Ireland: Social partner’s involvement in unemployment benefit regimes

  • Observatory: EurWORK
  • Topic:
  • Social policies,
  • Published on: 20 December 2012



About
Country:
Ireland
Author:
Roisin Farrelly
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In Ireland unemployment benefit is administered by the State through the Department of Social Protection. Unemployment benefit is paid from the social insurance fund, which is paid up of contributions from employers, employees and Government.

Currently the Department of Social Protection is establishing a new National Employment and Entitlements Service (NEES), as provided for in the Programme for Government. According to the Department, “the objective is to integrate the provision of employment services and benefit payment services within the Department and in so doing to ensure that the payment of income supports to people who do not have a job is directly linked to the equally, if not more important, task of supporting such people in their pursuit of employment and related opportunities and improving their life chances. As part of this approach the Department is seeking to change its focus from the passive provision of transaction based services (claims processing and payments) to the active case management of clients.”

The social partners have no role in the administering of or decisions regarding levels of unemployment benefits. They do have a lobbying type role in pre-budget submissions with regards to levels of unemployment benefits. In addition, under the Social Partnership era, under some national agreements, the social partners did agree target social welfare and unemployment benefit rates. Under the Towards 2016 national agreement, the social partners committed to: “Achieving the [National anti-poverty strategy] NAPS target of €150 per week in 2002 terms for lowest social welfare rates by 2007. The value of the rates to be maintained at this level over the course of the agreement, subject to available resources.”

1. The characteristics of the UB system in the country

1.1. Recent changes/transformations of the UB system in your country:

1.1.1. In the last 10 years, has the country’s UB regime been modified? Have new forms of interventions been introduced?

  • Regarding the UI:

Unemployment Benefit was renamed ‘Jobseeker’s Benefit’ in 2006.

Jobseeker’s Benefit is a weekly payment from the Department of Social Protection (DSP) to people who are out of work and are covered by pay related social insurance (PRSI). Most employers and employees (over 16 years of age) pay PRSI contributions into the national Social Insurance Fund (SIF). In general, the payment of social insurance is compulsory. If you are in employment, the amount of social insurance you pay depends on your earnings and the type of work you do.

Key recent changes include:

  • In January 2009, there were changes to the number of PRSI contributions needed to qualify for Jobseeker's Benefit and an increase in the earnings limit for a graduated rate of payment. (see Q. 1.2.1 below)
  • From January 2011, the rate of Jobseekers Benefit was cut by €8 per week to €188.
  • In 2011, the employee’s annual earnings ceiling for PRSI was abolished and PRSI is now payable on all income.
  • As part of the jobs initiative announced by the government in 2011, the lower rate of employer’s PRSI was reduced from 8.5% to 4.25% for employees who do not earn more than €356 per week. This change came into effect from July 1, 2011 and will apply until December 31, 2013.
  • It was announced in Budget 2012 that there would be changes to Jobseeker's Benefit for part-time workers. However, these changes require legislation and are not yet in effect. According to the Department of Social Protection, the changes mean that where a Jobseeker's Benefit recipient is working for part of a week, the payment entitlement will be based on a 5-day week rather than a 6-day week. This means that for each day that a person is unemployed, one-fifth of the normal rate of Jobseeker's Benefit is payable and if they get part-time work for 2 days, they will get three-fifths of the normal Jobseeker's Benefit for that week. Furthermore, from January 2013, Sunday working will be taken into account when calculating the amount of Jobseeker's Benefit to be paid.
  • Regarding the UA:

Unemployment assistance was renamed Jobseeker’s Allowance in 2006.It is means tested payment to people who are unemployed and looking for work.

Recent key changes include:

  • The rate of Jobseekers Allowance paid to new claimants under the age of 20 was reduced from €204.30 per week to €100 per week, with effect from the first week of May 2009. In April 2009, then Minister for Social and Family Affairs, Mary Hannafin said the changes were made “to incentivise 18 and 19 year old jobseekers to avail of education and training opportunities and try to prevent their becoming welfare dependent from a young age, changes are being made to the Jobseekers Allowance… This decision was made on foot of ongoing consideration of unemployment and incentives policy by Government. It is not discriminatory but rather a targeted measure aimed at protecting young people from welfare dependency. Receiving the full adult rate of a jobseekers payment at 18 years of age, without a strong financial incentive to engage in education or training, can lead to welfare dependency from an early age. If they do not improve their skills, such young persons are at risk of becoming long-term unemployed from a young age. Therefore, it is considered necessary to provide 18 and 19 year old jobseekers with a strong financial incentive to engage in education or training or to take up employment that pays more than €100 per week.”
  • From January 2010, the rate of Jobseeker’s Allowance for new claimants aged 20 and 21 without dependent children was reduced to €100; for new claimants aged 22 to 24, without dependent children,  it was reduced to €150; and for all people aged 25 and over it was reduced to €196.
  • From January 2011, the maximum rate of Jobseekers Allowance was cut by €8 per week to €188.
  • Regarding the SA (if relevant):
  • Rates of many SA’s were cut by €8 per week from January 2011. Supplementary welfare allowance was cut by €10 per week to €186.

