Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697751206156.pdf (Ireland)
An Roinn Gn6thai Fostaiochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Mr Martin Hughes Clerk to the Committee Committee of Public Accounts Leinster House Dublin 2 5th November 2020 Dear Martin, Ref: S0048 PAC33 Further to the letter from Mr Pat Fannin of 29th October 2020, I attach the following documents as requested: • Appendix 1: Briefing note on Chapter 4 of the Comptroller and Auditor General's Report; • Appendix 2: 2019 outturn figures for the DSP Vote and 2020 estimates; • Appendix 3: 2019 outturn figures for the DSP SIF (Social Insurance Fund) and 2020 estimates.
I am also providing some material in relation to self-employment and JobPath as these are issues which Mr Fannin's letter references are of particular interest to members of the Committee.
This material includes: • Report on "The use of intermediary-type structures and self-employment arrangements: Implications for social insurance and tax revenues"; • An update to the charts and graphs published in the above report; • This year's Tax Strategy Group paper on "Pay-Related Social Insurance for Self-employed Workers"; • A 2019 working paper on "Evaluation of JobPath Outcomes/or Ql 2016 participants".
I would be grateful if you could arrange to provide Committee members with copies of these documents.

Separately, I am arranging an information pack containing hard copies of various annual reports and briefing documents outlining the work of the Department to be sent to you for circulation to the Committee members.
Olfig an Ard-R(mal, An Rolnn Gn6thal Fostalochta agus Colmlrce S6Islalai, Aras Mhlc Dhlannada, Sr.aid St6rals, Balle Atha Cliath 1, D01 WY03 Office of the Secretary General, Department of Employment Affairs and Social Protection Aras Mhic Dhiarmada, Store Street, Dublin 1, 001 WY03 T +353 1 7043896 I secretary.general@welfare.ie I www.welfare.ie R0193(i) PAC33 A I will forward my opening statement and a list of the Department's attendees at the Committee in advance of the meeting on Thursday, 12th November.
Yours sincerely, R0193(i) PAC33 A An Roinn Gn6thai Fostaiochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Working paper: Evaluation of JobPath outcomes for Q1 2016 participants March 2019 R0193(ii) PAC33 A Contents List of Tables ........................................................................................................................................ iv List of Figures ....................................................................................................................................... v List of abbreviations and terms ......................................................................................................... vi Executive Summary ........................................................................................................................... vii Headline results .............................................................................................................................. vii Background ..................................................................................................................................... vii JobPath in Operation .................................................................................................................... viii Clustering ....................................................................................................................................... viii Cluster descriptions ...................................................................................................................... viii Evaluation approach ....................................................................................................................... ix Conclusion ........................................................................................................................................ ix Introduction ............................................................................................................................................ 1 I Social Protection in Ireland ......................................................................................................... 3 An Overview of the Department and its Contracted Services ................................................... 5 Contracted Public Employment Services ..................................................................................... 6 Pathways to Work ............................................................................................................................ 8 II Irish Economic Setting ............................................................................................................... 10 Employment .................................................................................................................................... 10 Unemployment and Live Register................................................................................................ 11 Other indicators: Earnings and Vacancy Rates ......................................................................... 13 Labour Force Participation ............................................................................................................ 13 Profile of Long-Term Unemployed (LTU) jobseekers ............................................................... 14 Summary ......................................................................................................................................... 15 III JobPath in Operation ................................................................................................................. 17 The JobPath service ...................................................................................................................... 17 Referral to JobPath ........................................................................................................................ 19 IV Literature Review ....................................................................................................................... 23 Which employment programmes work?
..................................................................................... 23 Evaluating contracted public employment services .................................................................. 24 Cluster analysis: applications for similar evaluation challenges ............................................. 26 Evaluations in a dynamic treatment environment ..................................................................... 26 Pathways to Work evaluations ..................................................................................................... 27 V Data and Description ................................................................................................................. 29 The Jobseekers Longitudinal Dataset and additional administrative datasets ..................... 29 Description of data ......................................................................................................................... 30 i R0193(ii) PAC33 A Cluster modelling ............................................................................................................................ 33 Cluster characteristics ................................................................................................................... 35 Technical description of clustering methodology ...................................................................... 42 VI Evaluation Approach .................................................................................................................. 44 Estimation of JobPath Effects ...................................................................................................... 44 Outcome Presentation Rationale: Earnings and Social Welfare Payments ......................... 51 V. Results: labour market outcomes ............................................................................................ 52 Main Results: Earnings Social Welfare Payments .................................................................... 52 Variance between clusters ............................................................................................................ 53 VIII.
Discussion of policy implications, future directions and conclusions ................................. 56 Policy implications .......................................................................................................................... 56 Further analysis .............................................................................................................................. 56 Conclusion ....................................................................................................................................... 57 VII Bibliography................................................................................................................................. 60 VIII Appendix ...................................................................................................................................... 63 Standardised processes for data preparation – SQL based ................................................... 63 JobPath Providers by Region and Location ............................................................................... 64 JobPath rollout dates by quarter and DSP claim office ............................................................ 65 2017 time lag between JobPath referral and start date ........................................................... 68 Clusters of jobseekers on the Live Register .............................................................................. 70 Cluster Stability ............................................................................................................................... 71 ii R0193(ii) PAC33 A Acknowledgements The evaluation is being carried out in the context of a partnership between the Statistics and Business Intelligence Unit of this Department and the Directorate for Employment, Labour and Social Affairs of the Organisation for Economic Co-operation and Development (OECD).
The final outputs of the project include (1) the publication of a DEASP report, (2) the publication of a joint DEASP-OECD report with methodological extensions and background as well as additional results, and (3) regular quarterly publication of updated outcome statistics for JobPath participants using the same methodology as in the published reports.
The Department acknowledges the contributions of Herwig Immervoll and Daniele Pacifico of the OECD for methodological input and advice, and Deloitte for assistance in the data extraction and modelling.

The Statistics and Business Intelligence Unit of the Department of Employment Affairs and Social Protection is part of the Irish Government Statistical Service, which is headed by the Central Statistics Office.
It operates in association with, and contributes to, the wider Irish Government Economic and Evaluation Service (IGEES).

