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Developing a Fully Inclusive Social Insurance Model - Welfare.ie

Developing a Fully Inclusive Social Insurance Model - Welfare.ie

CHAPTER 1:

CHAPTER 1: INTRODUCTIONAND OVERVIEW1.1 BackgroundThe Programme for Prosperity and Fairness (PPF) contained a commitment to the establishment of aWorking Group to "produce proposals for the development of a fully inclusive social insurance modelwhich would facilitate combining work and family responsibilities in the context of changing working andsocial patterns".The Working Group (WG) was first constituted in May 2002 following nominations from the SocialPartners. The WG was chaired by the Department of Social and Family Affairs. This WG met on sixoccasions between May and November 2002 and identified a number of issues for consideration. TheGroup commenced work in relation to addressing these issues and prepared a draft interim report inNovember 2002. However, by that time negotiations on a new partnership agreement had commenced(which subsequently emerged as “Sustaining Progress”), and further drafting was suspended until theoutcome of those negotiations was known.However, under the terms of Sustaining Progress, it was agreed to re-establish the WG to continue theearlier work. A new Working Group was convened in July 2003 and received agreement to examine theissues identified by the previous group, with new nominations from the social partners. The WG met ona further seven occasions until June 2004. The members of the working groups established under boththe PPF and the SP agreements are listed below.Membership of Working GroupPPF GroupSustaining Progress GroupDepartment of Social & Family Affairs Anne McManus* - Chair John Bohan - ChairCarol McGannPaul CunninghamPaul CunninghamMartin Finucane**replaced by John Bohan, August 2002 *replaced by Siobhan Lawlor, January 04Department of Finance Dermot Quigley Dermot QuigleyTony CarberryJohn FitzpatrickEmployers Organisations Jackie Harrison IBECAebhric McGibney IBEC Aebhric McGibney IBECFarming Pillar Con Lucey IFA Con Lucey/Mary Carroll IFACiaran Dolan ICMSA Paul Brandon ICMSATrade Unions Joan Carmichael ICTU Joan Carmichael* ICTU,Rosheen Callender SIPTU Rosheen Callender SIPTU*replaced by Paula Carey, February 04Community & Voluntary Pillar Fr. Sean Healy CORI Ray DooleyOrla O'ConnorChildren's Rights AllianceNational Women's Council of Ireland June Tinsley INOUSecretary to Working Group Michelle Ryan DSFA Barbara O'Connor DSFAMembership of the group was supplemented on a number of occasions by the following persons: Aoife Doyle (IBEC) and ColmMcDermott, Elaine Soffe, Leonard Burke, Maeve Farrell and Tom Whelan from DSFA.DEVELOPING A FULLY INCLUSIVE SOCIAL INSURANCE MODEL1

1.2 Structure of ReportThis report reflects the work of the group over all these meetings. The remainder of Chapter 1 providessome background information in relation to the operation of the social insurance system and detailssome of the changes in the social insurance system that have sought to improve its comprehensivenessover the past twenty odd years. The Chapter also identifies the broad approach of the WG in terms ofthe range of issues which it addressed. Chapter 2 presents a more detailed discussion in relation tothese issues and the conclusions of the WG. Chapter 3 presents these conclusions in summary form. Anumber of appendices present more detail in relation to some of the issues addressed in the body ofthe report.1.3 Overview of social insurance systemThe importance of social insurance was set out previously by the Commission on Social Welfare (1986)as follows:-“We regard the system of social insurance as an expression of social solidarity and citizenship in which therisks, costs and benefits should be shared as widely as possible in the community. Social insurance creates asense of entitlement to benefits and generates support among the public for their benefits …In our view,the system of social insurance should be as comprehensive as possible, and all income earners shouldcontribute to, and benefit from, the system” (CSW, page 10).The Irish system of social protection is often described as a “mixed” system. It combines a socialinsurance system whereby entitlement to contingency-based benefits are secured largely on the basisof paid contributions linked with earnings income, with a system of social assistance wherebyentitlement for similar contingency-based payments are made on the basis of an assessment of theperson's means.The pivotal role of social insurance was identified by the Department of Social Welfare in 1996 in thefollowing terms:"The purpose of Ireland's social insurance system is to provide an income support system to cover insuredworkers for a variety of life contingencies for which they would otherwise find it difficult, if not impossible,to provide on an individual basis" (DSW, 1996).The Department further indicated that the system was based on a number of fundamental principles:" The Contributory Principle whereby there is a direct link between contributions paid or creditedand entitlement to a varying range of benefits which are payable, if and when particularcontingencies arise," The Solidarity Principle whereby contributions paid by insured persons are not actuarially linkedto benefits at the individual level but can be redistributed to support other contributors. It istherefore an expression of solidarity between different earning groups and different generations.It is often argued that a system of social insurance has a considerable number of advantages over itsmeans-tested counterpart. In the first instance, entitlement to benefit is accrued in the course of paidemployment, thereby removing problems of possible stigma and low take-up of benefits. Secondly,benefits are not means tested and this limits possible disincentives to taking up employment. It isadministratively simpler to operate, as well as being comprehensive in scope and equitable in effect. Onthe other hand, some argue that the social insurance system is simply part of the larger Governmentspending and finance arrangement and indeed that social insurance contributions levied on earnings2Department of Social and Family Affairs

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