Most Irish People Better Off Working
16th June 2015
New findings from the ESRI released today confirm that work does pay for most of Ireland’s unemployed.
Making Work Pay More: Recent Incentives, which will be presented at Wednesday’s ‘Budget Perspectives’ conference, shows that more than 8 out of 10 jobseekers would earn at least 40 percent more in employment than from benefits. About 6 out of 10 jobseekers would see their incomes at least doubled by taking up a job.
The Back to Work Family Dividend
There are some families for whom the gap between in-work and out-of-work incomes is small, and in a small percentage of cases out-of-work income can exceed in-work income. Among jobseekers, such families are typically jobless couples, particularly those with children. The 2015 Budget introduced a new initiative, the Back to Work Family Dividend, to improve in-work incomes for these families.
This involves retaining the child element of jobseeker payments – almost €30 per week for each child ‑ for one year, followed by a half-rate payment for a further year. ESRI researchers find that this scheme, if fully utilised, could lead to significant improvements in the financial incentive to work facing such families.
Apart from cash incomes, the possible loss of a medical card (due to in-work income above means-test limits) may sometimes be an obstacle to taking up employment. This does not arise for those who are long-term unemployed and able to retain a medical card for 3 years when taking up a job. ESRI researchers investigated the potential impact of loss of medical cards, and found that for families making an average use of a medical card, valued at the cost of providing this service, this would have quite limited impact.
For those families who expect to make greater use of the service – perhaps because of a chronic illness – the impact could be greater, but the counterpart to high usage by relatively small numbers of families is that very many families would have below average use of the service. Other approaches to investigating this issue are planned for the future.
“In the vast majority of cases, unemployed individuals would be financially better off in work than out of work”, stated report co-author Michael Savage “We find that the Back to Work Family Dividend, a recent policy initiative designed to improve work incentives for jobseekers with children, helps to make work pay more for this group”