IGEES Irish Government Economic & Evaluation Service iii R0193(ii) PAC33 A List of Tables Table 1: Headline 2017 outcomes for people who benefited from JobPath in 2016 .............. vii Table 2: Increase in earnings due to JobPath, by Live Register cluster (values for all clusters refer to people in receipt of jobseekers payments for at least 12 months prior to referral to JobPath.)
............................................................................................................................. vii Table 3: Annual Earnings Percentage Change Source: CSO, EHA05 ................................. 13 Table 4: Average CPI Percentage Change Source: CSO, CPA01....................................... 13 Table 5: Persistence Rates (12 months rolling average) Source: DEASP administrative data ........................................................................................................................................... 15 Table 6: Average potential payment per JobPath Participant .............................................. 18 Table 7: The number of jobseekers referred to JobPath from July 2015 to September 2018, broken down by quarter, contractor, and length of time on the Live Register.
..................... 19 Table 8: Adjustments made to the Live Register to make the JobPath sample size ............ 30 Table 9: Live Register Figures for Q1 2016; Source: CSO, LRM17 ..................................... 31 Table 10: Personal Characteristics of the Control and Treatment groups ............................ 31 Table 11: Labour Market history of the Control and Treatment groups ................................ 32 Table 12: Social welfare payment history of the Control and Treatment groups .................. 32 Table 13: Descriptive characteristics of the Younger Casual Claimants cluster ................... 35 Table 14: Descriptive characteristics of the Younger Professionals clusters ....................... 36 Table 15: Descriptive characteristics of Intermittent Labour Market Attachment group ........ 37 Table 16: Descriptive characteristics of Shorter Durations group ........................................ 38 Table 17: Descriptive characteristics of the Older, With Strong Employment History cluster 39 Table 18: Descriptive characteristics for the Self-Employed cluster ..................................... 40 Table 19: Descriptive Characteristics for the Persistent Longer Durations cluster ............... 41 Table 20: Those who were eligible for JobPath in Q1 2016 and those who received the service in subsequent quarters ........................................................................................... 44 Table 21: Annual Earnings Rate Change Source: CSO, EHA05 ......................................... 51 Table 22: Social Welfare Payment Rate, percentage change on previous year Source: DEASP Administrative Data ................................................................................................ 51 Table 23: CPI Percentage Change on previous year Source: CSO, CPA01 ........................ 51 Table 24: Mean Weighted Total Earnings, 2017 (€) ............................................................ 52 Table 25: Mean Weighted Social Welfare Payments, 2017, (€)
 ........................................... 52 Table 26: Mean Weighted Weeks of Insurable Employment, 2017...................................... 53 Table 27: Mean Weighted Total Earnings, 2018 (€) ............................................................ 53 Table 28: Mean Weighted Social Welfare Payments, 2018 (€) ............................................ 53 Table 29: Mean Weighted Weeks of Insurable Employment, 2018...................................... 53 Table 30: Mean Weighted Total Earnings by Cluster, 2017 (€) Includes all individuals with or without earnings in 2017 ..................................................................................................... 54 Table 31: Mean weighted earnings per week of insurable employment by Cluster, 2018 (€) Includes all individuals with or without earnings in 2017 ...................................................... 54 Table 32: Mean Social Welfare Payment by Cluster, 2018 (€) Includes all individuals with or without earnings in 2018 ..................................................................................................... 54 Table 33: JobPath Providers by Location ............................................................................ 64 Table 34: JobPath rollout dates by quarter and DSP claim office ........................................ 68 iv R0193(ii) PAC33 A List of Figures Figure 1: Numbers on the Live Register and CSO Standardised Unemployment Source: DEASP Administrative Data and CSO .................................................................................. 4 Figure 2—Pseudo-Coverage rates across OECD countries Source: OECD Social Benefit Recipients Database ............................................................................................................. 5 Figure 3: 2007 – 2018 Employment and Unemployment numbers for persons 15 years and older
 .................................................................................................................................... 10 Figure 4: Persons aged 15 years and over in Employment by sex, 2007-2018 Source: CSO, QLF01 ................................................................................................................................. 11 Figure 5: Total Persons on the Live Register, 2007 - 2018 .................................................. 11 Figure 6: Persons on Live Register by Age, 2007-2018 ...................................................... 12 Figure 7: ILO Participation Rates 4Q Moving Average by Sex (not seasonally adjusted) 2008-2018.
Source: CSO, QLF02 ....................................................................................... 14 Figure 8: Number of long-term unemployed people (12 months or more) as a % of all unemployed people, 2010-2017 .......................................................................................... 14 Figure 9: Long-term Unemployment Rates, 2008 - 2018 .................................................... 15 Figure 10: Number of persons on the Live Register, 1967-2018 ......................................... 16 Figure 11: Map of JobPath Providers by Provider (Seetec in purple and Turas Nua in yellow) ........................................................................................................................................... 17 Figure 12: Time lag between 2016 JobPath referral and start date.
.................................... 20 Figure 13: Flow of Jobseekers Referred to JobPath in 2016 ............................................... 21 Figure 14: Flow of Jobseekers Referred to JobPath in 2017 ............................................... 22 Figure 15: Median Duration of days on the Live Register .................................................... 33 Figure 16: Younger Casual Claimants age distribution ........................................................ 35 Figure 17: Younger Professionals age distribution .............................................................. 36 Figure 18: Intermittent Labour Market Attachment age distribution...................................... 37 Figure 19: Shorter Durations age distribution ...................................................................... 38 Figure 20: Older, With Strong Employment History age distribution .................................... 39 Figure 21: Self-Employed age distribution ........................................................................... 40 Figure 22: Persistent Longer Durations age distribution ...................................................... 41 Figure 23: Duration of claim open for JobPath participants and eligible non-participants, Q1 2016 .................................................................................................................................... 46 Figure 24: JobPath evaluation model pipeline ..................................................................... 46 Figure 25: Age distribution for control and treatment ........................................................... 47 Figure 26: JobPath evaluation methodology: logistic regression ......................................... 47 Figure 27: Weighted and Unweighted Standardized Differences ......................................... 48 Figure 28: Weighted and Unweighted Kolmogorov-Smirnov statistic ................................... 48 Figure 29: Standardized Processes for Data Preparation- SQL Based ............................... 63 Figure 30: 2017 time lag between JobPath referral and start date....................................... 68 Figure 31: Earnings 2013-2015, unweighted, treatment and control .................................... 69 Figure 32: Earnings 2013-2015, weighted – treatment and control...................................... 69 Figure 33: Clusters of Jobseekers on the Live Register ...................................................... 70 Figure 34: Cluster Persistence Rates .................................................................................. 71 v R0193(ii) PAC33 A List of abbreviations and terms ALMPs Active Labour Market Policies BTEA Back to Education Allowance BTWEA Back to Work Enterprise Allowance CPI CSO DEASP ESRI Consumer Price Index Central Statistics Office Department of Employment Affairs and Social Protection Economic and Social Research Institute EU-SILC European Union Survey on Income and Living Conditions FÁS Intreo JLD JSF LES Former training and employment agency, replaced by SOLAS The Department of Social Protection’s single point of contact for all employment and income supports Jobseekers Longitudinal Dataset Job Sustainment Fees Local Employment Service Live Register This administrative record gives a count of those in receipt of jobseekers’ and related welfare payments LTU NEAP NEES OECD PES PEX PtW SOLAS Long Term Unemployed (>12 months) National Employment Action Plan National Employment and Entitlements Service Organization for Economic Co-operation and Development Public Employment Service A score based on the probability of a jobseeker exiting the Live Register, based on labour market characteristics, which determines the type of interaction between the jobseeker and the Intreo office Pathways to Work, a series of cross-Departmental labour market strategies covering 2012-2020 Responsible for funding, planning and co-ordinating the further education and training sector in Ireland vi R0193(ii) PAC33 A Executive Summary Headline results People who benefited from JobPath in 2016 got 20% more jobs the following year than they would have got without JobPath, and 26% more jobs in 2018.
And people who did get jobs earned 16% more per week in 2017 and 17% more in 2018 if they benefited from JobPath in 2016.

This means that, on average, people who benefited from JobPath in 2016 had earnings from employment that were 35% higher than they would earned without the programme in 2017 and 37% higher in 2018.

Furthermore, the effect is positive for all cohorts who received the JobPath service, including those furthest from active participation in the labour market.
Headline Results More people in jobs Higher weekly earnings Extra earnings from work Welfare supports Table 1: Headline 2017 outcomes for people who benefited from JobPath in 2016 2017 +20% +16% +35% -4% 2018 +26% +17% +37% -9% Younger Casual Claimants Younger Professionals Intermittent Labour Market Attachment Older, With Strong Employment History Shorter Durations Self- Employed Persistent Longer Durations +61% +54% +100% +54% +14% +35% +24% Table 2: Increase in earnings due to JobPath, by Live Register cluster (values for all clusters refer to people in receipt of jobseekers payments for at least 12 months prior to referral to JobPath.)
Background The evaluation is being carried out as part of a partnership between the Statistics and Business Intelligence Unit of the Department of Employment Affairs and Social Protection and the Directorate for Employment, Labour and Social Affairs of the Organisation for Economic Co-operation and Development (OECD).

JobPath was introduced in 2015, some years after the dramatic collapse in employment that occurred through 2009-2012.
A share of those who lost jobs in this period became long-term unemployed in the years that followed.

The response of the State’s Public Employment Service (PES) for this cohort included the contracted provision of employment services through the JobPath model.

In simple terms JobPath provides additional case worker resources to provide a one-to-one, case managed, employment advisory service to long-term unemployed jobseekers.
It sits alongside and augments the case-worker capacity that was already in place in Intreo and the Local Employment Services (LES).

A key difference compared to Intreo and LES services is that a significant proportion of JobPath contractor payments are based on actual employment outcomes achieved.

By comparison directly provided Intreo and LES services are pre-funded and the costs incurred are not related to outcomes achieved.
The purpose of vii R0193(ii) PAC33 A this study is to determine if, and if so the extent to which, those long-term unemployed people who participated in JobPath fared better or worse than similar individuals who did not receive the service.

JobPath in Operation Referrals to JobPath come from the long-term unemployed cohort of the jobseeker population.
For the purpose of JobPath selection, all long-term unemployed jobseekers on the Live Register, aged between 18 and 61 years old inclusive, are categorised into groups based on duration of unemployment (i.e.

1-2 years, 2-3 years, etc.).

Selection for referral to JobPath is by stratified random sampling using these categories based on duration.
In addition to ensuring equity in the selection, the objective of this process is to guarantee that people referred to JobPath are representative of the long-term unemployed people on the Live Register.

Two JobPath contractors work with jobseekers referred by the Department of Employment Affairs and Social Protection to provide job coaching and job search assistance.
Participants on JobPath receive intensive individual support from the contracted providers to help them address barriers to employment and to assist them in finding jobs.

During this time, jobseekers have access to a personal advisor who works with them over two phases.

In the first phase, of up to 12 months duration, the personal advisor provides practical assistance in searching, preparing for, securing and sustaining employment.
In the second phase, if the participant secures employment, the service provider remains in contact with the participant during at least the first three months of employment.

Clustering One of the novel features of this evaluation is the use of cluster analysis to interpret the results of the impact of JobPath.

This recognises that jobseekers are not a homogenous group.
Any programme or service can be expected to have a different impact on different jobseekers and what works particularly well for some will work less well for others.
A comprehensive dataset of jobseekers was compiled based on factors (such as age, prior work history, duration of unemployment) and a clustering algorithm calculated the optimal number of clusters so that each cluster is, to the greatest extent possible, internally consistent (individuals in the same cluster are similar to each other) and distinct from all other clusters (individuals in one cluster are different from those in other clusters).
The result is a set of clusters using all of the available data to describe the jobseeker population and to allow programme impact to be reported in respect of comparable groups of similar jobseekers.

