Credit where it is due: this is an interesting, and what Sir Humphrey Appleby of Yes Minister fame would have called “courageous” proposal, first reported by Hugh O’Connell of the Independent:
“speaking at Government Buildings on Tuesday, Social Protection Minister Heather Humphreys said she had asked her officials to examine “pay-related benefit” where a person’s income before they lost their job is considered in the context of their jobseekers’ payment.
“I think one of the things that we have learned from the pandemic is that when people suddenly lose their jobs, we don’t want to see that cliff edge income drop because they have entered into commitments commensurate with their income,” she told a press conference.
“So we do need to avoid that drop, and I think that’s where we can look at – and I’ve asked my officials to look at – pay-related benefit and I think that we need to do that. My officials are looking at that specifically.”
What does that mean in layman’s terms? Well, it means that a solicitor, say, who earns €100,000 per year and becomes unemployed would be entitled to a bigger (perhaps much bigger) dole payment than a supermarket worker on €20,000 who becomes unemployed on the same day.
There are arguments for, and against it. The arguments against it will probably triumph, in short order. For one thing, opponents will say, unemployment benefit is a social safety net. It is designed to be the floor beneath which a person’s income should not fall. Basically, no matter who you are, or what your qualifications are, the dole is as impoverished as you should be allowed to get in Ireland, as an adult. If you tie it to income, then you are basically writing into law that some people should always be poorer than others, even if they experience a similar crisis – the loss of a job.
For another thing, it is an unnecessary and unfair cost to the taxpayer. Why should somebody paying taxes pay far more in income supports to one unemployed person than to another? The money is not being awarded for any work that is done – it is unemployment support. Other taxpayers are paying for it. Why should you or I, if we are paying taxes, be paying more to Mary than to Margaret, simply because Mary had a good job at one stage? She does not have one now, so she gets the bare minimum everybody gets. That is how a great many people will feel.
So, then, what are the arguments for it?
Well, for starters, unemployment benefit is a form of social insurance. To use our example of Mary and Margaret, it is likely that Mary, if she was a high earner, was paying a much higher insurance premium. Why should she not, then, get a higher insurance payment, if she becomes unemployed?
How much you get back out, in other words, should be commensurate to what you put in. We already apply this principle when it comes to pensions – a contributory pension is higher than a non-contributory pension, and some people even have private pensions on top.
Second, as Minister Humphries points out, people tailor their lives to their level of income. Whether we like it or not, a high earner is likely to face many more cutbacks, if they lose their job, than a lower earner. A person on €20,000 who goes onto the €200 per week dole payment will suffer an annual loss of €6-7,000, once you take tax into account. A person earning €50,000 who goes onto the dole will suffer a much more catastrophic loss of annual income. Having paid more in, then, should they not be able to take more out?
Third, higher earners are, usually, likely to be unemployed for a shorter period of time, for the simple reason that in general, they are more likely to have in-demand skills which made them high earners to begin with. This is not a hard and fast rule, but it is reasonable to expect that an unemployed lawyer or accountant will find it easier to find new employment than an unemployed retail worker. Given that some of the social costs of unemployment go much further than the individual, it might make sense to make that period of unemployment as painless as possible.
So that is what they are thinking, most likely. It also ties in with Leo Varadkar’s infamous (for some reason) pledge to be for “people who get up in the morning”, by telling them that the more they put in, the more they will get back.
But it is unlikely to amount to anything, for my money. The present system, after all, is easy to understand. And a plan like this will not survive first contact with an argument that goes “how dare they give more to rich people, while poor children are on waiting lists in the hospitals”. It seems alright on paper, but in practice, this one is a rock-solid vote-loser.