Direct Request (CEACR) - adopted 2011, published 101st ILC session (2012)

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

The Committee notes that the Government’s report has not been received. The following comments are therefore based on the information provided by the Government in its 36th, 37th and 38th annual reports on the application of the European Code of Social Security.

Part III (Sickness benefit), Article 17, and Part IV (Unemployment benefit), Article 23 of the Convention. Length of the qualifying period. The Committee notes that in order to qualify for Illness Benefit or Jobseeker’s Benefit, a person must have paid at least 104 weekly Pay Related Social Insurance Contributions (PRSI) since they first started work. In its 36th annual report on the Code, the Government explained that the intention of introducing a two-year qualifying period was that young persons or migrants should not qualify for substantial benefits, regardless of financial need, following a relatively short period of employment. Where such need exists, alternative means-tested supports may be claimed. The Committee observes that, in comparison with other European countries, a two-year qualifying period for sickness and unemployment benefits is excessive and is motivated by the desire to limit access to benefits for certain categories of insured persons in order to obtain financial savings in sickness and unemployment insurance schemes. The Committee is bound to point out that the protection with respect to the short-term contingencies in the international social security law is based on the principle of unobstructed access to guaranteed minimum benefits for all persons protected. This principle is realized in the trade-off achieved between the duration of the qualifying period to gain entitlement to the benefit and the duration of the payment of the benefit itself: the Convention permits to limit the duration of the payment of benefit on condition that there would be no or a very short qualifying period necessary only to preclude abuse. In that way the Convention guarantees that the persons protected will be granted unobstructed access to benefits of at least a minimum duration immediately after their employment and insurance status is regularized in the social security institution allocating the benefit. Beyond this minimum equation, the Convention permits that the insured persons who have completed a longer qualifying period would be entitled to a longer period of the benefit payment. In Ireland, the situation appears to be different in the sense that both the qualifying period and the duration of the benefit are much longer than the minimum parameters established by the Convention. While, in the opinion of the Government, the Irish scheme may have established a proper balance between the duration of the qualifying period and the subsequent duration of the benefit, such design of the sickness and unemployment benefits nevertheless results in obstructing access of the persons protected to the minimum benefits guaranteed by the Convention. In the light of these explanations, the Committee would ask 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 at least 26 and 13 weeks respectively.

Part XIII (Common provisions), Article 71(3). General responsibility of the State for the due provision of benefits. In 2010, the general rollback of the level of social protection in the country accompanied by unprecedented public spending on the bail out of the banks, which have succumbed to the pressure of the financial markets, led the Committee to ask the Government, in its conclusion on the European Code of Social Security, how it understood the general responsibility of the State for the proper governance of social security and what measures it took to protect funds for the social protection of the population against external political and financial pressures. The Committee thanks the Government for the detailed, thoughtful and frank reply provided in its 38th report on the Code. According to the Government, the crisis has impacted in three ways: a collapse in tax revenues which at the end of 2010 were 33 per cent lower than their peak in 2007; a tripling of unemployment in a relatively short period (from 4.5 per cent in June 2007 to 14.2 per cent in June 2011); and severe losses in the banking sector which threatened to destabilize the whole system. Against this background, Ireland has had to take decisive action to stabilize Government finances, to start reducing the structural deficit caused by the contraction in the economy, and to stabilize and recapitalize the banking sector, which is essential to Ireland’s economic recovery. The latter has seen, in accordance with the EU–IMF Programme of Financial Support for Ireland, very significant resources injected into the banking system. At the same time, in order to enhance international credibility, the Government pursues a determined deficit reduction strategy as set out in the National Recovery Plan for the combined period 2011–12. The funding agreement with the EU and IMF commits the Government to a further reduction of “at least €3.6 billion” in Budget 2012. Accordingly, there has been, and will continue to be, an ongoing requirement to curtail expenditure in 2012 and in later years.

The Department of Social Protection is expected to spend in 2011 over €20 billion or almost half of tax and PRSI contributions income combined. For that reason, the transition to a more balanced budgetary position simply cannot be made without affecting social welfare spending. However, when considering the retrenchment which has taken place after 2009, it is as well to remember that over the last number of years the Irish social welfare system has seen unprecedented growth in the level of payments made and the coverage of the population. For instance, in the period from 1997 to 2005 pensions increased by about 80 per cent which was way ahead of inflation during that period. Notwithstanding the social austerity measures, the improvement in the position of welfare recipients achieved during the period of unprecedented growth in social welfare payments has to a large extent been maintained. The consideration of the level of overall expenditure on social welfare in the context of Budget 2012 and subsequent Budgets will be informed by the commitment in the Programme for Government to maintain social welfare rates.

