Most PUP recipients better off in employment – ESRI report

State Covid supports reduced work incentives but halved potential income loss

People eating outside in Two Boys Brew cafe in Phibsborough, Dublin. Photograph: Tom Honan/The Irish Times

People eating outside in Two Boys Brew cafe in Phibsborough, Dublin. Photograph: Tom Honan/The Irish Times

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A new report has found that 95 per cent of Pandemic Unemployment Payment (PUP) recipients would be financially better off in employment.

However, the PUP scheme does reduce financial work incentives for the newly unemployed, the study released on Monday by the Economic and Social Research Institute (ESRI) says.

It maintains that without pandemic support mechanisms introduced by the Government, falls in household income linked to pandemic-related loss of jobs would have been twice the rate recorded.

The report, Covid-19 and the Irish Welfare System, warns that a substantial proportion of younger people, including students, “may face sharp reductions in income when these schemes are removed”. It says they have no pre-existing entitlements to unemployment supports and those not in education get Jobseeker’s Allowance 45 per cent lower than others.

“ Increasing the youth rate of Jobseeker’s Allowance and grants to those in education could help these groups,” the report says.

It says working age adults may also experience income loss in the absence of supports if the economy is slow to recover. More in-work supports may be needed to help family incomes if employment hours to do not return to pre-pandemic levels, it says.

Negative impact

While the widespread job losses brought about by Covid-19 have had a substantial negative impact on household income in Ireland, this would have been even more severe were it not for welfare measures, it says.

“In the absence of the PUP and EWSS [Employment Wage Subsidy Scheme], we estimate that pandemic-related unemployment would have decreased household income by an average of 7 per cent. Losses would be largest for those in higher-income groups as the pre-existing welfare system offers better relative income protection for those on lower incomes. As a result of the introduction of the PUP and EWSS, the estimated average income loss was more than halved, to three per cent.”

Report co-author Dora Tudasaid: “While concerns have been raised that PUP disincentivises employment, the vast majority of PUP recipients would be financially better off in employment.” The Government has said PUP will be maintained at its current rates until September, before a gradual reduction over 2021 and 2022.

Meanwhile, this will be one of the peak weeks in Covid vaccinations, with some 330,000 doses due to be given. People aged 35-39 began to register over the weekend, but it emerged that some people in their 20s may not be fully vaccinated until early November.

Tánaiste Leo Varadkar said it would be “unfair” to ask young people to wait until they were fully vaccinated before travelling abroad. Yesterday he said the law the Government will put in place for EU travel next month will diverge from the advice of the chief medical officer and will allow unvaccinated people to travel.

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