Direct Request (CEACR) - adopted 2012, published 102nd ILC session (2013)

Social Security (Minimum Standards) Convention, 1952 (No. 102) - Ireland (Ratification: 1968)

The Committee notes the Government’s report on the Convention received in September 2012, which contains a reply to the direct request of 2006. It also notes that the 39th annual report on the application of the European Code of Social Security replies to the questions raised by the Committee in the direct request of 2011.

Part III (Sickness benefit), Article 17; and Part IV (Unemployment benefit), Article 23. Length of the qualifying period. In its 2011 direct request the Committee observed that, in comparison with other European countries, a two-year qualifying period for sickness and unemployment benefits was excessive and asked the Government to consider modifying the length of the qualifying period so that it would be long enough to preclude abuse, while remaining sufficiently short for not impeding access to the sickness and unemployment benefits of a minimum duration of at least 26 and 13 weeks, respectively.

In reply, the Government highlights the significant differences that exist between the Irish social welfare system and the systems in other European countries: Irish rates of social insurance contributions, which are fully reckonable for all benefits and pensions, are among the lowest in the OECD, while in return a typical employed contributor can expect to receive over his lifetime three times what he contributes to the social insurance fund. Accordingly, the Government feels that the qualifying conditions as they stand strike a reasonable balance between access to benefits and the contribution required from insured persons. Nevertheless, the Government agrees to reconsider the qualifying conditions for the sickness and unemployment benefit schemes in the context of the on-going review and reform of Ireland’s social welfare system. In this connection, the Committee would like to emphasize that though the Irish scheme may have established a proper balance between the qualifying conditions and the subsequent duration of the benefit, the present design of the sickness and unemployment benefits results in obstructing access of the persons protected to the minimum benefits guaranteed by the Convention. The Committee would like the Government to keep this consideration in mind in reforming the Irish social welfare system.

Part XII (Common provisions), Article 71(3). General responsibility of the State for the due provision of benefits. (a) Reductions and discontinuation of benefits. The 39th report on the Code recalls that Ireland is engaged in a multi-annual programme to reduce its structural deficit and to put public finances on a sustainable footing. This is seen as a requirement for future economic stability and growth, as well as being a prerequisite for maintaining and developing the social protection system. Even allowing for the adjustments which have already taken place there is still a €16 billion shortfall in Government finances. Social welfare expenditure is a major component of overall Government expenditure accounting for some €21 billion, or 40 per cent of all current expenditure in 2012. Accordingly, it cannot be immune when it comes to overall budget adjustments. In 2012 the Government was aiming for an adjustment of €3.8 billion through a combination of tax increases and reductions in day to day spending. The contribution to be made to this target by the social welfare budget is €0.475 billion or just over 2 per cent of overall expenditure. The Government has committed to maintaining the personal rates of benefits at their current level and this was achieved in the 2012 Budget. In excess of 50 per cent of the savings envisaged for the social welfare budget this year are to come from five areas: changes to the rebate employers receive on redundancy payments, a reduction in the period covered by the winter fuel allowance from 32 to 26 weeks, changes to some Child Benefit rates, adjustments to the Rent and Mortgage Interest Supplement Scheme, and adjustments to the amount of earnings allowed under the One-Parent Family Payment scheme. The balance of the savings required will be achieved through small changes across a variety of other schemes. Even allowing for the reductions in rates which did take place, the improvement in the position of welfare recipients achieved during the period of unprecedented growth in social welfare payments before the crisis has to a large extent been maintained.

The Committee notes the changes to the social welfare code arising from the EU/IMF Programme of Financial Support for Ireland detailed in the Government’s report on the Code. It observes that the changes introduced by the Social Welfare Act 2011 and the Social Welfare and Pensions Act 2012 continue the trend to reduction or abolition of a number of social benefits. Cuts in various benefits are effected throughout the system with a unique view to achieve the required volume of overall reduction in expenditures on social welfare. Taking into account that the objectives to reduce public finances set under the EU/IMF Programme of Financial Support for Ireland are far from being accomplished, the Committee would like the Government to state when it expects to stop the trend to downsizing Ireland’s social welfare system, what new cuts in benefits are foreseen in the 2013 Budget, and whether it has fixed for itself any threshold precluding any further reduction of social expenditures.

(b) Deficit of the Social Insurance Fund. According to the 39th report on the Code, the operating deficit of the Social Insurance Fund over the period 2008 to 2011, inclusive, was very close to €7 billion. Estimates for 2012 provide for a deficit of nearly €1.82 billion. Significant Exchequer subvention will be required to meet on-going expenditure requirements in the absence of reductions in expenditure levels or increases in PRSI income. In this respect, the Committee notes that the Actuarial review of the Fund was due to be published in 2012. It would like the Government to explain the main findings and recommendations of the review in its next report and to indicate measures taken to provide appropriate subvention to support the SIF in the short term and to return it on the sustainable financing footing in the long term.

Social security and reduction of poverty. (a) National indicators of poverty. According to the 39th report on the Code, Ireland uses three national indicators of poverty: (1) at-risk-of-poverty, using a threshold of 60 per cent of median equivalized income; (2) basic deprivation, defined as enforced lack of two or more items from the 11 item index of necessities such as food, clothing, heating, as well as social activities; (3) consistent poverty, a measure of multiple poverty combining at-risk-of-poverty and basic deprivation. This last indicator is used to set Ireland’s national poverty target which is to reduce consistent poverty to 4 per cent by 2016 and to 2 per cent or less by 2020, from a 2010 baseline rate of 6.2 per cent. This equates to 200,000 people. With respect to the dynamics of poverty, the report indicates that while in the period 2003 to 2007–08 poverty fell by a significant amount, since the onset of the economic recession in 2008 it has increased using all three national indicators: at-risk-of-poverty increased from 14 to 15.8 per cent; basic deprivation grew from 11.8 to 22.5 per cent; consistent poverty increased from 4.2 to 6.2 per cent. Compared to 2003, poverty in Ireland is still below the levels pertaining in the early 2000s on two of the three national indicators. However, the basic deprivation rate is above the 2003 baseline rate by seven percentage points. The Committee would like the Government to explain the discontinuation of which social welfare benefits has contributed to the sharp increase of basic deprivation in the country and the adoption of what measures may help to reverse this trend.

(b) Minimum welfare rate. The report further indicates that, over the period 2003 to 2010, the minimum welfare rate as a proportion of the at-risk-of-poverty threshold increased from 71 per cent to 95 per cent. Including fuel allowance which is a means tested household payment, the minimum welfare rate increased from 75 per cent to 100 per cent. The improvement in the minimum welfare rate as a proportion of the at-risk-of-poverty threshold was primarily due to increases in welfare rates and child benefit in the 2000s. However, in 2010, the minimum welfare rate was reduced to €196 per week and to €186 in 2011. There was no reduction in 2012. Data on the at-risk-of-poverty threshold for 2011 and 2012 are not available. The Committee notes with concern that in the period 2008–10 the number of persons finding themselves at risk of poverty increased from 14 to 15.8 per cent. It cannot but emphasize that maintaining the minimum welfare rate above the at-risk-of-poverty threshold represents the principal guarantee against the risk of the beneficiaries sliding into basic deprivation and consistent poverty and the welfare system failing to fulfil its main objective. The Committee trusts therefore that the Government will be able to show in its next report on the basis of the available statistical data that the minimum welfare rate together with the fuel allowance was being kept equal or above the at-risk-of-poverty threshold in each year since 2010 when it first attained this threshold.