Welfare trap is stopping people from taking jobs
Published 27/08/2013 | 04:49
A STRING of welfare traps that are stopping people taking up work have been identified in a damning government report.
It finds large numbers of people are turning down jobs because they will lose welfare benefits.
And workers in low-paid jobs are reluctant to work extra hours because they will end up losing valuable social welfare payments – which would leave them worse off overall.
The damning criticism has come from an agency that is part of Social Protection Minister Joan Burton's own department.
The Citizens Information Board, which is funded by the Department of Social Protection, revealed a series of 'welfare traps' – where people turn their back on work because they fear they will be excluded from benefits.
It comes as Ms Burton is under growing pressure within the Government to do more to cut welfare spending and compel claimants to pursue job opportunities.
Ms Burton has been instructed to reduce her €20.3bn annual budget by €440m next year, a decrease of more than 2pc.
And her department has been repeatedly criticised by the bailout troika of the IMF, EU and ECB for not doing enough to encourage people back to work. The troika is concerned that if action is not taken quickly to help people who are out of work, they will be trapped on the dole queues for years and may never work again.
Tensions are mounting within the coalition over the slow pace of social welfare reform and missed targets. Taoiseach Enda Kenny is taking an active interest in the area – and closely monitoring Ms Burton's efforts.
Now the Citizens Information Board has found that welfare traps are undermining efforts to kick-start the labour market.
The latest report comes a year after former Economic and Social Research Institute professor Richard Tol found in an academic paper that thousands of working families with children would be better off on the dole.
The ESRI later watered down the findings.
Last night, Mark Fielding, of small firms lobby group ISME, said thousands of people would take up work if they did not end up worse off due to the loss of welfare benefits.
"It is clear from the comments and complaints that we get on the ISME helpline that there are significant numbers of people on the Live Register who are in a position where the difference between in-work income and out-of-work income reduces the incentive to work."
Government sources said the report was "a reminder of the need for increased urgency in the implemenation of job activation measures."
"So a dent can be put in the Live Register. The problem will not solve itself," a senior source said.
Attempts to get people back into work are known as activation schemes.
The Citizens Information Board report states: "Employment disincentives/welfare traps, and some difficulties accessing employment support schemes, are undermining the policy intent of labour activation schemes and that of tackling welfare dependency."
Entitled 'Social Policy Quarterly Report' for January to March of this year, the report is based on feedback from staff at Citizen Information Board (CIB) offices across the State.
The CIB provides free face-to-face information to people on everything from debts to welfare services at 268 locations.
Outlined in the report are traps forcing people to keep claiming social welfare. These include:
* The 30-hour rule that means those getting valuable rent supplement will lose it if they work more than 30 hours a week. Some 85,000 people get rent supplement, which is worth up to €1,000 a month for a couple with two children in Dublin, and €400 a month in Donegal for the same-sized family.
* People who get jobseeker's allowance, or jobseeker's benefit, will lose it if they work more than three days a week. The eligibility criteria for these two types of dole payment are "proving a disincentive to taking up or staying in part-time work", according to the report.
Exposed in the report is an anomaly where two people work just 15 hours a week in a low-income job. One of them could be on a high dole payment, as long as they work no more than three days a week. But if the other person works the 15 hours over more than three days they will not get a jobseeker's payment.
* Family income supplement only goes to those who work 38 hours or more a fortnight. This means many of those on low incomes do not get this payment. It is effectively a state top-up to those in low-income jobs to encourage them to take up a job.
* People getting the one-parent family payment who are working part-time are losing this following recent changes. They then find they cannot get other payments.
In one case quoted in the report, a man working part-time and claiming jobseeker's allowance and rent supplement has been offered more hours in work. This will mean he works 33 hours a week. If he takes up the extra work he will lose both welfare payments.
The man would be entitled to family income supplement, if he takes the job. But even with the income supplement he will be €70 a week worse off.
The report recommended that the department conduct a review of eligibility criteria.
A spokesman for the Department of Social Protection said: "It is recognised that a changing labour market has resulted in a move away from the more traditional work patterns, with a consequent increase in the number of persons employed for less than a full week.
"This is an important policy issue for the Department of Social Protection but any changes to the current criteria could have significant cost implications and require careful consideration."
By Charlie Weston Personal Finance Editor