With Budget 2021 on the horizon, Lorcan Kelly explores the future of the Pandemic Unemployment Payment and how this may impact students.
In March, the Pandemic Unemployment Payment (PUP) was employed swiftly and indiscriminately. By April 6th, approximately 507,000 people were in receipt of the €350 weekly payment as a result of lost jobs. With another 207,000 individuals receiving some other form of social welfare payment, an estimated 28.2% of the labour force was considered unemployed in April.
The PUP was designed as an emergency response to buoy incomes for those who had lost their jobs as a result of the pandemic. Initially, the Department of Finance utilised the previous year’s significant budget surplus to cover the sudden costs of both the PUP and the payroll initiative then known as the Temporary Wage Subsidy Scheme (TWSS). As spending continued into the summer, Paschal Donohue, Minister for Finance, announced that the department was committing to record levels of borrowing to finance public expenditure, despite Fine Gael’s warnings against the dangers of rising debt levels and unworkable interest rates.
All the economic indicators agreed with this strategy. Countercyclical economic theory aside, this increased fiscal spending on welfare was given the European blessing - the ECB had previously announced that it was making approximately €750 billion available to EU members to borrow at 0% interest. This fund would be allocated specifically to finance the costs of the Covid-19 crisis across the European Union, hopefully aiding a Europe-wide recovery. Furthermore, Angela Merkel and Emmanuel Macron united behind a €500 billion recovery plan in May, which most notably proposed mutualising debts across the EU. Fiscally, it seemed that Europe was going with the “all in this together” approach, despite some pushback from more fiscally frugal countries like the Netherlands and Denmark.
With the government supposedly spending as much as it can, how have students been affected by its welfare schemes?
Students across the country have transitioned back into college life, with many availing of accommodation away from home in anticipation of (albeit reduced) hours of in-person teaching and the social benefits of club and society life. Unfortunately, with the Department of Higher Education announcing that most third-level teaching would be online, and UCD announcing that online will last at least until Christmas, many students have been left hung out to dry financially. This, paired with the significantly reduced presence of on-campus club and society activities, leaves little reason for many students to bear the costs of living away from home at all.
Youth employment has been affected disproportionately by the pandemic. The CSO reported that the monthly unemployment rate for those aged 15-24 was 18.9% in September, while it was just 3.8% among those aged 25-74. For comparison, the unemployment rate for those aged 15-24 was 12.2% in 2019. One could argue that this was to be expected – employment is typically more tenuous at a young age, and Ireland has now entered a severe recession with increased levels of unemployment. One might expect that young workers would be the first on the chopping block for many businesses struggling to cover costs.
According to analytics conducted by the National Youth Council of Ireland (NYCI), in response to figures published by the Department of Employment Affairs and Social Protection, revealed that 6 out of 10 young people were now on the lower rate of PUP, with almost a third of people under 25 on the lowest rate of €203. This compares to almost two thirds of older citizens receiving the highest rate of €300. In a statement released by NYCI, James Doorley, NYCI Deputy Director, said: “We are calling on the Government to either restore all those who lost their job as a result of the pandemic to the highest rates or alternatively deliver a massive injection of funds in education, training and access to apprenticeships in Budget 2021 to counteract the impact of the pandemic on the employment and future career prospects of young people.
“With 36.5% youth unemployment, young people comprising 21% of those on the PUP (despite only making up 11% of the workforce), a further 28,777 young people on the live register, the pandemic has hit the employment prospects of young people hard.
“And from our analysis the cuts brought in by Government in recent weeks are a further hammer blow falling disproportionately on the young. It is important to remember that all the young people on the PUP now had a job in March, and for very good public health reasons Government took measures to protect us all from the pandemic, instituted measures which led to young people leaving employment temporarily and now 6 months losing those jobs. Therefore, the Government has a duty to either put young people on the higher rate of PUP or alternatively provide a large investment in education, training, career guidance and the roll out of a national access to apprenticeship scheme in the Budget next week to give young people hope and alternatives in the coming months.
“We are facing into a grim period for young people on the employment front with the traditional option of emigration now also largely closed off. It is vital that we provide the young people who lost their jobs in March - and who are unlikely to return to those old positions - opportunities and supports to enhance their skills, retrain and look at new and alternative career options. We cannot afford to abandon them to the corrosive social virus of long-term unemployment”.
For many students, the PUP could act as a safety net against sudden unemployment. With job opportunities becoming increasingly volatile, the PUP is undoubtedly a significant feature of many students’ financial backup plans. However, the government appears to be placing third-level students’ receipt of the PUP (currently amounting to approximately €24 million) under review ahead of Budget 2021. This does not bode well when considering the recent coverage of students by the Irish media.
In light of the media outrage surrounding the recent scenes at Galway’s Spanish Arch, it may also be politically advantageous for the government to (whether explicitly or implicitly) exclude third-level students from its unemployment scheme in some manner. One might argue that this would be an act of barefaced discrimination. Nevertheless, with Budget 2021 being published within the week, the image of hundreds of students packed tightly together in Galway City will remain fresh in the minds of politicians and citizens alike. This all takes place on the backdrop of a rapidly increasing public deficit, making reductions in public expenditure ever more appealing to economic bureaucrats. A reduction in welfare payments to third-level students is far more publicly palatable now than it was in previous months, regardless of ethical or economic considerations.
This reluctance to pay out emergency welfare also manifested in the government’s recent refusal to impose level 5 restrictions nationwide, despite advice from NPHET to do so.
Third-level students have become the Irish media’s most recent scapegoat of the pandemic, following holidaymakers, irresponsible restaurateurs, publicans and Covid deniers. Despite the media’s response, the fact still stands that unfavourable labour market conditions and uncertain social welfare qualifications will make it difficult for many students to make ends meet this academic year. Students should not be penalised financially on the basis of a single incident, just as pubs should not be (and were not) penalised following the scenes at Dublin’s Berlin D2 bar back in August. While the PUP could support many students, the current socio-political climate may not permit this to be the case.