The clustering exercise provides us with a greater understanding of the entire Live Register population (of which long-term unemployed people are one part), and allows us to accurately interpret the impact of JobPath for distinct cohorts.
Cluster descriptions Short descriptions of the clusters of all Live Register claimants (not just the long-term unemployed claimants) are provided below: Younger Casual Claimants have the shortest claim durations, with comparatively good labour market attachment even if they tend to have earnings only in the previous calendar year.

Younger Professionals: these are largely young, with a higher share of short claim durations; almost all have some history of employment.
viii R0193(ii) PAC33 A Intermittent Labour Market Attachment: People in this cluster have a poor employment history in the past year but evidence of intermittent employment/earnings over the past five years.

Shorter Durations is the largest cluster.

People in this cluster tend to be 30 to 40 years of age.

The cluster has an above-average share of people with clerical and secretarial occupations.

Older, With Strong Employment History is the smallest cluster.
While long-term unemployed, people in this cluster have a strong prior history of employment, they are largely male and with a greater share of people coming close to retirement age.

Self-Employed: people in this cluster were often self-employed prior to their claim.

They have weak labour market attachment their average claim duration is the second longest among all the clusters.
Persistent Longer Durations: people in this cluster have generally been unemployed for more than two years and they rarely move to another cluster.

This cluster has the lowest share of people who were previously in managerial or professional occupations.

A large proportion of people in this cluster were referred to JobPath.
Evaluation approach The process of evaluation begins by identifying JobPath-eligible jobseekers in Q1 2016 and dividing them into those who did not exit the Live Register1, but did not start JobPath, and those who started JobPath.

The situations of these two groups are tracked across successive time periods to consider the labour market outcomes of these two groups in the following two years.
Next, the probability of treatment is estimated using logistic regression with a binary outcome of taking part in JobPath, or not, in Q1 2016.

This procedure generates probability scores for each individual and allows us to estimate inverse probability of treatment weights.
Adding weights to each observation in the control group means we can ensure the treatment and control groups are adequately balanced and, consequently, that any comparison between them reflects only their differing status in respect of JobPath and not underlying differences in their labour market characteristics.
Conclusion The Public Employment Service (PES) performs an important role in providing the support needed to people who lose their job and to help them return to employment in as short a time as possible.

Performing this task well helps to minimise the drift to long-term unemployment.

This, in turn, minimises the scale of the challenge faced by the PES in addressing the complex challenges of the long-term unemployment.

JobPath makes an important contribution to this task.
In Ireland and elsewhere it is well established that those who become long-term unemployed (defined as being out of work for over twelve months) face diminishing prospects of securing employment.

The longer a person is unemployed the less likely it is he or she will secure employment.
For this reason, the quality of the service provided by the PES to this cohort is particularly important in helping to identify and address steps that they can take to secure stable employment and to support them in taking those steps.
The evidence from research internationally indicates that case-work based employment counselling and job-search 1 Exiting the Live Register refers to people who cease registration for Jobseekers Benefit (JB), Jobseekers Allowance (JA), or for various other statutory entitlements at local offices of DEASP.

ix R0193(ii) PAC33 A assistance has a positive impact in terms of improving employment outcomes for this group (Spermann, 2015).

This is the service that JobPath is designed to deliver.
If it is delivering the service well, the employment outcomes and earnings for people who receive the service should be noticeably better than the equivalent outcomes for those people who do not receive the service.

Based on the econometric analysis undertaken in this research it is clear that JobPath has been effective in supporting long-term unemployed people secure work and in improving employment earnings for those who do secure work.

In summary the effect of JobPath is to 1.


Increase employment outcomes and annual earnings from employment for those who participated in JobPath 2.

Increase the earnings per week of employment 3.
Decrease reliance on social welfare income supports in the period after participation on the programme Each of these factors has a positive impact on the current situation of the individuals concerned, their expected labour market outcomes, the Exchequer finances and Each of these factors has a positive impact on the current situation of the individuals concerned, their expected labour market outcomes, the Exchequer finances and future entitlements to social insurance benefits.
The effect on employment outcomes – the likelihood of a person getting a job – is very significant with a 20%+ improvement in employment outcomes in 2017 and 26%+ in 2018.

Of equal note is that the weekly employment earnings of people who secured employment with the support of JobPath are 16% higher than the weekly employment earnings of people who secured employment without the support of JobPath in 2017 and 17% higher in 2018.
In total therefore the positive employment/earnings impact is in the order of 35% in 2017 and 37% in 2018..The impacts were positive not only on an overall basis but for each of seven different clusters of Jobseekers with the positive employment earnings impact ranging from 24% for people with a prior history of being very long term unemployed to 100% for those people with prior history of intermittent employment.
Although evaluation methods and target groups differ between studies, compared to other employment schemes that have been the subject of econometric analysis this is  Significantly better than the Back to Education Allowance Scheme (where the ESRI econometric evaluation indicated negative employment outcomes).
 Slightly ahead of the impact of the JobBridge programme - where the differential employment impact was estimated at c 14 percentage points (32% improvement)  Somewhat lower than improvement previously reported (2017) for the Back to Work Enterprise Allowance Scheme (a scheme that supports people start their own business meaning that all participants, by definition, see an improvement in employment outcomes).
These findings indicate, firstly, that it is possible to achieve positive results for unemployed people with a payments-by-results contractual model; and secondly, that the State should continue to prioritise providing case-managed employment advisory services to long-term unemployed people.
x R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Introduction This evaluation of the JobPath service is being carried out in the context of a partnership between the Statistics and Business Intelligence Unit of the Department of Employment Affairs and Social Protection and the Directorate for Employment, Labour and Social Affairs of the Organisation for Economic Co-operation and Development (OECD).
The final outputs of the project will be: (1) the publication of a DEASP report, (2) the publication of a joint DEASP-OECD report with methodological extensions and background as well as additional results, and (3) regular quarterly publication of updated outcome statistics participants using the same methodology as in the published reports.
for JobPath In this evaluation, we use cluster analysis to segment the Live Register into seven groups of people with similar labour market histories, and then compare the outcomes of those who received the JobPath service with other eligible people within each cluster.

The evaluation examines the labour market history of JobPath participants and compares them to people who did not receive the JobPath service, selecting only those of the latter group that closely resemble the former.
This means the two groups are extremely similar but for one factor – one group received the JobPath service.

By comparing the outcomes of the two groups at later stages, we can estimate the impact on jobseekers of receiving the JobPath service.

JobPath is the first intensive job search assistance service provided to long-term unemployed people where payments are directly related to employment outcomes achieved.
As well as providing evidence on whether JobPath enhanced the labour market outcomes of long-term unemployed people, this evaluation will provide an insight into the broader question of whether intensive case management of long-term unemployed people works, by comparing outcomes of those undergoing intensive case management and those who did not receive a similar service.
This paper analyses the impact of JobPath on improving the employment outcomes of long- term unemployed people for those who participated in Q1 2016.
The measures by which we assess the employment outcomes to have changed are twofold:   the amount of money earned in earnings from employment compared to the amount of money received in social welfare payments in the 2017 calendar year the number of weeks of insurable employment in the 2017 calendar year These measurements of labour market outcomes are distinct from the job sustainment fee paid to JobPath providers (see Section III), which is not considered in this analysis.
Job sustainment fees are paid by the Department of Employment Affairs and Social Protection to the JobPath contractors only under certain circumstances.

Although these fees are indicative of positive outcomes for the individuals concerned, they are not, of themselves an objective indicator of an enhanced labour market outcome compared to other individuals who did not participate in JobPath.
This evaluation seeks to answer the question ‘has JobPath had a differential impact on jobseeker employment outcomes.
1 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection The paper is structured as follows: Section 1 outlines the social protection system, the extent of its coverage in Ireland, as well as providing an overview of the Department of Employment Affairs and Social Protection, its contracted services, and the policy background as set out in Pathways to Work; Section 2 describes the labour market context of this evaluation; Section 3 explains how JobPath works and the volume of referrals to the service; Section 4 reviews the relevant literature; Section 5 describes the data used for the evaluation; Section 6 presents the evaluation approach; Section 7 reports on labour market outcomes; and Section 8 concludes with the policy implications and future directions.
2 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection I Social Protection in Ireland Social protection is generally accepted to be a set of measures that a society provides to its members, both to insulate them from poverty and social exclusion caused by a lack of income (e.g.
due to sickness, disability, maternity, employment injury, unemployment, old age, or death of a family member) and to improve their prospects of exiting poverty and social exclusion.

Social protection encompasses an assortment of measures that cover every conceivable variety of contingency, from life’s certainties (e.g.

old age) to the unforeseen events that would, without some mitigating assistance, have devastating effects (unemployment, sudden illness).
As well as covering a range of circumstances and life events, from birth to death, social protection also extends widely across society, from those with a long history of needing social support to those who never anticipate the events leading to reliance on social protection.

