Fundamental reform of social welfare needed to make work pay

    • Small Firms Association calls for fundamental reform of the social welfare system
    • Social welfare, tax and education must be aligned to ensure that work always pays more than welfare

The Small Firms Association (SFA) has called for a complete review of the social welfare system to ensure that work always pays more than welfare. Linda Barry, SFA Assistant Director, stated: “Small businesses frequently encounter difficulties in getting people on social welfare to take up a job or increase their hours. These employers are effectively competing with the social welfare system and often find themselves on the losing end.”

“23% of households in Ireland are classified as ‘jobless’ – the highest level in the EU. Getting more people into employment is the best way to tackle poverty, spread the gains from the recovery and reduce income inequality. This is particularly true in Ireland where the link between work and poverty is the weakest in Europe, i.e. people in work are much less likely to be in poverty. With unemployment at 6.6%, the labour market is returning to full employment and skills gaps are emerging in some sectors. This is causing particular challenges for small firms to fill vacancies and attract staff at wage levels that the companies can afford.”

“A fundamental rethink of the social welfare system is needed to mobilise all potential workers in the country. It is vital to ensure that work always pays, while the most vulnerable in our society also receive the support they need. A holistic review of the individual social welfare schemes, their interplay and the relationship between social welfare and the labour market, healthcare, childcare and other policy areas is required”, Barry continued.

The Small Firms Association has highlighted a number of specific proposals:
    • Calculate Jobseeker’s Allowance on an hourly basis rather than a daily basis to encourage part time work
    • Gradually withdraw social welfare benefits as a person enters the workforce and increases their hours of work, so that they don’t immediately lose all benefits and grants
    • Reduce income tax to increase take home pay
    • Provide more of the National Training Fund for in-work training to give employees access to greater pay in the future

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For further comment or interview, contact Linda Barry, SFA Assistant Director, on tel: 087 1472811 or email: linda.barry@sfa.ie
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