Thursday, 4 June 1992
Dáil Éireann Debate
17. Mr. J. Higgins asked the Minister for Labour if he intends to provide incentives to encourage the long term unemployed to return to work so that it is worth while financially for them to go out to work; and if he will make a statement on the matter.
Mr. Cowen: Research into the comparison between net wages especially for lower paid jobs and the potential social welfare income of those likely to fill them has shown that such employment would not be financially attractive in some cases. Chapter 7 of “NESC: A Strategy for the Nineties” contains information on the poverty trap.
The partnerships established under the area-based response to long term unemployment have also identified the relationship between pay, social welfare payments and FÁS allowances an an obstacle to many long term unemployed persons taking up employment training or other manpower opportunities which would assist them return to the workforce. In this regard, the Taoiseach announced on 30 April last in Tallaght a number of special measures to be taken in the 12 pilot areas aimed at helping the long term unemployed in these areas get back to work. The measures, which will be operated through the partnerships in association with the appropriate Government Departments, focus on eliminating difficulties faced by people who are long term unemployed when the possibility of taking up either paid employment and/or training and development schemes present themselves. In particular, long term unemployed people, approved by the partnerships, taking up paid employment or becoming self-employed will retain their existing secondary social welfare benefits, for example, Christmas bonus, fuel and butter allowances and so on for a period of 12 months. In the case of those becoming self-employed, they will be paid an allowance for the 12 months equivalent to the Social Welfare payments to which they were entitled while on the live register.
Mrs. T. Ahearn: I welcome the Minister's acceptance that this is a major stumbling block in getting the unemployed back to work. While the FIS was a means of helping them, few people knew of the existence of this supplement. There should not be a conglomeration of schemes to help people. The Government should simply provide that anybody who takes a job will be better off by £25 or £35 a week than when receiving social welfare benefits.
Mr. Cowen: This question is being addressed. The area-based response was proposed by the central review committee of the Programme for Economic and Social Progress. It has now been put into effect after some delay. We must wait to see how effective the pilot scheme is. The EC have indicated an interest in funding an area-based approach rather than the schematic approach which we have used in the past, without the rate of success we would have liked.
Mr. Rabbitte: I welcome the initiative announced by the Taoiseach in Tallaght. Perhaps we should put this on a larger plane. Does the Minister agree that the interaction of low pay, social welfare and tax should be focused on by the Oireachtas Joint Committee on Employment? Does the Minister accept that a great many of the long term unemployed will go into low paid work and that it is inequitable and counter-productive that they should immediately forfeit their fuel vouchers, their health card and their Christmas bonus and be subject to higher rents and so on if they accept an offer of employment? This is wrong and we should seek to address the question.
Mr. Cowen: I agree. Consideration of the incentive to take up employment when it becomes available could be the subject of an in-depth examination by the Oireachtas Committee. The area-based response which is operating on a pilot basis is addressing the specific issue of the secondary social welfare benefits which the unemployed enjoy. I also agree that the whole question of low pay must be addressed. The Government, through taxation proposals in successive budgets, have sought to improve the lot of the low paid and have taken out of the tax net an increasing number of low income earners. The approach to taxation reform must be gradual but we would wish to pursue the matter more quickly if Exchequer resources permitted. The long term unemployed like to keep secondary social welfare benefits but this is a matter of some grievance to the low paid who are not entitled to them and  who look upon themselves as worse off in many cases than those on social welfare. There is a conflict which must be addressed fairly quickly. I agree that there is an inclination on the part of the long term unemployed to accept jobs in low paid areas. The training authority will have to address that problem and perhaps bring in a module-based training programme for the long term unemployed which would enable them to improve their skill levels so that they could move into the skilled rather than the semi-skilled sector.
Mr. Garland: Like Deputy Rabbitte, I congratulate the Minister on his initiative in this area. It must be plain to him, and to every Member, that the scheme is a good one. Why not introduce it everywhere rather than on a pilot basis? It is working. Let us not be so timid.
Mr. Cowen: We want to see to what extent it works. The initiative came from the social partners in the first instance and the Government have taken it on board. There were conflicting views in different Departments as to whether secondary social welfare benefits should be retained. We have decided to see if the scheme works without putting restrictions on it. For that reason it is operating on a pilot basis. There are Exchequer costs involved in pursuing this type of idea. We should first see how it works and how it might be modified and improved. We will then proceed to introduce it on a national basis.
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