€350m to be spent subsidising families in low-paid work

Critics say rapid rise in family income supplement tops up low pay by employers

Latest projections indicate the family income supplement will be paid to more than 50,000 families in respect of more than 100,000 children this year. File photograph: Eric Luke/The Irish Times

Latest projections indicate the family income supplement will be paid to more than 50,000 families in respect of more than 100,000 children this year. File photograph: Eric Luke/The Irish Times

 

The Government is on course to spend a record €350 million this year on subsidising the income of thousands of families in low-paid work, latest projections show.

Tánaiste and Minister for Social Protection Joan Burton says the supplement is a vital support and helps to encourage people into the workforce.

But critics say the rapid rise  - about 60 per cent in recent years - is topping up employers’ low pay and highlights the extent to which working families are at risk of poverty.

The family income supplement is a weekly tax-free welfare support for working families.

Latest projections indicate it will be paid to more than 50,000 families in respect of more than 100,000 children this year.

Job growth

While thousands of jobs have been created in recent years and unemployment rates have dipped below 10 per cent, much job growth is in low wage areas.

About 400,000 workers, or 30 per cent of the workforce, now earn below the low pay threshold, defined as €12.20 an hour by Eurostat.

Those on low hours or temporary contracts are most at risk of being low paid, according to research by the Nevin Institute, a trade union-backed think tank.

Unions and campaigners have expressed growing concern over precarious working conditions for many employees across a rising number of sectors.

In an interview, Ms Burton said the Government will take a number of steps this year to increase job security, while still providing flexibility for workers and employers.

She said new collective bargaining legislation will oblige employers to engage with staff over terms and conditions for the first time, while new registered employment agreements will set a floor for wages in areas of low pay.

Support expressed

Ms Burton expressed support for increasing the minimum wage of €8.65, if it is recommended by the recently established Low Pay Commission.

“A competitive, efficient and effective economy isn’t the same as a low wage economy - in fact, they are more likely to be high wage economies,” the Tánaiste said.

“We live in a globalised world and a high level of vigilance is required [to ensure] the European social contract isn’t undermined by employers gouging out terms and conditions.”

Employers’ groups, however, are strongly opposed to any increase in the minimum wage and argue it would hinder job creation and harm our competitiveness.

Budget resources

The Tánaiste pledged to increase child benefit and cut the universal social charge, subject to available resources in the next budget.

Ms Burton said she wants stronger social safety nets for the rising number of people classified as self-employed.

The self-employed have restricted access to illness, invalidity and disability payments because they contribute less in PRSI or social insurance.

She said her officials are examining ways of providing access for these workers to social supports by reforming the much-criticised universal social charge.

One option, she said, is converting some of the universal social charge into a social contribution, which could give most of the 400,000 self-employed greater access to social insurance.