Social protection contributes to reducing poverty, exclusion, and inequality while enhancing political stability and social cohesion.
Social protection contributes to economic growth by smoothing household income and thus domestic consumption.

Furthermore, social protection safeguards and enhances human capital and productivity, making it a critical policy for transformative national development.

Ireland has a high social benefit coverage ratio against the risk of unemployment, in both good and bad times.
This reflects a commitment in the social protection system to financially supporting people who are affected by unemployment, and constructing the support as being for unemployed jobseekers, regardless of unemployment duration.

It is worth contrasting this approach with other countries where entitlement to unemployment benefit payments is time limited or otherwise targeted to specific groups of jobseekers, and where benefit coverage can be low as a result.
Traditionally, the Irish Public Employment Services (PES) has provided income support to long-term-unemployed jobseekers without any time limitation apart from the movement from the insurance-based Jobseekers Benefit to the means-tested Jobseekers Allowance, both of which are paid at the same maximum rate.
The extensive coverage of unemployment benefits in Ireland is evidenced in the World Social Protection Report 2017/2018 (see Figure 2) and also in the two main official statistics relating to unemployment and claimant counts – the LFS and the Live Register.

The official measure of unemployment (carried out according to measurement standards set by the International Labour Organization), is based on a survey of households, with results released every quarter.
The Live Register is a count of claimants of certain weekly social welfare payments.

As well as people who need income support when out of work, the Live Register includes casual workers and people signing for credited contributions, which are payments made during unemployed based on paid credited PRSI contributions in the past.
In recent decades, governments throughout the developed world have moved from simply providing a system of passive income supports to developing PES that prioritises action to promote active inclusion and activation into employment.

This sits alongside, and is a counterpart to, the provision of long-term income support (i.e.

insulation against the poverty and social exclusion effects of a loss of income) by providing incentives and intensive assistance to help people secure employment (i.e.
to help them exit poverty/social exclusion and to reduce dependence of social welfare transfers).

In the case of long-term unemployed 3 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection through jobseekers people, the services provided by PES typically comprise a case-management approach to (e.g.
support Intreo/LES/JobPath) together with a number of programmes and services specifically tailored to meet the needs of long-term unemployed people, including work-placement programmes (e.g.

JobBridge/YESS), state employment schemes (e.g.

CE/Tús), recruitment subsidies (e.g.

JobsPlus), and education and interventions (e.g.

BTEA and Momentum).
BTEA and Momentum).

job-search assistance and job-counselling The commitment to full social protection coverage for all unemployed people in both good and bad times, combined with the openness of Ireland’s labour market and economy, requires a system that is flexible both in terms of its financial capacity to support people through unemployment and – crucially – in its activation and case management capacity.
Providing high-quality activation and case management capacity using an in-house permanent staff cadre is challenging in a situation where there are cyclical, and sometimes rapid, changes in the number of unemployed jobseekers.

That is why the Irish PES has always had recourse to contracted services that are flexible across the economic cycle.
This has ensured a responsive system of employment support for those in unemployment despite the recurring economic cycles of low unemployment followed by high unemployment, a risk that is associated with Ireland’s position as a small open economy (see Figure 1).

Ireland’s national statistics agency, the Central Statistics Office, cautions against conflating the two measures.

In many countries, the number of people unemployed and the number of claimants are at very different levels.
However, once casual jobseekers and those signing for credited contributions are removed, the core Live Register (LR) – people receiving weekly Jobseeker payments – tracks unemployment closely.

Figure 1 shows the number of people receiving Live Register social welfare payments from 2004 to 2018, disaggregated by those signing for credits, those receiving casual jobseeker payments, and all other claimants (typically recipients of either Jobseekers Benefit or Jobseekers Allowance).
500,000 4 50,000 +-------i LN'e Re1ister · Casual I----, Live Re&ister • °"dits 400,000 +--------< - Core live Reaist.er 350,a,o -r--- - ---1_-_ ..:CSO=::""..:•::.

:m::ploy= m.= nt~ 150,000 100,000 50,00l net Irish As seen in Figure 1, social the has safety the supported all people who have been out of work at every point through over ten years of deep crisis and rapid recovery.
It is underlining worth that Ireland is at the Figure 1: Numbers on the Live Register and CSO Standardised Unemployment Source: DEASP Administrative Data and CSO upper end of OECD measurement of the to which extent unemployed people are covered by social welfare payments.

Figure 2 illustrates the pseudo-coverage rate (a simple ratio of benefit recipients and the number of unemployed people) across OECD countries, disaggregated by insurance-based payments and means-tested assistance payments.
4 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection On average, the pseudo coverage rate fell from 59% to 57% between 2007 and 2014, with changes varying per country: significant increases in countries such as Austria, Finland, and Germany contrasted with decreases in countries such as Denmark, Belgium, and Canada (OECD, 2018).

Ireland’s strong unemployment benefits coverage has remained stable in both crisis and recovery.
• Insurance, 2014 D Assistance, 2014 ♦ Total, 2007 % 140 120 100 80 60 40 20 ... ... • ... ... ■ I I i I I I I I• • 1• • I .a.
• • • ... • • 175204 ♦ • • • Figure 2—Pseudo-Coverage rates across OECD countries Source: OECD Social Benefit Recipients Database An Overview of the Department and its Contracted Services The Department of Employment Affairs and Social Protection (DEASP) administers over 70 separate schemes and services throughout Ireland to promote active participation in society through the provision of income supports, employment services through its Public Employment Services function, and other services.
These services include administration of a wide range of social insurance and social assistance schemes, including pensions, benefits, allowances and grants for children, people of working age, carers, people with disabilities, and older people.

Additional services include activation, employment and community services and programmes to promote development, progression, participation, and social involvement of clients.
Overall, the Department is responsible for:  Advising the Government and formulating appropriate social protection policies;  Design, develop and delivery of effective and cost-efficient income supports, activation and employment services, advice to customers and other related services; and  Working towards seamless service delivery in conjunction with other Departments, Agencies and bodies in the delivery of Government policies.
The current structure of the DEASP is a result of incremental policy reforms beginning in the mid-1990s, in part driven by a broader recognition that the welfare state needed to adapt to changing labour market dynamics.

The current process of reforms was initiated in 1996 by the European Employment Strategy (EES), requiring all EU member states to set out actions for the implementation of EES guidelines, through the development of national action plans.
Starting with the National Employment Action Plans (NEAPs) in the 1990s, through to the National Employment and Entitlements Service (NEES) in 2011, and finally the introduction 5 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection of the first Intreo pilots in 2012, each subsequent stage in employment policy evolution introduced a discrete set of reforms.
Intreo is now the single point of contact for all employment and income supports throughout Ireland.

These reforms have gradually shifted the Public Employment Services towards a model that is underpinned by a pro-active activation approach.

Labour market activation policies are designed to give jobseekers a better chance at finding employment through engagements such as education or training schemes, employment support schemes, or internships.
DEASP activation efforts involve engaging working-age adults with a focus on moving into employment, in line with broader social protection reforms that operate from a social contract approach to receipt of welfare payments.

Contracted Public Employment Services Public Employment Services (PES) can help to support the efficient functioning of the labour market by improving information flows, adjusting for externalities, aiding the matching process between employers and jobseekers.
PES activities include:  Job brokerage by publicly disseminating job vacancies to facilitate rapid matches between supply and demand.

 Provision of labour market information by collecting data on job vacancies and potential applicants.

 Market adjustment by implementing labour market policies aimed at adjusting labour demand and supply for particular categories (e.g.

through recruitment subsidies and in-work income supports for long term unemployed people and people with disabilities).
 Management of labour migration by coordinating the geographic mobility across borders of persons who want to use and develop their skills in a new working environment.

This is done in conjunction with the EU’s EURES employment service and the Department of Business, Enterprise and Innovation’s employment permits section.

 Jobseeker engagement to identify barriers to employment and to improve the value of their ‘human capital’ e.g.

through reskilling, work experience and training.


 Employer engagement to identify suitable places of employment for jobseekers.

In Ireland, the PES is managed by the DEASP and is delivered via two main channels: directly through the Intreo service and through contractors.

JobPath is an example of such a contracted service, introduced in July 2015 in order to complement existing contracted services such as the Local Employment Service (LES), Job Clubs and EmployAbility.
Government policy to reduce unemployment during the period covered in this evaluation was set out in two strategy documents, the Action Plan for Jobs and Pathways to Work.

First, the Action Plan for Jobs set out policies to create an environment in which business can succeed and create jobs.

Second, Pathways to Work aimed to ensure that as many of these new jobs and vacancies as possible were filled by people on the Live Register.
6 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Local Employment Service 22 organisations are contracted by DEASP to provide the LES, which acts as a local gateway to the scope of services available to jobseekers, in order to aid their return or entry into employment.

Services include:  Placement service (career guidance, vacancy matching and placement).

 Progression (education, development opportunities).
planning and training  Mediation personalised guidance to develop a career plan (career counselling and referral to third party agencies), initial group following information session.