Social partners are not involved in decisions regarding social welfare, it is a budgetary matter for Government.

In general however, in pre-budget submissions for example, unions are against any cuts to rates of social welfare and employers are in favour of initiatives taken to improve competitiveness. Both unions and employers are generally in favour of initiatives which help unemployed people back in to the workforce.

1.2. The main characteristics of the UB system as it is now

1.2.1. Unemployment Insurance.

  • Coverage:

To qualify for Jobseeker's Benefit you must:

  • Be unemployed (you must be fully unemployed or unemployed for at least 3 days out of 6)
  • Be under 66 years of age
  • Have enough social insurance (PRSI) contributions and a certain class of contribution (See Q 1.2.1b)
  • Be capable of work
  • Be available for and genuinely seeking work

Self-employed people are not covered by Jobseeker’s Benefit (JB) as they pay PRSI class S which does not cover them for JB.

  • Eligibility:

To qualify for Jobseeker's Benefit you must:

  • Be unemployed (you must be fully unemployed or unemployed for at least 3 days out of 6)
  • Be under 66 years of age
  • Have enough social insurance (PRSI) contributions
  • Be capable of work
  • Be available for and genuinely seeking work

To qualify for Jobseeker's Benefit, you must pay Class A, H or P PRSI contributions. Class A is the one paid by most private sector employees. Class H is paid by soldiers, reservists and temporary army nurses, who do not qualify for Jobseeker's Benefit until they have left the army. To qualify you need:

  • At least 104 weeks PRSI paid since you first started work AND
  • Have 39 weeks PRSI paid or credited in the relevant tax year (a minimum of 13 weeks must be paid contributions*)

Or

  • Have 26 weeks PRSI paid in the relevant tax year and 26 weeks PRSI paid in the tax year immediately before the relevant tax year.

There are a number of circumstances in which credited contributions can be awarded. For example, pre-entry credits are given when you start employment for the first time in your working life. However, you can only qualify for Jobseeker's Benefit when you have actually paid 104 contributions. Credits are also awarded while you are getting certain social welfare payments, including Jobseeker's Benefit (provided it is for 6 days), Jobseeker's Allowance or Illness Benefit.

  • Duration:.

Jobseeker's Benefit may be paid for up to 234 or 312 days of unemployment. However, the duration of benefit varies according to the class of PRSI contribution and the number of total contributions paid since a person started working as follows:

  • If a person has 260 Class A contributions paid, they may be paid a total of 12 months (312 days).
  • If a person has less than 260 contributions paid they may be paid for a total of 9 months (234 days).
  • Replacement rates:

From December 30, 2010 the full weekly personal rate of JB is €188.00.

The personal rate payable depends on the claimant's average earnings in 2009 (this is the current governing contribution year). If the average weekly earnings in that year were €300 (gross) per week or more, the full personal rate of JB is payable. Where the average weekly earnings were less than €300, a reduced personal rate of JB is paid.

Jobseeker's Benefit rates are graduated according to your earnings in the relevant tax year. Since January 2009, a reduced rate of Jobseeker's Benefit is payable if your average weekly earnings in the Relevant Tax Year before you became unemployed were under €300. Your average weekly earnings is your gross yearly earnings from employment divided by the number paid A, H or P contributions in the Relevant Tax Year.

  • Financing:

Financed from the Social Insurance Fund.

The Social Insurance Fund, from its inception, was funded on a tripartite basis, with contributions from employees, employers and the self-employed, with a subvention from the Exchequer where there is a gap between income and expenditure. (KPMG Actuarial Review of the Social Insurance Fund as at 31 December 2010 – launched September 2012)

According to the Minister for Social Protection in November 2011:

“The Exchequer is the residual financier of the Social Insurance Fund and Exchequer contributions were the norm over 40 years.

For example in 1967, the State contribution was 38% of fund expenditure and almost 29% in 1985. However, no Exchequer contributions were required between 1996 and 2009 as the Fund was in surplus on foot of contributions from employers and workers.

