The Taoiseach told the Dáil that people who were working part time before the pandemic will see their Pandemic Unemployment Payment (PUP) reduced, but has promised their weekly payment “will still be more than they were earning on a weekly basis before the pandemic”. But how can this be achieved?
The likely cohort to be targeted by this reform are part time workers in sectors like hospitality, retail, accommodation and food sectors.
Many tens of thousands in these sectors were almost immediately thrown into unemployment when Covid-19 hit.
Paul Redmond, an economist with the Economic and Social Research Institute (ESRI) estimates that before the crisis, around 70,000 workers were employed on minimum wage in these sectors, with the average worker earning €230 per week. Those who lost their job now receive €350 per week on PUP, which, for some, will be substantially higher than the wage they previously earned.
“For some part-time workers, the PUP payment will be higher than the wages they earned in their previous job. For these workers, the PUP payment could be reduced, while still keeping it in line with their previous earnings,” Mr Redmond says.
The Government has not explained exactly how this cohort will be identified, but one way is to examine the hours a person was working in the pre-Covid period period, alongside their income, and adjust the payment based on that.
“By looking at the hours people worked before losing their job, they can figure out who was working part-time and taper the PUP accordingly,” says Mr Redmond.
It has been suggested that if there is a simple, flat cut to the rate for part time workers the payment will be brought into line with the part-time jobseekers allowance. This is paid at a maximum level of €203 per week but only to those who were making €300 a week or more when they were working. For those on lower wages, the payment is less.
If an equivalent sliding scale is deployed it is unlikely that the Government could maintain its commitment to keeping the level of income on a reduced PUP above someone’s pre-Covid earnings .
Mr Varadkar said a Cabinet decision would be made on Friday on the future of the payment, adding that the scheme in its amended form would be extended “for months, not weeks” beyond June 8th.