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Government plans to link unemployment payments to past working history and PRSI contributions

With the phasing out of the PUP, government is keen to bring in pay-related unemployment payments.

Image: Shutterstock/Yulia Grigoryeva

GOVERNMENT WANTS TO introduce reforms in October’s Budget whereby unemployed people receive social welfare payments linked to their previous PRSI contributions. 

Taoiseach Micheál Martin said today that the legacy of the Pandemic Unemployment Payment (PUP), where some are paid up to €350 per week rather than the usual €203 Jobseeker’s Payment, is that a new social welfare system can be created. 

The Journal.ie first reported in February that work was underway to map out how such a system might work, with Tánaiste Leo Varadkar stating that when the PUP is wound down, there is an opportunity to reform the current system. 

The scheme would involve linking social welfare payments to people’s past working history, and would be a significant change to the social welfare system. 

The proposal would see those who have been in long-term employment entitled to a higher payment than the current standard social welfare payment, receiving a percentage of their salary for a specific number of weeks or months when they lose their job.

Once the interim period is over, they would then receive the standard payment only.

For those who do not have enough contributions, they would be placed on the existing Jobseekers payment of €203.

Varadkar said such a system is the norm in Europe, adding that the duration of benefit payments would vary according to how long a person had paid into the system and their age.

Speaking to reporters today, the Taoiseach said such a system existed in the past in Ireland, and he would like to see it re-introduced.

The new scheme would ensure that someone who is laid off or who loses their job doesn’t face a cliff-edge in terms of a fall in their income, explained Martin.

He said it would be a “graduated sort of process” where over time a person could sustain, in the early phase of a period of unemployment, an income somewhat close to what their employer paid. 

The Taoiseach said work was underway on how to engineer such a system, stating that it is important to learn lessons from the pandemic.

Varadkar told The Journal that he is a “strong supporter of pay related benefits”, adding that work is underway, led by Social Protection Minister Heather Humphreys, on a new pay-related system.

“I think if people pay PRSI for years and years and years, in the initial weeks and months after they lose their job they should receive a higher payment.”

“It has been long time since we had a welfare package in the Budget,” Varadkar pointed out, stating that it has been the “best part of three years”.

“So yes, we would very much like to see social welfare package in the next Budget but if there’s going to be welfare package there has to be tax package too,” he said.

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Varadkar said he would like to get back to a place where there are annual social welfare and tax packages in the Budget, but added “that costs money”.

Fiscal space has to be created to ensure such a package could become a reality, he said, stating that in his view, the best way to afford such a package come October, would be rapid growth and getting businesses back open.

Another option is raising PRSI for employers and employees, but Varadkar said he would be reluctant to introduce that change, stating that it was “too soon” given what workers and businesses have gone through in the last year.

Humphreys told reporters at a press conference today in Government Buildings that she has asked her officials to look at pay-related benefits, stating today: 

I think we need to do that, my officials are looking a that specifically.

Public Expenditure Minister said he is also conscious that it has been a number of years since there has been any change in core social welfare rates.  

He told reporters today that he was sure the social protection minister is eager to have a social welfare package in the Budget come autumn, stating that those discussions would be taking place over the next couple of weeks and months.

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