Éamon Ó Cuív raises concerns on pay-related jobseeker changes

I think this is a very interesting proposal, but there are a number of details in relation to it that maybe you could clarify or I would like to make a comment on, because what you often find, and I think those of us who do our constituency clinics assiduously, that there can be a great concept with details in it that are very much at variance with the reality of lived lives. So the first question I have, it says at the bottom of page 2, it says that to qualify, this is the document that we got, the initial document, that to qualify a person would have to have six months paid contributions in the 12 months prior to the claim. Now what this seems to say is that if you are out in illness benefit in the 12 months prior, that you wouldn't be entitled to the job seekers benefit paid related. That seems to me to be unfair, because when a person is made unemployed it isn't their control and when a person gets ill it's not their control, so that's the first one. Now the second one, and you could clarify this, I was reading it carefully but I wasn't absolutely sure, it said that the pay related job seekers benefit would last for six months. Does that mean that job seekers benefit will be reduced from nine months to six months or that only the pay related element would be reduced to six months? So maybe just clarify that because there's a rider on the answer. The short answer is yes, a reduction from nine months to six months. Yes, I'd have to say to you that when I read that I said, hang on a second now, most, well, an awful lot of people are either partners or couples, in other words, they have a partner. And what that means is that they're not entitled to job seekers alone. And that's obviously an increasing phenomenon of unemployment at the moment, that when one person comes to unemployment they need the two incomes to survive, pay mortgages and all the rest, to put kids to school and do all the other things they need to do. And when they become unemployed, to get job seekers benefit because that's not means tested, but the minute, the minute that's over, it's game over, they're not able to go on the schemes, they're not able to go on community employment schemes and to get no payment, no payment whatsoever. So I was saying to myself, well, okay, if I was somebody's partner, and I was in this situation, or somebody come into my constituency clinic, and I gave them the option of six months of a pay related scheme and fall off the cliff into nowhere, literally into the abyss, or actually just do the simple thing, increase job seekers benefit back to 12 months as it used to be. Which would I take? And I think this committee has to consider that, and I hope that maybe you consider that as well, right? Now, the next point is, there seems always, I notice now, for example, means testing of non-contributed pensions. If you're in employment, you can earn €200 a week, but if you're in self-employment, you can't earn anything without it being means tested. So there seems to be a kind of allergy to self-employment in the department. Now, it says on the second page again of the document we had that this scheme wouldn't be open to the self-employed, and it gives basically two reasons. One, the lower contribution that's paid, that I accept. That issue should have been addressed years ago, because once we started introducing a whole lot of benefits for the self-employed, it would be reasonable that they would pay more PRSI than they are, and it would have been fantastic value. Even in its crudest form, with just the state pension available on the self-employed, on an actuarial basis, it was better value than the employer or employee contribution. Therefore, we have already discussed the fact that the self-employed, and it has been discussed in the context of the pension age, that that will have to go up, the self-employed contribution. Therefore, I think in a joined up world, you would say, well, if the self-employed element here was going to be covered, it would mean a rise of so much in the self-employed contribution, 0.5% or 0.6% or 0.639% or whatever it would be. And the second reason you give is, well, you don't know how much income they have. But a self-employed person has to make a tax return. And if they had to make the tax return for the previous year to be eligible for this, so be it. But I don't think that it would be a very big cost. And I think it would be for those people who suddenly find themselves unemployed from self-employment. And we had a lot of people during the downturn that that happened to. Again, you're back to the JSAJB, because again, a lot of those are partners who are working and are not entitled to job seekers allowance. It's also stated in the document that extending the scheme to nine months could cost 50% more. But what, of course, this implies is that everybody who goes six months will go nine months. But then the document says, and you've just reiterated this, that 11 weeks is the kind of, you know, where they're beginning to drop off. And that is my understanding. However, the document says that 70% of JSAJB recipients exit the scheme within six months. So you're actually dealing with 30% after six months. That's at the threshold of six months and a lot of those fall off again between six and nine months. Once the year is over, my understanding, you're well up and a very high percentage are back in employment. Therefore, it seems to me that keeping it at the nine months wouldn't be that expensive or certainly wouldn't be as expensive as this document says. So they're just points I picked up when I read this document. It is useful. It's an interesting concept. But as I said, the big, big question, the big, big, big overarching question here is shorten and increase or lengthen and flat. And for an awful lot of people, the longer payment actually would be better because an awful lot of people are partners who are working. Mr Heshan. Thanks, Deputy, for those questions. I think when I was here before in the context of a disability discussion, I think it was this committee anyway, I was asked about the pay related benefit and the straw man. And I think I characterised it at the time that it was a bit like when you go to IKEA and you see a mock up of an apartment. So in other words, if you said to somebody, what do you want to have in your apartment? It's very hard. There are too many variables. So sometimes the easiest thing to say is, well, here's what one would look like. And everything is customisable. So you can that's effectively what a straw man proposal is. You you set out. This is what one version of a pay related job seekers benefit looks like. And exactly as you say, deputy, each of these variables can be changed. And