. It should be about supporting people during periods of unemployment and as they transition into new employment. It should not be used as a stick to beat them into what could be inappropriate jobs for their skill sets. Perhaps we are seeing a bit of a hangover from the attitudes that govern the system we have in place.

Another rationale is that we do not want to create a disincentive to returning to work. In my experience, the belief that people do not want to work is vastly overplayed in the system. People want to work. They want to be in work and they want to be rewarded for their work. When they are not in work, they want the very basics of dignified protections from the State before they get back to work again. There is little evidence to show this would be the case when we look at other European countries that have a pay-related benefit in place. Many of our EU neighbours pay a much higher rate and they do so for longer. This should be about supporting recipients of the benefit in finding employment that best matches their skills, benefiting the workers and the economy in the long run.

I will touch briefly on pay-related benefits on the whole with regard to our social support system. The Labour Party would like to see the extension of pay-related benefits to other short-term income supports, such as maternity and paternity benefits, parents' benefit, carer's allowance and illness benefit. Ireland is one of only two countries in the EU to pay maternity benefit at a flat rate, leaving it to employers to make up the difference. There is a risk that this negatively affects hiring decisions. In fact, there is little doubt in any of our minds that it does. Paying flat-rate paternity benefit to new fathers has meant that many face a cliff edge in income and, as a result, we see a low uptake of paternity leave among those in the private sector. Similarly, women are twice as likely as men to claim parents' benefit. Relating paternity and parents' benefit to pay would improve uptake and promote a more equal distribution of parental care in a household that has two parents.

Individuals who need to take a break from their careers or reduce their hours to provide care for someone close to them should not have to be concerned about the financial implications of doing so. At present carer's allowance is means-tested, adding unnecessary bureaucracy to an already complex welfare system. I acknowledge the Minister is making large strides with the Bill. We also acknowledge the work she is doing on pension provision in the country and having a long-term view on it. We believe the next big nettle that needs to be grasped, whether by her or someone else in the next government, is to remove the means test for carer's allowance. Carers are workers. They are workers in our economy, community and society who work in our homes. They provide unbelievable care through their work for their loved ones and those they care for. In particular, the work of Family Carers Ireland on the means test needs to be heeded.

We need to see the same step change we are seeing the beginnings of in other areas, as I have mentioned, with carer's allowance. If we are to learn anything from the referendums several months ago, it is that carers and disabled people feel they are not being listened to and they are not being understood. Part of this relates to how we approach pay and allowances for carers in this country. People eat into their savings to provide crucial care for loved ones. This should not have to be the case. Moreover, it is heavily gendered. Women make up the majority of care providers, meaning they are disproportionately affected by falls in income caused by a means test with regard to this payment.

A few years ago, the Labour Party welcomed the introduction of statutory sick pay requirements, also welcomed the recently announced improvement in entitlements. However, we vehemently oppose the idea being floated by Fine Gael to delay these much-needed improvements for many of those facing a prolonged period of illness. Illness benefit does not provide an adequate level of income to support and prevent a cliff edge. A flat rate of payment and lower replacement rate when taking the average salary forces many people back to work early out of financial necessity and not because of what is best for their health or long-term recovery. This poses a harm for the individual through greater potential for relapse or disimproved health, and for their colleagues in terms of infectious illness, their health and the risk of workplace accidents.

The Labour Party welcomes the Bill. We are glad to see the Government is making a progressive move, at least in principle, in the right area. I have highlighted areas which we feel are deficient where changes could be made in the context of the Bill. We need to get over the attitude that people would rather stay on social welfare than go back to work. This is not the reality. It is overplayed by a culture in our social protection system that in many cases demonises and punches down on social welfare recipients, irrespective of what payment they are on. It is a manifestation of a culture that needs to change. Pay-related benefits, if implemented correctly, will help to change this culture but it must be done correctly and it must be built upon once the Bill passes.

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