Legislation introducing a new pay-related social welfare payment for recently unemployed workers has been signed into law by President Higgins today (Monday).
Welcoming this radical reform of contributory Jobseeker’s Benefit, Irish Congress of Trade Unions general secretary Owen Reidy said:
"For too long workers have been left to endure a collapse in income and living standards after losing their job. The financial fallout for families and a local economy was brought into sharp focus this time last year when the 650-strong workforce in Tara Mines were laid off.
"Ireland is one of only four EU27 members states, along with Greece, Malta and Poland, to pay the same flat-rate payment to unemployed workers (€232 a week), despite workers paying pay-related social insurance (PRSI) contributions when in employment.
“Across the rest of the EU, contributory social welfare benefits are pay-related - the weekly payment is a percentage of a worker’s previous wage, to allow workers continue to pay their mortgage and other bills so as to secure their normal living standards in the short-term while looking for a new job.
“Under the new Pay-Related Jobseeker’s Benefit, workers with a strong attachment to the labour market and long record of paying PRSI contributions will receive 60% of their previous gross weekly wage up to a maximum €450 a week, almost double the current rate.
“The Irish Congress of Trade Unions and affiliated unions welcome this legislation to modernise unemployment insurance and strengthen the social safety net for workers. For us, this is only the beginning of a shift toward a more European-style social insurance system. Pay-related family leave must be included in the next Programme for Government.”
Government intends for this new payment and keeping the qualifying age for the State pension at 66 to be cost neutral, with all costs being recouped via a 0.7% increase in employee, employer and self-employed PRSI contribution rates phased in over five years. The Social Welfare (Misc. Provisions) Act 2024 will result in a worker on the average wage pay .90c more a week in PRSI when the first 0.1% increase kicks in from 01st October.
Mr Reidy said: “Unions recognise that social spending must be sustainable. However, the estimated €62 million yield from the 0.1% increase in PRSI contributions this year will be all but wiped out by the decision to simultaneously increase the cut-off point at which employers must pay a full PRSI contribution on behalf of their employees. Government must publish the options paper on which they based their decision on the application of the lower rate of employer PRSI contribution. The lack of transparency risks doing untold damage to support for their PRSI roadmap to a sustainable social welfare system.”
NOTES:
The current €232 Jobseeker’s Benefit for unemployed workers replaces just 25% of the average weekly wage or 47% of the full-time minimum wage. Whereas pay-related unemployment benefits in Belgium replace 91% of a worker’s previous wage, 79% in Denmark and 69% in the Netherlands.
From November, Jobseeker’s Benefit will be replaced by a new Pay-Related Jobseeker’s Benefit for PAYE workers who have a minimum and recent employment history and record of paying PRSI contributions and are fully unemployed.
The payment amount and the period it will be paid for will be linked to the unemployed worker’s previous earnings and PRSI contribution record –
• An unemployed worker who has worked and paid PRSI for five or more years will receive 60% of their previous gross weekly wage up to a maximum €450 a week for the first 3 months of unemployment. This will reduce to 55% capped at €375 a week for months 4, 5 and 6 and to 50% capped at €300 for months 7, 8 and 9. If the worker is still unemployed after 9 months they can transfer over to the means-tested payment for the long-term unemployed, Jobseeker’s Assistance (€232).
• An unemployed worker who has worked and paid PRSI for between two and five years will receive 50% of their previous gross weekly wage up to a maximum of €300 for the first 6 months of unemployment. If the worker is still unemployed after 6 months they can transfer over to the means-tested payment for the long-term unemployed, Jobseeker’s Assistance (€232).
The average time spent on contributory Jobseeker’s Benefit is 13 weeks, with 70% of workers in a new job within six months of signing on.