The Social Insurance Fund has incurred an operating deficit each year since 2008. Total spending in 2008 exceeded total income in 2008 and that pattern has been repeated in subsequent years. This deficit was funded in 2008 and 2009 using the fund’s cash reserves accumulated in the earlier years of operating surplus.

The remaining balance of the accumulated surplus was fully depleted during 2010, with the shortfall in 2010 and again in 2011 being met by way of Exchequer subvention from Vote 38 in accordance with section 9 of the Social Welfare Consolidation Act 2005.”

The KPMG review found that the Social Insurance Fund has a significant shortfall of expenditure over income (provisional 2011 shortfall of €1.5bn on expenditure of €9.0bn but income of €7.5bn).

  • SP involvement:

The Social Partners are not involved in the administering of or decisions regarding unemployment insurance.

During the Social Partnership era, which ended in 2009, in the Towards 2016 Review and Transitional Agreement the Social Partners had agreed to “a target of €150 per week in 2002 terms for lowest social welfare rates by 2007. The value of the rates to be maintained at this level over the course of the agreement, subject to available resources”.

1.2.2. Unemployment Assistance. Are forms of UA present? If yes, please indicate their general characteristics with specific attention to:

  • Coverage:

It is a means tested payment. An unemployed person may get Jobseeker's Allowance if they don't qualify for Jobseeker's Benefit or if they have used up your entitlement to Jobseeker's Benefit.

  • Eligibility:

Unemployed people may get Jobseeker's Allowance if they don't qualify for Jobseeker's Benefit or if they have used up your entitlement to Jobseeker's Benefit.

To get Jobseeker's Allowance you must:

  • Be unemployed
  • Be over 18 and under 66 years of age
  • Be capable of work
  • Be available for and genuinely seeking work
  • Satisfy a means test
  • Meet the Habitual Residence Condition

If you get part-time or casual work (up to and including 3 days per week), you may still be paid a proportion of your Jobseeker's Allowance. However, you must show that you are trying to get full-time employment.

If your employer reduces your days at works to 3 days week or less, you may get Jobseeker's Allowance for the other days. You must meet the other conditions that apply to Jobseeker's Allowance, for example, you must satisfy a means test.

A lay-off situation arises where your employer is unable to provide work for you, but believes this to be a temporary situation and tells you this before the work finishes. If you are laid off work you may get Jobseeker’s Allowance. You will not get Jobseeker’s Allowance for any day you are getting holiday pay.

If you are self-employed, you may be entitled to Jobseeker's Allowance, depending on your income from your business.

If you have just left school you cannot get Jobseeker's Allowance. To get Jobseeker's Allowance you must be out of school for three months and you be at least 18 years of age.

  • Duration:

Jobseeker's Allowance is payable for as long as the qualifying conditions are satisfied.

  • Replacement rates:

The total household means is deducted from the maximum payment (usually this is the personal rate including any increases for adult and child dependants) to find the actual amount of Jobseeker’s Allowance the person is entitled to.

  • Financing:

Financed from the Social Insurance Fund (see Q. 1.2.1.e)

  • SP involvement: Yes/No. If Yes, specify briefly:

No

1.2.3. Social Assistance. Are SA programmes with a direct relationship with the UB system and/or SP involvement present? If yes, please highlight the factors underlying such a relationship.

In Ireland there are a number of SA schemes. Jobseekers allowance (JA) is considered to be a form of social assistance. Social assistance payments are for people who do not have enough PRSI contributions to qualify for the equivalent social insurance payments.

There is not social partnership involvement.

In addition to JA, other SA payments include:

2. SP involvement in the UB regime

Social Partners in Ireland are not involved in the development, implementation, management or monitoring of UB or UA. They do have a lobbying type role in pre-budget submissions with regards to levels of unemployment benefits. In addition, under the Social Partnership era, under some national agreements, the social partners did agree target social welfare and unemployment benefit rates. Under the Towards 2016 national agreement, the social partners committed to: “Achieving the [National anti-poverty strategy] NAPS target of €150 per week in 2002 terms for lowest social welfare rates by 2007. The value of the rates to be maintained at this level over the course of the agreement, subject to available resources.”

2.1. The development phase

N/A

2.1.1. In your country, did SP participate in the development phase of UB programmes over the last decade?

2.1.2. If yes, please provide detailed information on the SP involvement in the development phase of UB regimes with respect to the following dimensions, distinguishing between UI and UA and reporting any important changes during the decade.

2.2. The implementation phase

SP involvement in the implementation phase reflects their influence on the practical mechanisms underlying the provision of UB. Here the focus is on the procedures underlying a UB system and, the tasks performed by SP in this context.

