Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

438. To ask the Minister for Social Protection the extent to which she and her Department have examined issues preventing or discouraging persons, those unemployed from obtaining employments; if she has examined various schemes available to her Department with a view to ensuring adequate incentivisation; and if she will make a statement on the matter. [4241/14]

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context | Oireachtas source

I established the Advisory Group on Tax and Social Welfare in 2011 to harness expert opinion and experience to address a number of specific issues around the interaction of the tax and social protection systems, recommend cost-effective solutions as to how employment incentives can be improved and better poverty outcomes achieved.

The Advisory Group is currently progressing its final module of work on the issue of working age income supports and the interaction of the tax and social welfare systems to determine how the social welfare system can best achieve its goals of supporting persons through periods of involuntary unemployment while incentivising work and disincentivising welfare dependency. The Group will report to me on these issues once their examination of the various issues has been completed.

As part of their analysis the Advisory Group are examining replacement rates for given income levels. Replacement rates are tools used to measure the degree to which out-of-work benefits when unemployed replace take home income from work. While there is no pre-determined level of replacement rate, which would influence every individual’s decision to work, higher replacement rates may indicate lower incentives to take up employment. In this regard a replacement rate in excess of 70% may be considered to be excessive.

Replacement rate analysis, as supported by research by the ESRI, demonstrates that the great majority of people on the Live Register have a strong financial incentive to work and significant numbers leave the Register each year.

In this regard it may be noted that almost three-quarters of the people on the Live Register are only claiming a personal rate for themselves. They are either single or may have a spouse or partner who is working. In addition, 52% of the people on the Live Register receive less than the maximum personal weekly rate.

High replacement rates are generally associated with a relatively high number of dependent children and/or receipt of rent or mortgage supplement. However, it is important to note that only some 9% of persons on the Live Register are in receipt of rent supplement, with a further 1.5% in receipt of mortgage interest supplement. The vast majority of jobseekers do not receive these additional supports.

Significant moves have already been taken to address the impact of housing entitlements upon replacement rates. Arising out of commitments in the Programme for Government to review the operation of the rent supplement scheme, proposals to integrate the systems for providing rent supplement and social housing support have been advanced. It is intended to transfer responsibility for the provision of rental assistance to persons with a long term housing need from the Department of Social Protection (currently provided through rent supplement) to housing authorities using a new housing assistance payment.

The effect of this transfer and the introduction of a new form of housing assistance payment will be to address one of the significant disincentives to accessing full-time employment that exists under the rent supplement scheme. This will have a positive impact on replacement rates.