Vast majority on PUP would be financially better off at work - ESRI

Younger people are more likely to suffer from financial hardship when Covid-19 State supports are ceased, according to new research published by the Economic and Social Research Institute (ESRI).

In its latest publication, the ESRI also said that the estimated average income loss for households was more than halved as a result of pandemic payments.

The report also stated that not all those with weak financial incentives to work will opt for unemployment or inactivity, and that the vast majority of PUP recipients (over 95%) would be financially better off in employment.

Students will not be entitled to pre-existing unemployment supports following the withdrawal of the Pandemic Unemployment Payment and the Employment Wage Subsidy Scheme later this year, it said.

In April, 34% of PUP recipients aged under 25 were registered as full-time students, and therefore ineligible for State benefits such as the Jobseeker's Allowance.

Young adults who are not in education are eligible for a Jobseeker's Allowance rate that is 45% lower than other groups.

The ESRI is recommending that supports be put in place to counteract the sharp decrease in young people's income once the schemes are withdrawn.

Researchers found that the estimated average income loss as a result of the pandemic was more than halved, to 3% as a result of the State supports.

Dora Tuda, an author on the report and a Postdoctoral Research Fellow at the ESRI, said the study "shows the extent to which the social welfare system, including the introduction of the PUP and wage subsidies, supported the incomes of those whose employment was affected by the pandemic.

"This research estimates that the PUP and EWSS halved the magnitude of household income losses," she said.

"While concerns have been raised that PUP disincentivises employment, the vast majority of PUP recipients would be financially better off in employment," she added.

Speaking on RTÉ's Morning Ireland, an ESRI senior research Officer said that younger people under 25 are more reliant on the PUP because if job opportunities do not return, they will receive far less money from the jobseekers allowance.

Claire Keane said the ESRI did not find much evidence that the PUP has weakened work incentives.

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Ms Keane said before the scheme was introduced around 1% of people were financially better off not working when you compared social benefits to employment.

This rose to around 4% of people on the PUP, she said, which means 95% of people are better off returning to work.

However she warned that this assumption, that people are better off working, is based on the assumption that employees can return to pre-pandemic work hours.

One feature of the PUP that might create a work disincentive, she warned, is the fact that taking up just one hour of work would mean an end to the payment.

She said the ESRI has suggested that people should be allowed keep some of the pandemic payment as they return to work, if they are not returning to the hours they worked before Covid began.

Ms Keane said it will have to be seen if employment opportunities return for students and increasing maintenance grants would be useful to ensure that students do not have to work such high hours when studying.