Job-seeker-Employer Liaison.

the   Post-Employment Programme Assistance.

 Post-Training/Education Programme Assistance.
the necessary Job Clubs Job Clubs provide structured support to job ready jobseekers (with training, education and motivation) to secure and retain paid employment in the open labour market and is a final transition for jobseekers mechanism Services are provided via:  involving Formal workshops the profiling of individual client the skills, matching with jobseeker with job local the opportunities development of a better understanding of the interview process.
 One-to-one engagements which allow jobseekers to avail of practical and personal support.

and  CV preparation service.

 A drop-in service allowing jobseekers the facilities of the Job Club (e.g.

telephone, internet, photocopying) at their own convenience.

to avail of is Service provision EmployAbility a EmployAbility an nationwide employment support service for people with a health condition, injury, illness or disability and a recruitment advice service for the business community.
of Services include:  Employment assistance and access to a pool of potential employees with varying levels of skills, abilities and training.

 Ongoing support for both the employee employer throughout employment.

and  Professional service to successful recruitment.

job matching ensure help information on employment  Advice and additional supports.

and Follow-up Mentoring to both employers and employees.
Support  The Pathways to Work 2016-2020 strategy provided programmes and services for long-term unemployed people through targeted wage subsidies under JobsPlus and through reserved places for long-term unemployed jobseekers on employment and training programmes.

JobPath, a contracted, payment-by-results employment service, provides additional resources to enable the provision of a high-quality case managed employment support service to people who are long term unemployed.
By augmenting and complementing the Department’s existing employment service capacity, JobPath allows more intensive engagement with the long-term unemployed than would otherwise be the case By using a payment-by-results model this additional capacity could be added, during a period of significantly constrained finances, in a relatively low-risk manner compared to a fixed-cost pre-funded model.
In December 2014, the Department of Social Protection published a contract notice inviting tenders for the provision of JobPath services.

JobPath then began in the second half of 2015 and was fully rolled out to all Intreo offices by Q2 2016.

Contracts covered a period of 4 years with an added 2 year ‘work out’ period to cover the final set of referrals.

The two contracted providers of JobPath’s employment services are Turas Nua and Seetec (see Figure 11 for locations of service).
Furthermore, the JobPath service was designed in such a way as to be seamlessly integrated into the Intreo Service, in order to maintain the ‘one- stop-shop’ interface with jobseekers.

7 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection How does JobPath Work?

 The Department of Employment Affairs and Social Protection generates a stratified random sample of long- term unemployed jobseekers for referral to JobPath.
For those referred, participation is mandatory, although the Department may cancel or pause a person’s referral (see figures Figure 13 and Figure 14 to see the various flows of JobPath referrals).

Those selected receive a letter inviting them to an information session on the services available to them through JobPath.

Following this information session, jobseekers are then given an appointment for a one-to- one meeting with an advisor who will work with them on their case.
JobPath participants receive intensive individual support to help them address barriers to employment and to assist them in finding jobs.

The JobPath service is separated into two main phases:     The first phase, which is 12 months in duration, involves engagement with a personal advisor who provides practical assistance in searching, preparing for, securing and sustaining employment.

The second phase begins if and when a jobseeker is successful in obtaining employment.
Here the personal advisor continues to work with the individual for a further period of up to 12 months.

 During their time on JobPath, a jobseeker may also be referred for further education and training opportunities; which may extend the period the jobseeker is supported through the service for up to a further six months  Providers have flexibility in addressing whatever barriers a jobseeker may have in securing employment e.g.

basic literacy skills, computer skills, etc.


 Service Guarantee: every participant on the programme is guaranteed a baseline level of service.

This ensures that all participants receive a personal progression plan, regular face-to-face meetings with advisors, assistance with CV and job interview preparation etc.

The period of engagement on the programme for the client is 52 weeks.

 This intensive engagement with long-term unemployed jobseekers requires considerable resources and case officer time.
Prior to the introduction of JobPath, the ratio of unemployed jobseekers to case officers in Ireland was over 1,000:1; which was considerably high by international standards, where figures of 100 – 150:1 are the norm with caseworker ratios for long-term unemployed people being even lower.

This reflected the financial and recruitment constraints on the public service and limited the degree to which the Department of Social Protection could expand its range of services to the target groups.
The introduction of extra capacity, via JobPath, to target long-term unemployed jobseekers improved this ratio significantly to approximately 238:1 in 2017 and allowed Intreo case officers to focus their time and effort on a smaller pool of unemployed jobseekers.

Pathways to Work As noted above, Ireland’s pro-active approach to the provision of PES services is set-out in the Pathways to Work (PtW) strategy, first launched in 2012.
PtW sets out a comprehensive reform of the State’s approach to helping jobseekers return to work.

One important element of PtW has been the merger of the PES and income support services to create a more centralised system of job search assistance.

Previously, Irish employment and income support services were split among many different organisations and agencies.
The DEASP had provided unemployment assistance payments and limited advisory services, while the Community Welfare Services (CWS) of the Health Service Executive (HSE) had provided temporary income support and supplementary welfare payments whereas FÁS, the former training and employment agency, had provided work placements, apprenticeships and employment information services.

As part of the PtW reform processes, one-stop-shops for job search assistance were created, known as Intreo centres.
The new Intreo centres are co-ordinated centrally by the Department of Employment Affairs and Social Protection (DEASP), and consist of 61 offices throughout Ireland.

Intreo centres are the central point of contact for all employment and 8 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection income supports, providing employers.
tailored employment services for both jobseekers and The initial PtW strategy was to consolidate services into a one-stop shop and to develop a more pro-active approach than NEAP or NEES.

It is also worth bearing in mind that the early PtW strategies coincided with the latter part of the crisis period and the PES having learned lessons from dealing with vast inflows of new unemployment claims.

A significant initiative of the PtW strategy was the development of a Jobseekers Longitudinal Dataset, (JLD).
The JLD enables the Department’s statisticians to track jobseeker journeys including episodes of employment and unemployment together with services received over a prolonged period.

This, in turn, facilitates the analysis of the effectiveness of individual services the JLD was complemented by the formation of a Labour Market Council (LMC) composed of external experts and stakeholders and the development, under its guidance, of an evidence-based approach to the development and operation of the PES.
This resulted in detailed evaluations of JobBridge, the Back to Education Allowance and the Back to Work Enterprise Allowance schemes.

improving employment outcomes.

The development of in In parallel with the development of Jobseeker services PtW also prioritised engagement with employers as being key to improving employment outcomes for unemployed Jobseekers.
Again with the support of the LMC this led to the development of schemes such as JobsPlus, Feeding Ireland’s Future and Momentum and services such as JobsIreland and National Jobs Week.

The focus on employer engagement also informed the development of the JobPath model and, more recently, the Youth Employment Support Scheme (YESS).
In more recent times, as the inflow of new claims reduced and the stock of Live Register claimants decreased, the most recent medium-term labour market activation strategy, Pathways to Work 2016-2020 (PtW), emphasises a the consolidation of the reforms made, an increased focus on quality, and the extension of the service to non-active cohorts while at the same time maintaining a focus on long-term unemployed people in Ireland.
9 R0193(ii) PAC33 A An Roinn Gnothai Fostaiochta agus Coimirce Soisialaf Department of Employment Affairs and Social Protection II Irish Economic Setting An essential component of deriving useful policy lessons from an evaluation of a labour market programme is interpreting outcomes in light of the employment context.

This section presents a number of indicators that set the context for employment outcomes for those availing of the JobPath service, using data on employment and unemployment.
This section gives an illustration of the Irish economy in the crisis and post-crisis period, with the period in which JobPath operates (mid-2015 onwards) shaded in all figures.

Employment To date, JobPath has operated in a labour market of continuing improvement in employment prospects.

After the post-crisis drop in employment levels, reaching a low of 1,863,500 in Q1 of 2012, total employment has continued on the path to recovery in recent years.
Figures for Q3 of 2018 put overall employment at 2,273,500, slightly higher than the pre-crisis high of 2,252,500 (Q3 of 2007).

Persons aged 15 years and over in Employment and Unemployment 2007-2018 Data Source: CSO, QLF01.
2000 ., 1500 ,:, C :Ji 5 ~ 1000 - - In Employment Unemployed 500 ,_'1,o' 1' ,_,,,& '1," Period Figure 3: 2007 – 2018 Employment and Unemployment numbers for persons 15 years and older Although the absolute value for the number of people employment is higher, the employment rate, which measures proportion of the working age population in employment, has yet to return to previous highs.

Q3 2007, represented the pre-crisis high for the Irish employment rate (72.5%).
During the crisis, the employment rate reached its lowest point in Q1 2012, dropping to 59.3%.

The recovery in the employment rate has continued since then, most recently measuring 69.1% in Q3 of 2018.

10 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Persons aged 15 years and over in Employment by Sex 2007-2018.
Data Source: CSO, QLF01 1300 1200 <J) -0 C ro <J) :::, 0 .c I- 1100 1000 900 (Y .. ~ ~ Period Figure 4: Persons aged 15 years and over in Employment by sex, 2007-2018 Source: CSO, QLF01 Male employment has regained some of the ground lost during the economic downturn, but has not yet reached pre-crisis levels.

