In Budget 2015 the Government announced a scheme to encourage people to get back to work: this was introduced as a Bill in the Oireachtas recently. The scheme is called the Back to Work Family Dividend and is being brought in because the Government has repeatedly stated the value of work (“the best route our of poverty is through work”)[1] and wants to encourage people to work and wants to reward those who do.
But what is this Dividend? Very simply, it’s a payment to incentivise people to take up work and to move off welfare. It’s open to people who are receiving a welfare payment, have children, and want to take up a job, increase part-time hours, or become self-employed. It allows you to keep the full qualified child payment (€29.80) part of your welfare for one year and half of it for the second year.
So this seems to make sense. It will benefit low paid workers best, it encourages self-employment, and its focus is on children. At a value of €1,550 per child in the first year, this would amount to almost 10% extra on top of a minimum wage job.
But there are some drawbacks. As the payment stops if your spouse claims social welfare, if one spouse loses his or her job, the family suffers by losing this payment too. And to get the subsidy, you have to “exit welfare”, which means you move away from income support. But some jobs don’t pay enough for that and so you’re stuck in a bind. This has led the Irish National Organisation for the Unemployed to say that the rules may be too stringent.[2]
But the main issue with the Scheme is that it treats co-habiting or married couples the same as lone parents. So let’s focus on them.
During the recession, deprivation among lone parents increased year-on-year and in 2013 was prevalent among 63% of lone parents. And in the same year, they faced consistent poverty at a rate of 23%. Meanwhile, the employment rate was a mere 36% in 2014[3] and community employment take-up is as low as 9%,[4] even though this is an ideal employment platform for lone parents. So this cohort was clearly badly affected by the recession, mainly due to fewer flexible jobs and cuts to welfare supports such as Child Benefit, the Back to School allowance, the Education Allowance, the Income Disregard, and Illness Benefits.
So while the recession affected many groups, lone parents are distinct because they play the role of two people. The Scheme being introduced fails to recognize that and comes at the same time as reform of the lone parent welfare system. From July, a difference will be between lone parents with children under 7, with children between 7 and 14, and with children over 14. Those in the last group move onto ‘normal’ jobseekers payments and cannot keep part-time work.
Nudging lone parents into the workforce might be fine in a strong economy with good support services, where flexible work is available and childcare affordable. But we are not there yet. We are still at a point where flexible jobs are scarce and childcare costs are the second highest in the world.[5] Lone parent cannot work without childminding and although the Department said in 2012 it would provide 6,000 after-school places, only 500 had been announced by January 2015.
So all of this this puts lone parents in a corner: childcare is expensive, a partner is not present, and entitlements are being lost. But some safeguards do exist: the Department says that “No lone parent with a child under 14 years of age will be required to take up employment in order to receive income support from the Department” and that those with children between 7 and 14 can work part-time. This will help a good cohort of lone parents when used alongside the new Dividend.
Overall, it’s a positive scheme for households in which one partner or both is or are unemployed. It encourages them into the workforce. This is badly needed. But it doesn’t properly address the uniqueness of lone parent households. It is presented as a solution to the overhaul of their social security system, even though the two issues are separate. Trying to solve the problem of lone parent poverty traps with solutions for dual-unemployed households is inappropriate. Separate schemes are both more effective and necessary.
[1] Press Release, Joan Burton, 18 February 2015
[2] Newsletter, INOU, December 2014
[3] One Family, Oireachtas Committee on Education and Social Protection, 18 February 2015
[4] One Family, Oireachtas Committee on Education and Social Protection, 18 February 2015
[5] OECD, 2014