Proposal to cut dole after nine months

Thousands of jobless people could see their unemployment benefits cut from next year as part of a controversial plan to be considered by the Government tomorrow.

The Irish Times understands that the Government is under pressure from the EU-IMF-ECB troika to reduce the duration for which the non-means-tested jobseeker’s benefit is paid.

At present the payment – worth up to €188 a week – is paid for up to 12 months to people who are out of work and covered by social insurance. However, this would be reduced to nine months under proposals to be considered by the Cabinet.

As a result, those on the benefit would face moving on to means-tested jobseeker’s payments much earlier. This would see thousands of people receiving lower rates. The move is aimed at encouraging people to seek work, or what policymakers call a “labour activation measure”.

Government sources insisted last night no decision has yet been made on the proposal. Internal estimates suggest the move could affect about 40,000 people in a full year and save over €90 million annually. The savings would help to ease pressure on the social insurance fund, the pot into which PRSI contributions go to fund a range of benefits.

Last year, the fund’s annual shortfall stood at €1.5 billion. In the absence of any policy changes, the shortfall is set to rise significantly in coming years.

This article was amended on November 27th, 2012 to correct a factual error.