Female employment, while also suffering a loss during the crisis, has followed a different path to recovery.

Female employment peaked at 972,100 during the second quarter of 2008.
However, by the second quarter of 2017, female employment had risen to 978,300, highlighting the differing recovery pace of male and female employment.

Female employment has continued on this upward trajectory, surpassing the million mark in the first half of 2017 and reaching 1, 041, 600 by the end of Q3 2018.

Unemployment and Live Register Total Persons on Live Register 2007-2018.

Data Source: CSO, LRM02.


450000 400000 350000 ]l 5 300000 z 250000 200000 Figure 5: Total Persons on the Live Register, 2007 - 2018 Between Q1 2007 and Q1 2012 the total number of people unemployed in Ireland more than tripled from 115,000 to 351,800, with the unemployment rate increasing from 5% to 15.8% in 11 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection the same period.
Within the same timeframe, male unemployment increased from 4.9% to 18.1% and female unemployment increased from 5% to 13.1%.

The severity of the impact of the crisis differed across age groups.

For those aged 15-24 years old, unemployment spiked dramatically during the crisis, with the unemployment rate reaching 31.5% in February 2012 (when it was 13.6% for those aged 25-74).
Since then, the Irish labour market has been on a path of continued recovery, with the seasonally adjusted unemployment rate standing at 6.0% for the third quarter of 2018.

The recession saw a dramatic increase in unemployment, far above the EU rate, but also a more rapid recovery, with the unemployment rate below the EU average at present.
The Live Register counts the number of recipients of Jobseekers Benefit, Jobseekers Allowance and related payments from the Department of Employment Affairs and Social Protection.

The number of people on the Live Register increased significantly during the economic crisis, from 158,752 in January of 2007 to a high of 470,284 in July 2011.

The number has been declining considerably in recent years, falling to 196,261 in November 2018.
400000 Persons on Live Register by Age Group {All Durations) 2011 - 2018.

Data Source: CSO, LRM 11. sooooo~----------------------------------- ---~ - < 20 - 20-24 - 25-34 - 35-44 - 55-59 60-64 45-54 !_300000 [ 0 I ~ 200000 100000 <t,~'->"-' ,t Time Period the Looking at Live Register trends by sex, the number of men on the Live rose Register but higher decreased more From rapidly.
March 2008 to March 2011, the number of men Live the on Register Figure 6: Persons on Live Register by Age, 2007-2018 from increased 127,020 to 290,225, or by 128.5%.

As of December 2018, men on the Live Register stood at 112, 414.

The number of women on the Live Register has been decreasing steadily in recent years, but remains higher than the pre-crisis levels, measuring 87, 255 in December 2018.
Examining the recent trends in the Live Register by age group, from 2011 to present; the age category of 60 to 64 is in fact the only age bracket that has increased its numbers on the Live Register (this trend is related to the increase in the State pension age from 65 to 66 on the 1st of January 2014).

From March 2011 to March 2018, the number of people on the Live Register for more than one year decreased.

This decease applied to all age groups with the exception of those aged 60 to 64.
12 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Other indicators: Earnings and Vacancy Rates In addition to the estimate of the number of people in employment or unemployment at a point in time and the count of unemployment benefit recipients, average annual earnings is another indicator of demand for labour.
A reduction in average earnings occurred in the aftermath of the crisis, with a small increase seen in 2012, before falling slightly again in 2013.

However, there was a significant recovery in average earnings from 2014 onwards.

In the period 2014 to 2017, nominal growth in average annual earnings was 2.4%, representing an increase from €36,046 to €37,646, with average annual earnings growing by 1.97% in 2017.

Average annual earnings for all workers are presented in Table 3 below.
Recent increases in annual earnings have been experienced by both full-time and part-time workers.

Both full-time and part-time workers saw a fall in average earnings in 2010 and 2011, before increases since then have been moderate.

Both categories have seen consistent gains from 2014 to present.

In the ten-year period from 2008 to 2017, full-time and part-time workers experienced nominal growth of 5.02% and 10.27% respectively in average earnings.
These increases have not been eroded by inflation, as evidenced in the tables below, which shows earnings at, or slightly above, the levels of inflation from 2013- 2017.
Year Rate 2013 -0.3 2014 0.3 2015 1.1 2016 1.3 2017 2.0 Table 3: Annual Earnings Percentage Change Source: CSO, EHA05 Year CPI Change 2010 2011 2012 2013 2014 2015 2016 2017 -1.0 2.6 1.7 0.5 0.2 -0.3 0.0 0.4 Table 4: Average CPI Percentage Change Source: CSO, CPA01 Labour Force Participation The labour force participation rate measures those in the labour force (people working or seeking work) relative to the entire working age population (those aged 15 years or over).
Ireland’s overall participation rate stood at 67.4% in the third quarter of 2007 and dipped to a crisis low of 61.1% in the first quarter of 2013.

Participation now stands at 62.3%, as of the second quarter of 2018, below the level seen prior to the financial crisis.

The crisis was most severe for men in the labour force, with participation falling from a pre- crisis high of 77.2% in 2006 Q3 to a low point of 68.3% in the first quarter of 2012.
The male participation rate has been relatively immobile in recent years, sitting at 69% as of the third quarter of 2018.

13 R0193(ii) PAC33 A An Roinn Gnothai Fostaiochta agus Coimirce Soisialaf Department of Employment Affairs and Social Protection ~ 70 2 "' c:: Q 65 '" C. ·13 -~ 60 a_ Female ILO Participation Rates 40 Moving Average by Sex (not seasonally adjusted ) 2008-2018.

Data Source: CSO, QLF02 80 .

.


- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - , Female participation started from a much lower base, with a pre-crisis high of 57.7% in the third quarter of 2007.

It fell slightly at the onset of the crisis but has remained constant in recent years, staying within the range of 54.2% from to 56.1% 2010 to present.
Male 75 55 50 ' - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -~ -------------------- The vacancy rate – the proportion of unfilled job vacancies in an economy – tells a similar story of continued improvement in labour market prospects.

Looking at all economic the sectors vacancy rate in Ireland was at its lowest from Q3 to Q4 of 2009, 0.3%.

From the end of 2009, the vacancy rate increased steadily and, since 2015 Q1, has remained in the range of 0.9%-1.2%.
Ireland’s Q3 2018 vacancy rate of 1.1% is below the EU average of 2.2% (Eurostat, 2018a).

Figure 7: ILO Participation Rates 4Q Moving Average by Sex (not seasonally adjusted) 2008-2018.

Source: CSO, QLF02 Ireland, in Profile of Long-Term Unemployed (LTU) jobseekers Duration on the Live Register is a salient factor for this evaluation, both in terms of the effects of long-term unemployment on likely re-entry to employment and as a qualifying criterion for referral to the JobPath service.
20 60 50 Number of long-term unemployed people(12 months or more) , as a % of all unemployed people 2010 - 2017 Data Source: Eurostat, lfsa_upgan .

Following the initial onset of the crisis, economic widespread job losses led to an increase in short- term unemployment.

This temporarily reduced the share of unemployment accounted for by those who are long-term unemployed (unemployed for one year or more).
the However, absence of an immediate recovery meant a large proportion of the first wave of unemployed people became long-term unemployed.
Long-term unemployment rose sharply in the recession, with the share of Figure 8: Number of long-term unemployed people (12 months or more) as a % of all unemployed people, 2010-2017 0'-------------------------------------' 2013 Year 20 10 2017 2016 2012 2009 2015 20 14 2011 10 14 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection unemployed people made up by the long-term unemployed increasing from just under 25% to over 60% in 2012.
The number of long-term unemployed people, as a percentage of all unemployed people, is now at 34.9% as of Q3 2018, having fallen from a high point of 61.9% in Q1 2011.

The share of long- term unemployment, or the number of people unemployed for one year or more as a percentage of the total labour force (aged 15-74), increased consistently from the onset of the crisis and reached a peak of 9.8% in Q1 2012.

The increase in long-term unemployment applied to both men and women.
In Q1 2007, the share of long-term unemployment stood at 1.6% and 1% for men and women respectively, dramatically increasing to 12.3% and 6.7% by Q1 2012.

Since then, the share of long-term unemployment has been on a downward trend, reaching 2.07% in Q3 of this year (the male and female values are 2.23% and 1.90% respectively).

The persistence rate refers to the rate at which short-term unemployed people become long term unemployed.
This is a measure of the extent to which intervention can prevent the slide from short-term unemployment (which includes frictional unemployment as a result of churn in the workforce) into the more damaging long-term unemployment.

Ireland’s persistence rate was 30.1% at the end of March 2013 and has seen consistent reductions since Q3 2013, reaching 24.2% in Q1 2018.

