Bruton seeks to cut dole for young jobless in radical plan

A RADICAL plan to tackle Unemployment, including a new subsidy for employers and major tax and social welfare reform, is to be presented to the Cabinet by the Minister for Enterprise and Employment.

Mr Richard Bruton is also to propose that 18 and 19-year-olds be paid a lower level of unemployment benefit to encourage, them to take jobs or stay in education. He will also call for a target of reducing employers' PRSI to British levels.

Mr Bruton's proposals are backed up by a major study on unemployment completed by his Department. They will now be discussed by the Cabinet, with the Minister arguing to have key proposals included in this month's Budget.

The main thrust of the plan is to cut the cost to employers of taking on new staff and increase the financial incentive for the unemployed to take up work.

A central proposal is for an £80 per week subsidy for employers recruiting someone who has been out of work for more than two years.

The subsidy would be paid for one year and the scheme would try to prevent employers using it merely as a source of cheap labour. This scheme has not yet been fully costed, but Mr Bruton will argue that the cost may not be too onerous given that it costs £3,500 per person a year to pay unemployment benefit.

As a further measure to cut the cost to business of creating jobs, the plan calls for significant reductions in employers' PRSI payments, with a target of bringing them down to British levels.

The plan proposes that single workers should not have to pay tax or PRSI on wages of less than £75 a week.

At the moment, an employee becomes liable for tax at £71 per week and for PRSI at £60 per week. As a first step, Mr Bruton may push for substantial increases in PAYE allowances in the Budget.

The main thrust of the plan is to cut the cost to employers of taking on new staff and increase the financial incentive for the unemployed to take up work.

A central proposal is for an £80 per week subsidy for employers recruiting someone who has been out of work for more than two years.

The subsidy would be paid for one year and the scheme would try to prevent employers using it merely as a source of cheap labour. This scheme has not yet been fully costed, but Mr Bruton will argue that the cost may not be too onerous given that it costs £3,500 per person a year to pay unemployment benefit.

As a further measure to cut the cost to business of creating jobs, the plan calls for significant, reductions in employers' PRSI payments, with a target of bringing them down to British levels.

The plan proposes that single workers should not have to pay tax or PRSl on wages of less than, £75 a week.

At the moment, an employee becomes liable for tax at £71 per week and for PRSI at £60 per week. As a first step, Mr Bruton may push for substantial increases in PAYE allowances in the Budget.

The Cabinet will also consider an increase in the current PRSI allowance, the measure introduced in the last Budget which exempts the first £50 earned per week from employees' PRSl.

The Minister is also to argue for reforms to social welfare entitlements, to make it more attractive for those out of work to move into employment.

A key element of the plan is that those who have been out of work for long periods should be allowed to retain supplementary benefits such as medical cards and housing subsidies for a specified period after they take up employment. At the moment the sudden loss of such benefits is a major disincentive to move into the workforce.

Under the proposals those moving from the live register into work would also be allowed to retain the child dependant allowance - an extra payment given to the unemployed in addition to child benefit - for 13 weeks.

This would give them time to apply for the Family Income Supplement, which tops up the wages of low-paid families.

One of the more controversial aspects is a proposal that 18 and 19 year-olds should not be paid the full rate of unemployment benefit but face a graduated scale. The intention would be to encourage them to seek work & remain in education.

Mr Bruton's plan is also understood to call for a pilot scheme to top up the wages of low-wage single employees to minimum levels. This scheme may be tested in key areas of urban poverty where Partnership schemes now operate.

The plan also calls for a new special temporary employment scheme to encourage small businesses to give work to the unemployed on a temporary basis.

Mr Bruton is also expected to propose changes in the FAS Community Employment Scheme to ensure that a higher percentage of those participating come from the ranks of the long-term unemployed. A requirement for those out of work for six months or more to sign on for the CES may also be discussed.

The Cabinet is expected to discuss how the Budget can tackle unemployment at a number of meetings - the first of which is being held today - before finalising a Budget package.

Live register figures published last week, show a 2,900 rise in the seasonally adjusted jobless total.

One of the main thrusts of Mr Bruton's proposals is to address a number of straps" in the social welfare and taxation systems which discourage people from taking up employment. At the moment a young worker entering the jobs market would only be £16 a week better off in a job offering a wage of £100 a week than remaining on the live register.