Monday 22 January 2018

Varadkar may have opened a can of worms over benefits, but difficult issues must be tackled

'Mr Varadkar also raised the option of combining USC and PRSI into a social charge that would “be linked to wider and better benefits”.' Photo: Tom Burke
'Mr Varadkar also raised the option of combining USC and PRSI into a social charge that would “be linked to wider and better benefits”.' Photo: Tom Burke

Anthony McCashin

In recent articles in the Irish Independent ('We need to cut taxes but increase social insurance to get a fair society', March 25) and 'Sunday Independent' ('Choice is between those who want to go back and those who look to future', January 12), Social Protection Minister Leo Varadkar raised important questions about the future of our social insurance system.

Should people's entitlements be based on paid social insurance contributions? The minister's logic is about reciprocity: people who can pay, should pay something into the system "knowing they will get something out of it". There are practical arguments too for social insurance; it generates an earmarked fund to pay benefits, reduces means-testing, creates a sense of entitlement and provides an alternative, necessary form of insurance in the absence of commercial insurance (for example, there is no commercial market for unemployment insurance).

Social insurance has its limits, however. Inherently, contributions are linked to paid employment, but the percentage of the population most likely to have limited or no contributions is growing; lone parents, people with a disability, women in the home, and the precariously employed. The practical solution to this problem is to allow exemptions, to give notional and credited contributions, and so on. However, the more these departures from paid contributions are allowed, the less the system conforms to social insurance principles.

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