N/A

2.2.1. Distinguishing between UI and UA programmes, please describe the SP' role in accomplishing specific functions related to UB schemes (such as selecting the officials in charge of UB’ services, collecting contributions, etc).2.2.2. Furthermore, please analyze such SP involvement in terms of:

2.3. The management phase

SP are involved in the management phase as long as they are totally or partially responsible for the organisational asset behind the provision of UB.

N/A

2.3.1. In this case, distinguishing between UI and UA programmes, please describe SP’ role in terms of:

2.3.2. Distinguishing between UI and UA programmes, please describe the role of SP in case they are engaged in the financial management of the UB funds.

2.3.3. Distinguishing between UI and UA programmes, please answer to the following questions:

2.4. The monitoring phase

N/A

2.4.1. SP involvement in monitoring/evaluating the UB performance2.4.2. monitoring the SP involvement in the UB system

3. Final observations

3.1. Public debates and policy discussion:

N/A

3.2. Research:

Union position

As part of its’ ‘Fairer Better Way’ campaign, the Irish Congress of Trade Unions (ICTU) launched a ten point plan for national recovery in February 2009. The first point referred to the social welfare regime as follows:

Protecting Jobs & Tackling Unemployment

“Our social welfare system must be radically altered and integrated with skills enhancement, education and training. In a number of European countries, unemployed workers are guaranteed incomes of 80 percent of salary for two years, conditional on their participation in extensive training and upskilling. Employers are also assisted to identify alternatives to redundancy, such as short term working weeks and other arrangements.

A similar scheme, modified for Irish conditions, could be funded by amalgamating current expenditure on benefits with additional funding from the Public Capital Programme (PCP). This approach should be complemented by reprioritising the PCP to support job protection and labour intensive activities.”

Responding to Budget 2011 in December 2010, the Irish Congress of Trade Unions criticised cuts to social welfare payments contained in the Budget as “draconian”.

In its’ pre- Budget submission for 2012 – submitted in November 2011 – ICTU stated:

“There should be no further cuts to social welfare and strategies are needed to help the working poor and safeguard income supports for people with disabilities. More flexibility should be shown around part time work when assessing benefits or allowances for people out of work.”

“Unemployment damages individuals, families, communities and the wider economy. It can be tackled by halting the downward spiral that has gripped Ireland since late 2008. Cutting welfare rates … feeds this downward spiral by removing consumer spending from the economy.”

Employer position

In 2009, the Irish Business and Employers Confederation (IBEC) launched a discussion paper on labour market programmes. The paper highlights key principles for IBEC on the reform of the social welfare regime which include:

  • The unemployment benefit system should provide a relatively strong short-term safety net but should involve a phased reduction of benefits. The short-term benefit rates should have a greater earnings-linked dimension and the minimum rates should be at least 50% greater than long-term benefits
  • Benefit payments should be strictly conditional on availability for work; or participation in active labour market measures; work-place internships; training / education or social employment programmes.
  • The level of interaction between the unemployed and the public employment services will need to be substantially increased. This will require radical reform of existing structures and some re-deployment of public sector workers
  • The welfare system should be supportive of work-place internships for both recent graduates and experienced workers. Participants in approved internship

In 2010 IBEC Director Brendan Butler stated: “International evidence shows that reductions of the unemployment benefit in cases of non-compliance with job search criteria or programme participation can be effective in encouraging the transition from welfare to work. By international comparisons, Ireland has a very low rate of interviews for social welfare claimants, with attendance at compulsory interviews per person in the labour force about 30 times lower than in the UK. The Government must strengthen job search incentives to encourage people back to work. Benefits should be conditional on participation in activation schemes such as the one announced by the Minister– claimants should be required to show evidence of job search, attend frequent interviews with employment counsellors, apply for vacant jobs, comply with other instructions and implement a personal action plan.”

3.3. Other issues:

N/A

4. Commentary

In Ireland the unemployment benefit system is managed and administered by the Government through the Department of Social Protection. The social partners have no role in the administering of or decisions regarding levels of unemployment benefits. They do have a lobbying type role in pre-budget submissions with regards to levels of unemployment benefits. In addition, under the Social Partnership era, under some national agreements, the social partners did agree target social welfare and unemployment benefit rates. Under the Towards 2016 national agreement, the social partners committed to: “Achieving the [National anti-poverty strategy] NAPS target of €150 per week in 2002 terms for lowest social welfare rates by 2007. The value of the rates to be maintained at this level over the course of the agreement, subject to available resources.”

4.1. Assessments and comments: 4.2. Perceived strengths and weaknesses:

N/A

Roisin Farrelly, IRN Publishing

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