every time you change one, it will have an effect maybe on cost on behaviour on coverage. So really, the purpose of the straw man proposal is to get people's view on precisely the questions you're raising. So is it better to have a lower payment for longer or a higher payment for shorter? And what are the implications of a wider course of action? So these are exactly the kind of views we're looking to sort of draw out in this. In terms of your first question about illness benefit and the same question, I think also applies to things like maternity benefit, etc. Just like your IKEA mock up, when you turn on the taps, they don't necessarily work because they're not fully plumbed. I think a later sort of iteration has to look at how would it connect them with the wider social welfare system. But it would not be our intention that people would, because they're on another scheme, you know, that they would fail those contribution tests. I think the intention would be that we would try and capture those in further refinements of any proposal like this. In terms of the six month duration and the costings. Yeah, we have some preliminary modelling and those are reflected in the costings that are kind of indicative, really. We haven't simply just looked at numbers. We've also looked at what sort of behaviours around durations post six months into nine months. We went back to 2019 figures. So pre-pandemic to try and get a sense of those costings. So yeah, there is a sort of behavioural aspect as to, you know, not everyone will necessarily stay to the full duration. And in fact, you know, the experience is that on average, most people are gone within the first sort of three months or so. In terms of the partner, yeah, after, so we know from job seekers benefit. I think I'm just trying to, yeah, so 90% of people on job seekers benefit are on the personal rate. In other words, they don't have dependents or they're not claiming for dependents. And so it's one of the questions then is the current system is very much around. It's already pay related in the sense that there are bands, although 85% of people on the top bands. So the bands aren't all that meaningful. And then it's also based on family composition with qualified adults, qualified children. But 90% of people are just claiming for themselves, but no alternative. So on that basis, you're right that people would, after six months, would then be, that would be the end of their benefit if they're still on the payment. At that stage, they would be on the means-tested schemes. And as with all means-tested schemes, if there's other income in the house, if there's other supports, that would affect their treatment in the means test. Self-employed, again, all this is customisable. But just to say on self-employed, the job seekers benefit for self-employed is a relatively recent scheme. In 2019, we brought it in. We don't have real-time information. Unlike job seekers benefit for employees, which is pay related in a banded way, job seekers benefit for self-employed is not. And you have to be fully unemployed to avail of it. We don't have real-time lookup. That was one of the issues we came across with PUP when it comes to self-employed income. There's a lag in reporting. Whereas in the case of pay related benefit, what we'll do is we'll look back three months and then the 12 months before that. We'll have a good picture of your income over a year, including the various variations, you know, over the course of the year. So we'll have good information. We won't have that for self-employed. And then another cohort that I think we haven't yet cracked, I think, are those who combined self-employment with employment. They were especially complex to try and calculate for PUP. So as I say, the scheme design is at a level that allows us to paint a picture and get views. There are design questions within that and exactly as you say, these are customisable. Ultimately, the cost under the program for government commitment is to be met by PRSI contributions. So rather than exchequer. So to some extent, it's a question of how much benefit, you know, is the right balance in terms of the con rate. But the contribution rates changes that would be necessary for these costs are not enormous. I'll make one comment. As we know, lots of people are in relationships and don't have children. So many more people have children later in life than they would have had before. So the measure of not having dependent for the basis of JB is a kind of null set. It's kind of invalid because if you have a working partner and no dependent children, they won't show up as having a dependent. Because the partner will have their own income and therefore they can't claim under working partner. But it doesn't tell us how many people of the JB's with no dependents do or don't have partners who are working. And a large amount of people live in relationships. I think any casual observation in the clinic would tell you that. And therefore, and it's a relationship, in other words, that counts here. Therefore, a huge, huge number of people would be excluded or would lose their payment very early under this. And I think I wouldn't like to be sitting in the clinic answering that one, to be honest, that would cut it to six months rather than extend it to a year. And we give you a bit more for six months. Yes, for the person a very short time on job seekers benefit would be an advantage. But nobody knows that when they want job seekers benefit. Mr. Hessian, in relation to Deputy O'Keefe's question about the 50% increase going from six months to nine months, I'm confused with your answer because I didn't get I didn't understand how you could claim that it's 50% more expensive to go from six months to nine months. What's the mathematical basis for that? I don't have the detailed costings on that in front of me. But essentially what we've done within the department is we've tried to model different durations. And we've tried to model based on the 2019 figures. And you do get exit rates. You're trying to base it on what were the exit rates in 2019. And because obviously job seekers benefit at present is nine months. We've good visibility over the duration of a nine month claim. And we said we sort of ran sort of models around that. And that was the cost differential. I suppose you have a mix of things. You have those who would otherwise come off a payment at six months sort of continuing beyond that. There's also I think perhaps some effect in terms of duration on claims, even shorter claims and not go on a bit longer. You also have other effects with other schemes and the interplay with other schemes. So there's a complex range of factors there, but we can give you a note on it if that's helpful. And the description... So...