Income

PUP-style allowance payments on cards to avoid “income shock”

Higher unemployment benefits for workers who suddenly lose their jobs are part of the budget.

a longer-term plan to bring pre-retirees and former carers into part-time work is also in the works.

To avoid the so-called ‘income shock’ or ‘cliff edge’ of going from full pay to €208 payments, the newly unemployed would receive higher unemployment benefits to help them adjust.

The different rates would be based on individual income levels and how long a person has been unemployed. The intention is to help out workers who will be unemployed for a short time before finding another job.

The system is modeled after the PUP (Pandemic Unemployment Benefit) that worked during the Covid-19 lockdowns and restrictions.

At one time, there were five different PUP rates, ranging from €350 to €150 for part-time workers. Different compensation rates are common in other European countries and help workers adjust to their new, declining income levels.

The PUP provided a higher level of benefit to workers who lost their jobs due to the pandemic than normal unemployment benefits. The €350 per week was considered very important to maintain social solidarity during the crisis. At its peak, approximately 600,000 workers received the PUP. The weekly payment of €350 was finally abolished and joined the normal rate of €208 for jobseeker’s allowance.

But the PUP also showed the financial pressures on people who suddenly lose their jobs, especially low-to-middle income workers. The experience prompted a rethinking of state aid.

The PUP has also shown that it is easy to have different payment rates within the welfare system. However, the payment of different rates of compensation to workers depending on the duration of their unemployment is controversial.

Department of Social Protection officials are working out the details of how the proposal will work. A wage-related jobseeker’s allowance or basic income guarantee would form the backbone of the progressive social benefits proposal.

Social Care Minister Heather Humphreys is then due to present those proposals to Public Expenditure Minister Michael McGrath during the 2023 budget talks.

“The pandemic has shown that you can do the salary benefits and people agree on that,” a government source said.

“With salary-related benefits or ‘scaled pay’, you’ll get a higher payout rate for the first period after you lose your job.”

In the meantime, the government is also signaling a broader plan to entice workers back into the labor market. The number of people in employment in Ireland has soared to over 2.5million – the highest on record. The economy is approaching what is considered full employment, where the unemployment level is below 4%. The seasonally adjusted unemployment rate is currently 4.8% while long-term unemployment sits at around 80,000.

Around 40,000 work permits for staff outside the EU have already been issued this year, with hospitality joining technology and healthcare as the most in-demand sectors. A total of 870 cook permits have already been issued.

Pre-retirees and carers whose children have now grown up are particularly targeted to return to part-time work. Estimates show that there are hundreds of thousands of working-age people who could re-enter the labor market. But a plan should combine tax, social, health, education and pension rights and ensure that people would feel it was worth it, without losing the benefits. EU funding is available to roll out skills development and education programmes.

“You would need to find that sweet spot. All of these sectors tell you that they can’t find more staff. What are you doing to attract more people to the job market? said a government source.

The labor shortage was raised in a meeting with business groups attended by four ministers – Tánaiste Leo Varadkar, Finance Minister Paschal Donohoe, Mr McGrath and Deputy Minister Damien English.

The Small and Medium Enterprises Forum was supposed to discuss loans and access to credit for businesses by banks, but it strayed into labor shortages when brought up by Mr. McGrath. Work permits have doubled and company representatives have been given a clear indication that this will not be allowed to continue.