This continued contraction of the persistence rate further indicates the continuing recovery of the Irish labour market.
Period 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 Rate 30.1 30.9 29.3 29 28.7 27.5 27.2 25.6 24.5 24.4 24.2 Table 5: Persistence Rates (12 months rolling average) Source: DEASP administrative data Q) l "' 2 Q) e Q) C: Q.

6 4 8 12 10 collapse Long-Term Unemployment Rates 2008-2018 Data Source: CSO, LRM02 Summary This section outlines the labour market context for the introduction of JobPath, outlining the dramatic in employment that occurred through 2009-2011.
A share of those who lost jobs in this period became long-term unemployed in followed.

that the years The response of the PES for this cohort included the contracted provision of services employment JobPath the through model.

JobPath The service has operated in a improving period prospects.

employment While long-term unemployed remain at a disadvantage compared to the short-term unemployed, the period since mid-2015 has seen increased demand for labour.
Under these favourable economic circumstances, the extent to which those who participated in JobPath fared better or worse than those who did not receive the service is the subject matter of this evaluation.
Figure 9: Long-term Unemployment Rates, 2008 - 2018 Time Period the of 2 15 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection While this section recounts labour market developments in the years preceding the introduction of JobPath, a broader view of the Irish labour market shows the rapid increase in the number of people seeking unemployment payments from 2009 was not an isolated incident.
As a small open economy, Ireland is subject to the effects of the global economic cycle.

Although the most recent recession was deeper and more damaging than previous recessions, Figure 10 shows a history of volatility in the number of people on the Live Register.

to Responding these shocks, and preventing that slide into long-term unemployment, is part of the function of the Irish PES.
The next section outlines one of the approaches of the accessing to PES additional capacity to rapid address increases the number of jobseekers needing its services.
in Number of Persons on the Live Register, 1967-2018 Data Source: CSO, LRM02 ii E ::, z 400000 300000 200000 100000 Figure 10: Number of persons on the Live Register, 1967-2018 16 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection III JobPath in Operation The JobPath service • BEU'AST• • • • • • •• • • • • • • • • ••• • • • • 0 .
tt\ •• • • 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • e c.1w • 0 0 0 0 o 0 0 0 O O 0 Oo 0 0 Figure 11: Map of JobPath Providers by Provider (Seetec in purple and Turas Nua in yellow) the This section describes how JobPath Irish Public works as part of Employment Service, outlines the scope and scale of JobPath and provides statistics on referrals over the period of operation to date, 2015-2018.
It also journey of JobPath illustrates referrals (including temporary pauses and cancellations) in 2016 and 2017, the two years for which we have full year data.

the of structure divisional On 20 July 2015 the roll-out of JobPath began, with Seetec and Turas Nua assigned to two contract areas based on the the Department, as seen in Figure 11 below the northern (with Seetec covering divisions and Turas Nua the southern divisions).
JobPath services are provided through a network of Seetec and Turas Nua offices in 90 locations across the country, with Seetec operating in 49 locations and Turas Nua in 41 offices (see Table 33 in appendix).

The 90 service delivery locations include 57 full- time locations, 12 part-time locations, and 21 Outreach offices.

The overall cost of JobPath is determined by the number of people who participate in the programme and, for those who find employment, the duration they remain in employment.
Contractors are paid an initial referral fee and further payments are made on a sliding scale when jobseekers remain in employment for 13, 26, 39, or 52 weeks once the contractors can verify the employment duration with the co-operation of the jobseeker.

This structure aims to reward sustainable employment where the client remains in employment for at least 12 months.

Table 6 below shows how JobPath providers can potentially receive €3,718 per client.
In practice, the progression rate to sustained employment for long-term unemployed people means the average cost per JobPath client is currently €780.

This average cost compares favourably to costs of other forms of activation such as LES, Job Clubs and Intreo, although exact cost comparisons can be difficult to quantify, particularly for Intreo.

The total amount claimed in fees by the two companies in 2015 was €1.2 million, in 2016 was €28.6 million and in 2017 was €58.5 million.
17 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Registration 13 weeks in employment 26 weeks in employment 39 weeks in employment 52 weeks in employment 8.40% €311 16.50% €613 19.80% €737 24% €892 31.30% €1,165 Table 6: Average potential payment per JobPath Participant Total 100% €3,718 These two contractors work with jobseekers referred by the Department of Employment Affairs and Social Protection to provide job coaching and advisory services.
Participants on JobPath receive intensive individual support from the contracted providers to help them address barriers to employment and to assist them in finding jobs.

During this time, jobseekers have access to a personal advisor who works with them over two phases.

In the first phase, of 12 months duration, the personal advisor provides practical assistance in searching, preparing for, securing and sustaining employment.
The second phase starts if the jobseeker is successful in finding work and the personal advisor continues to work with the jobseeker for a further period of up to 12 months.

In addition to these two phases, jobseekers may also undertake training while on JobPath and this may extend the engagement period for up to a further six months.

JobPath contractors also provide a free service for employers by means of dedicated recruitment and initial training support.
They will work with the Department and with each other to ensure that a co-ordinated approach is adopted regarding engagement with employers.

In addition, in-work support for jobseekers is provided, especially during the critical first few weeks, to ensure that people have the best chance of making the transition from unemployment to employment.
Once jobseekers start JobPath, they will receive the following services:  Assessment of client skills, competencies, and aptitudes,  Development of a Personal Progression Plan (PPP) for each client and the review of this plan on regular basis,  Assistance with job search,  Development of the jobseeker’s curriculum vitae,  Development of job interview skills,  Training, education, and employment experience up to 26 weeks  Support in the transition to employment, including a period of “in-employment” guidance/counselling,  Access to computers, the internet, and other facilities to aid clients in their search for employment, with support on how to use these tools,  Supports to develop key skills to assist clients to sustain employment, e.g.
team working, organisation and time management skills,  Support to deal with other issues that may make it harder for clients to find sustain employment, for example, support with managing a health/disability related condition or advice on managing finances,  Other services or supports to enhance the client’s prospects of securing sustainable employment.
18 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection After referral, an initial one-to-one meeting is held with a personal advisor.
Clients and personal advisors prepare a personal progression plan covering:  Contact information of client and advisor,  Details of the client’s skills, competencies, and aptitudes,  Fields of work that are appropriate for the client,  Barriers to employment facing the client and the agreed actions to overcome such barriers.
 The client’s job/employment goals,  An agreed set of skills training, education, and development goals and actions,  An agreed set of potential employment related experience interventions,  All actions to be taken by the client during the first 13 week in-employment support period.

Referral to JobPath Referrals to JobPath come from the long-term unemployed cohort of the jobseeker population.
Within the JobPath contract, a provision is also made to select unemployed people who are at high risk of long-term unemployment.

For the purpose of JobPath selection, all long-term unemployed jobseekers on the Live Register, aged between 18 and 61 years old inclusive, are categorized into groups based on duration of unemployment (i.e.

1-2 years, 2-3 years, etc.).

Selection for referral to JobPath is by stratified random sampling using the categories above.
In addition to ensuring equity in the selection, the objective of this process is to guarantee that people referred to JobPath are representative of the long- term unemployed people on the Live Register.
Years Contractor Name Passing 12 months 2015 Seetec Turas Nua 2016 Seetec Turas Nua 2017 Seetec Turas Nua 2018 Seetec Turas Nua Total 0 0 1,302 975 1,071 806 681 488 LR 1-2 Years 817 1,251 9,127 8,829 11,097 9,587 9,588 6,925 LR 2-3 Years 689 777 5,898 4,941 4,925 4,048 2,579 1,768 LR > 3 Years 1,771 2,376 23,247 20,965 22,171 18,292 22,939 15,451 LR Working Part Time 0 0 239 885 8,385 7,953 6,638 5,938 Grand Total 3,277 4,404 39,813 36,595 47,649 40,686 42,425 30,570 5,323 57,221 25,625 127,212 30,038 245,419 Table 7: The number of jobseekers referred to JobPath from July 2015 to September 2018, broken down by quarter, contractor, and length of time on the Live Register.
Table 7 shows the number of jobseekers referred to the programme (including duplicate referrals)2, from July 2015 to September 2018, by quarter, contractor and length of time on 2 A jobseeker whose referral is cancelled by the Department as a result of no longer meeting the eligibility criteria for participation with the service, may be referred at a later date should their circumstances change and they become eligible for referral again.
19 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection the Live Register.

Shortly after receiving notification from the Department of referral to JobPath, jobseekers begin engagement with the JobPath provider.
For the vast majority of jobseekers referred to JobPath, there is a short lag between initial notification of referral to JobPath and commencement (the client’s interview date), which is the first direct engagement with JobPath (see Figure 12).3 The same information for 2017 is in the appendix.

Figure 13 and Figure 14 below outline what can happen after a jobseeker is referred to JobPath – the charts refer to 2016 and 2017, the years for which full year data are available.
2016 Time Lag between Referral and Start Date Source: DEASP Administrative Data 0.16 0.14 0.12 g' 0.10 Q) :, fil' 0.08 u:: 0.06 0.04 0.02 0.00 0 20 40 60 80 100 Days Difference Figure 12: Time lag between 2016 JobPath referral and start date.

