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New unemployment payment linked to past working history set to be introduced when PUP is phased out

Varadkar said the phasing out of the PUP provides an opportunity to reform the country’s social welfare system.

Image: Shutterstock/sebra

A NEW INTERIM payment for unemployed people linked to previous PRSI contributions is likely to be introduced by government when it begins phasing out the Pandemic Unemployment Payment (PUP).

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 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.

Similar social insurance contribution schemes exist in other countries in Europe.

Speaking to TheJournal.ie, Tánaiste Leo Varadkar confirmed that talks are underway to extend the PUP past the summer. 

However, he said when the payment is eventually wound down, it is an opportunity to reform the current social welfare system. 

“I think part of phasing out the PUP isn’t just about phasing it out, it’s bringing in a new payment to give people a little bit more in the first couple of weeks or first couple of months of unemployment, because it is very hard to adjust to the income you were getting from work to a social welfare income. I think that it is one of the positive aspects of the pandemic alongside statutory sick pay,” he said.

Varadkar said such a system is the norm in Europe.

Those in government sees the period where the PUP will be phased out as an  opportunity to bring in the new plan to ensure that there is no return to the status quo in terms of the social welfare system.

It is believed it would help in event of future short lockdowns or temporary layoffs. 

Similar to the PUP, this a prior-income related payment. The PUP is a social welfare payment for employees and self-employed people who have lost all their employment due to the Covid-19 pandemic. 

The payments range from €203 to €350, depending what you earned before losing your job. 

The new scheme would see someone who had been paying PRSI for years getting a little bit extra if they fall on hard times and lose their job.

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

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A similar scheme operates in Germany where the social insurance system sees anyone who has paid those premiums for at least one year over the past 24 months being entitled to unemployment benefit which can see those with children claiming two-thirds of their previous salary, while those without children can claim 60%.

The duration of benefit payments varies according to how long you have paid into the system and your age.

It is not the first time such an idea has been floated. Varadkar proposed the idea when he was Social Protection Minister, and when he was first elected Taoiseach. 

The issues being considered in the roll-out is the cost of such a scheme, though it is argued it could be a scaleable plan. 

Government expects some in the Opposition might argue that everyone should get the same flat rate payment if they are unemployed.

Varadkar said there is already disparity in the current situation whereby there are people who are on the old Jobseeker’s Allowance, who lost their jobs before the pandemic and then people who have a higher payment because they lost their jobs as a consequence of the pandemic.

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