With regard to PRSI spending, the Government explains that, traditionally, the Social Insurance Fund (SIF) has been funded on a tripartite basis – with contributions coming from the Exchequer, employers and employees. Legally, the Exchequer is the residual financier of the SIF, but no Exchequer contribution was required between 1996 and 2009 as the fund was in surplus. Actuarial reviews of the Fund are carried out every five years and the 2005 review (published in 2007) foresaw that any surplus available to the Fund will be exhausted by 2016. However, because of the rapid deterioration in the Irish economy and the huge rise in unemployment, the financial position of the fund deteriorated more quickly than was anticipated and the tripartite funding arrangement is now back in operation. The Government is committed to ensuring that social welfare payments are made at levels which will sustain social cohesion and treat people with dignity and will continue, in these very difficult times, to provide appropriate funding to support the Social Insurance Fund.

The Committee notes the firm commitment of the Irish Government to simultaneously fulfil the triple objective of: (1) recapitalizing the banking system by injecting into it substantial public funds at the expense of increasing the public debt; (2) consolidating the State’s finances for repaying its increased debts by substantially cutting public expenditures, including on the social welfare programmes; and (3) maintaining social welfare payments at appropriate levels in conditions of the growing number of claimants and diminishing resources of the SIF. With respect to recapitalising the banks and restructuring of the banking sector, the Government states that Irish banks will be reduced to a size appropriate to the country’s economy, more focused on core operations and better funded. With respect to consolidation of the State’s finances, the Government pledges to pursue a determined deficit reduction strategy in compliance with the funding agreement with the EU and the IMF. With respect to the commitment to maintain social welfare rates, the Government will provide appropriate funding to support the SIF. The Committee observes that, though these objectives might appear to be contradictory in some respects, it is only through ensuring that financial, economic and social objectives are advanced simultaneously in a balanced and integrated manner that the country could be steered successfully out of the crisis. The Committee hopes that the 2012 Budget proposed by the Government will not shift this balance away from the social objectives by disproportionately reducing the overall expenditure on social welfare, and would like the Government to show it in its next report that it has been able to find a fair balance between social expectations and financial constraints. Please also supply a copy and explain the main findings of the actuarial review of the SIF, which, according to the five year cycle, should have been carried out in 2010.

In the light of these commitments, the Committee notes that the Government is fully conscious of the need to enhance the international credibility of Ireland in the eyes of its international creditors by sticking to the aggregate reductions in social spending set out in the National Recovery Plan for 2011–12, as well as of its general responsibility vis-à-vis the Irish people for maintaining the national social security system at the level which will sustain social cohesion and treat people with dignity. The Committee would like to observe in this respect that the international credibility of Ireland depends not only on the fulfilment of the funding agreement with the EU and the IMF but not least on its ability to safeguard the social rights and protections which make it possible to fulfil the aim of the Council of Europe, as defined in the Preamble to the Code, “to achieve a greater unity between its Members for the purpose, among others, of facilitating their social progress”. Recalling that social progress is measured by the reduction of poverty, the Committee hopes that the Government, in pursuing the objectives of curtailing the deficit, recapitalizing the banks and repaying the debts to its international creditors, will not lose sight of the objective of the social progress and the reduction of poverty, for which Ireland has long been known as one of the most remarkable examples in Europe. The Committee will therefore assess the reduction in the overall level of protection offered by the Irish social welfare system in relation to one of the main objectives of the Code, which consists in the prevention of poverty among the categories of the persons protected. The social welfare system would not fulfil its role if its benefits would push the workers below the poverty line. The Committee asks the Government to provide in its next report the most recent statistics on the dynamics of poverty in the country, including the data on the social welfare minimums in comparison with the poverty line.

Finally, it is worth recalling that, during the economic crisis of the mid 1990s, the Committee have already stressed that immediate financial considerations, however important, should not take precedence over the need to preserve the stability and effectiveness of the social security system, and that any reductions in social security expenditures should be carried out in the framework of a coherent policy aimed at achieving viable long-term solutions ensuring the required level of social protection. The Committee would like the Government to explain in this respect whether reductions in the social welfare programmes in 2011 and 2012 continue to be made on the basis of the possible savings in the social welfare schemes identified in 2009 in extremis by the Special Group of Public Service Numbers and Expenditure Programmes (the McCarthy report) or are now carried out according to a more consistent social policy, which favours long-term solutions over the immediate cuts.