Wednesday, 6 May 1992
Dáil Éireann Debate
10. Mr. Sherlock asked the Minister for Social Welfare if, in regard to his comments in a recent media report (details supplied) to the effect that people on social welfare were afraid to take a short term job in case they lose out, he will outline the steps, if any, he intends to take to address this situation; if he will consider allowing people on social welfare limited working without losing their entitlement; and if he will make a statement on the matter.
86. Mr. Durkan asked the Minister for Social Welfare if he has any plans to improve or extend social welfare or supplementary entitlements to ensure that those who do become employed do not lose all entitlements, particularly if their income from employment is only marginally higher than that obtainable from unemployment; and if he will make a statement on the matter.
As pointed out in the newspaper article referred to, I am aware of the reluctance of some social welfare recipients to take up employment, or even part-time employment, because of the risk of losing their secondary social welfare benefit such as the fuel allowance, butter vouchers, Christmas bonus, medical card and differential rents.
I am determined, however, to maintain the real value of social welfare benefits while still promoting the incentive to work. In this regard, the family income supplement scheme has proved to be a valuable incentive mechanism for families on low pay by encouraging them to continue in employment.
The question of disincentives has also been addressed in the context of the area-based partnerships established under the Programme for Economic and Social Progress. Local companies have been established in 12 pilot areas with a history of high unemployment. There are an estimated 25,000 people who are currently long term unemployed in these areas. The companies are responsible for monitoring and evaluating local initiatives.
Only last week, the Taoiseach announced special measures to improve the position of long term unemployed people in the designated areas. These measures include the payment by my Department, for a period of 12 months, of the allowance equivalent to unemployment payments to a person who is  starting a business and whose project has been approved by the local company. The object of this arrangement is to ensure a family income while the new business is getting underway. In addition, the long term unemployed person starting their own business will be able to retain the secondary benefits associated with their social welfare payment for a period of 12 months.
A person who takes up paid employment will also be able to retain their secondary social welfare benefits subject to satisfying an upper income limit which is to be specified by my Department in consultation with the Department of Finance. Furthermore, those participating in recognised education, training and employment or work experience programmes will be able to retain their secondary social welfare benefits for the duration of the programme.
I am confident that, within the context of the area partnerships, these measures will greatly assist in removing what are perceived as strong disincentives to taking up employment. In the longer term, the question of a more coherent and co-ordinated linking of the tax and welfare systems will have to be considered and the issue is now to be looked at by the central review committee of the Programme for Economic and Social Progress.
Mr. Byrne: Would the Minister not agree that in regard to the carrot he is offering to the long term unemployed the reality is that these people are expected to find their own employment, to become self employed and to comply with numerous conditions, not least of which is sanction under one of the 12 pilot projects and that, instead of 25,000 people being taken off the live register, the net result will be that no more than a couple of hundred people will be taken into employment?
Mr. McCreevy: What I said was that there are 25,000 people long term unemployed in these areas. I would be delighted to think that 25,000 people would be taken off the live register as a  result of the initiative announced last week but, of course, that will not be the case. The 12 pilot areas were designated following consultation with the social partners and resulted from the Programme for Economic and Social Progress. The twelve areas were chosen because they are areas of long term unemployment. We intend to try the partnership approach in those areas. Many people are afraid to take a risk by going into the employment market or starting their own business because they fear if they do that and earn a few bob they will lose their medical card entitlement and many social welfare benefits. The Taoiseach announced last week that we recognise this fear and that the whole purpose of the pilot projects is to recognise the difficulties people have and see whether the idea will work. I am very hopeful it will work but we will have to wait and see at the end of the period.
Mr. Connaughton: Is there not a contradiction in parts of the Social Welfare Act, 1992, and the announcement by the Taoiseach last week in the sense that the Minister has given instructions to social welfare officers to take into account earned income above the level people would have received on the dole for the days they sign on and in turn that this will be calculated as means against their assessment for dole? Surely there is a huge contradiction here that needs to be cleared up quickly.
Mr. McCreevy: When discussing that particular part of the Social Welfare Act, 1992, I did recognise that difficulty but I have preached long and hard about incentives for people to get out into the employment market. Yes, there is a problem with the section of the Social Welfare Act to which I have referred but it is not part of this question. I do not want to go over that area again but the whole question of disincentives cannot be looked at in isolation. The idea put forward last week involves 12 pilot areas with a history of high unemployment. We will look at the outcome and base our future plans on this.
Mr. Byrne: I do not know whether the Taoiseach should be the Minister for Social Welfare or the Minister for Social Welfare should be the Taoiseach. We are hearing two contradictory ways of how to get the long term unemployed back to work. Would the Minister not agree that there is absolute inconsistency between what was announced by the Taoiseach, vis-á-vis the ability of people to retain secondary payments if they come off assistance, and the Minister's own Social Welfare Bill where people are being penalised and forced to work in the black economy? Those who heretofore were allowed to sign off for a day or two days in the week and earn a few bob which was not accountable for means testing, will now be subject to a means test which did not exist before. On the other hand, there is this big announcement by the Taoiseach. Does the Minister not see inconsistency there? Finally, how many people does the Minister think will take up full-time self-employment as a result of the projects announced?
Mr. McCreevy: There are an estimated 25,000 long term unemployed people in the designated areas. This is an experiment. The area-based response to long term unemployment is a pilot initiative under the Programme for Economic and Social Progress. Companies have been set up in these areas and one of the ideas to come forward was that if people were allowed to retain their secondary benefits they might be encouraged to start their own businesses or go back into the employment market if employment was  available. They are pilot projects which, hopefully, will work, and we will be able to learn from them. The idea of a pilot project is to learn something from it and the Taoiseach announced last week what we would try in these areas.
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