Changes to lone parent support made employment slightly less attractive

Changes to the One Parent Family Payment resulted in small income losses of between 1 and 2 per cent for employed lone parents compared to the benefits previously available, making employment slightly less attractive. The changes had little effect on non-employed lone parents, who had negligible to small increases in take-home income as a result of the changes.

New ESRI research examines the impact of changes made to social welfare policy between 2011 and 2018, which removed entitlement for lone parents with a child over 7 to the One Parent Family Payment and reduced the “earnings disregard”, the amount a lone parent can earn before their payment is reduced. The changes also made lone parent payments for those with children above 7 dependent on an individual’s engagement with job search and training services.

Changes were made partly to boost employment levels, which are substantially lower for Irish lone parents than in other OECD countries. The earnings disregard fell from €146.50 in 2011 to €130 in 2018. Prior to the changes, receipt of the payment did not depend on an individual engaging in training or job search activities. It was paid until a lone parent’s youngest child turned 18, or 22 if in education. Now, lone parents with children aged 7 to 14 are required to engage with activation services. Those whose youngest child is over 14 can apply for other payments not specifically targeted at lone parents, such as Jobseekers Allowance, and must be available for work.

The study also examines the impact of childcare costs on the net financial reward from employment. Without taking childcare costs into account, 2 per cent of lone parents are financially better off not working. Once childcare costs are taken into account this figure rises to 16 per cent. Once the new Affordable Childcare Scheme subsidies are taken into account this figure falls to 13 per cent.

“While childcare costs remain a significant barrier to employment for lone parents, the recently announced childcare subsidies show positive impacts on the financial incentives for lone parents to be in employment”, said Dr Claire Keane, an author of the report. “Future work should monitor closely the impact of the changes to the One Parent Family Benefit on the engagement of lone parents in employment and their poverty rates,” she added.