In total, 76,409 jobseekers were referred to JobPath in 2016, with 45,654 of those completing the programme (59.7% of those referred).

The completed status can refer to two separate groups of clients.
First, it applies to anyone who has completed phase 1 (the initial minimum one-year period of JobPath engagement) but remains on the Live Register.

Second, jobseekers referred to JobPath who secure employment after working with the provider progress to phase 2, which is the “in work support” phase of JobPath.

The JobPath service provider will continue to offer support to the client until they complete 52 weeks in employment, at which point they will have completed phase 2 of JobPath.
Therefore, the ‘started (but not yet completed)’ status includes people who have completed phase 1 of JobPath and are in employment and still in phase 2.

When jobseekers are referred to JobPath, they do not always progress directly to starting the programme.

Some of those referrals may have their referral paused before starting (13 in 2016) for a variety of reasons; including health and maternity reasons.
Some jobseekers may have the referral cancelled by the Department before starting, (7,970 jobseekers or 10.4% of total referrals).

The main reasons for these cancellations can be seen in Figure 13 and Figure 14, with the category of “Others” including people not yet being ready for JobPath activation and those whose status is “No Longer in Payment”, meaning the claim has been closed and no closure reason identified.
3 This report evaluates the outcomes of those who were engaged with JobPath; future updates will also examine the impact of being referred to JobPath for those who were referred but did not commence the programme.
20 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Flow s of Jobseekers Referred to JobPath in 2016 Pa used before st arting: 13 Cancelled after starting: 8,514 Of which: Claim Closed: 3,762 (44%) Further Education /Training: 1,055 (12%) Illness and Disability: 2,217 (26%) 1,480(17%) Others: Total Referr als: 76,409 Total Started: 65,868 Compl et ed: 45,654 Referred (yet to start, but not cancelled or paused): 2,558 Cancelled before starting: 7,970 Of which: Claim Closed: Education and Training: Illness and Disability: Others: 2,713(34%) 551 (7%) 854 (11%) 3852(48%) Paused after st arting: 91 Started (but not yet complet ed): 11,609 Figure 13: Flow of Jobseekers Referred to JobPath in 2016 Among those who were cancelled before starting JobPath, 3,544 (43.59%) can be classified as “Claim Closed”.
Claim Closed can be broken down into two different types:  Claim Closed (Not in Employment),  Claim Closed (To Employment Pre-Start of Programme).

When those referred to JobPath close their Jobseeker’s Allowance or Jobseeker’s Benefit claims for any reason other than starting a job, such as moving to another payment stream such as Disability Allowance) they are placed in the “Not in Employment” category.
Where jobseekers start work prior to JobPath registration or the first interview with the JobPath provider, they are placed in the “Employment Pre-Registration” category.

JobPath providers do not receive any fees in respect of people who commence employment before registering with the service.

From those referred in 2016, a total of 65,868 started JobPath (86.2% of those referred).

However, a variety of factors can lead to jobseekers not completing the programme.
Some 91 of those referred had their referral paused after starting.

As is the case for those who were paused before starting, these people can resume the programme when ready.

Some 8,514 jobseekers had their referral cancelled after starting, the reasons for which are outlined above.

Finally, 11,609 people in 2016 started on JobPath, but had yet to complete it by year end.
21 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Flows of Jobseekers Ref erred to JobPath in 2017 Tot al Referrals: 88,335 Paused before starting: 87 Cancelled after starting: 7,402 Tot al Started: 74,702 Of which: daimdosed: Education and Training: Illness and Disability: Others: 3,126(42%) 1,630(22%) 1,564(21%) 1,082(15%) Ref erred (yet to start, but not cancelled or paused) : 5,494 Cancelled before starting: 8,052 Of which: daim Closed: Education and Training: Illness a nd Disability: Others: 3,508 (44%) 730 (9%) 8 21 (10%) 2,993(37%) Paused after starting: 1,088 Started (but not yet completed): 41,552 Completed: 24,660 Figure 14: Flow of Jobseekers Referred to JobPath in 2017 In the 2017 calendar year, 88,335 people were referred to the programme.
Some 5,494 jobseekers were referred, have not cancelled or paused and were yet to start by year-end, with 87 jobseekers pausing before starting and 8,052 cancelling before starting.

Of those who cancelled before starting, the largest proportion (43.57%) came from those with a closed claim.

In 2017, a total of 74,702 jobseekers started on JobPath.

After starting on JobPath, 7,402 people had their engagement cancelled and 1,088 people paused.
Some 41,552 of those who started JobPath are still receiving the service, but have not yet completed, and 24,660 jobseekers referred to JobPath within the calendar year of 2017 completed the programme.

There are two ways in which people may be referred to JobPath multiple times.
First, if a jobseeker has completed a year with the JobPath service continues to meet the criteria for long-term unemployment and is not engaged in other activation supports and services, they become eligible for selection for a second period of activation with the JobPath service after four to six months.
Second, if a jobseeker has the referral cancelled by the Department as a result of no longer meeting the eligibility criteria for participation with the service, they may be referred again at a later date should their circumstances change and they become eligible for referral again.
22 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection IV Literature Review To understand how to frame the JobPath evaluation, this section sets out how other research has addressed the challenges of evaluation and what techniques may assist us in coming to a judgment on the impact of JobPath.
This section outlines other studies of interest where:  The research question is what assistance is effective in helping unemployed people (particularly long-term) return to employment  The subject of the evaluation is a contracted public employment service – much of the research on this topic compares simultaneous public and private provision of employments services, which is not directly relevant to Ireland.
 The means of overcoming the challenges of evaluation employs some form of cluster analysis to differentiate between different groups or addresses the issue of a dynamic treatment environment, with multiple successive treatment periods and repeated selections of treatment groups.

 The policy context of the evaluation is the Pathways to Work 2016-2020 strategy or the dataset used is the Jobseekers Longitudinal Dataset.

Combined, these topics demonstrate the complexity associated with the evaluation.
The published research summarised here underpins the methodology that was developed and applied in this case.

Which employment programmes work?

The specific barriers to employment faced by the long-term unemployed are addressed in a number of papers and available results were summarised in the OECD (2015).
Card et al (2017) conduct a meta-analysis of recent studies of active labour market programmes, finding average impacts are close to zero in the short run but become more positive two to three years after completion.

The meta-analysis also points to the ideal measurement time, with impact varying by type of programme, and finding larger impacts for participants who enter from long-term unemployment.

They also find active labour market programmes more likely to show positive impacts in a recession.
Spermann (2015) gives an overview of steps Germany has taken to respond to those who are long-term unemployed and offers a differentiated three-pillar approach centred on preventing and reducing long term unemployment.

The pillars are as follows: 1. preventing unemployment, beginning with quality education, good written and spoken language skills, and investment in vocational training.
2. minimising short-term unemployment from turning into long-term, specifically using jobseekers’ strengths more to make professional competency diagnostics appropriate to the labour market.

3. maximising outflow to employment and education through realistic target setting.

Spermann (2015) stresses the importance of ensuring that target and goal setting reflects jobseekers’ needs and abilities.
This involves allowing multiple work activities, such as employment, training, social integration, as valid targets that will eventually lead to employment rather than solely focusing on immediate job placement.
While Spermann 23 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection stresses the importance of these three pillars for responding to long-term unemployment, he notes that without an increase in case managers and investment in high quality training, activation measures suggested by these pillars will not be successful.
Overall, Spermann argues that an increase in better trained case managers paired with taking steps to deal with the structural causes of long-term unemployment (health, addiction, lack of skills, etc.)

are imperative to implement the three pillars of differentiated activation.
Nie and Struby (2011) examine data for 20 OECD countries from 1998-2008 and use a regression model to compare the impact of passive and active labour market programmes, concluding that training and job-search assistance were more effective in reducing unemployment than other ALMPs.

Hamilton (2002) exploits a random assignment to 11 mandatory welfare-to-work programmes across the U.S, finding employment-focused programmes more effective than education and training.
O’Connell at al (2011) examine evidence from a number of international studies and report that job search assistance services appeared to have positive impacts, particularly when linked to payment sanctions.

It also identified apparent deficiencies in the Irish services (linked to the separation of FÁS and the then Department of Social Protection) and concluded that the evidence in respect of the impact of training programmes was mixed.
Specifically, short-term job specific training and job search training appear to have positive impacts, while longer term general training is associated with negative impacts.

With respect to state employment schemes such as Community Employment, the evidence indicates long-term participation unemployment.
is associated with an in such schemes increased risk of Evaluating contracted public employment services This section explores the breadth of research conducted on contracted Public Employment Services and its impacts in a variety of countries and institutional settings.

As noted by O’Connell at al (2011), the evidence is mixed and it is difficult to draw conclusions as the form and models of contracting differ markedly between countries.
Bruttel (2005), for example, provides an overview of the incentive issues often associated with contracting Public Employment Services and highlights the rating system in Australia, which compares placement outcomes of contractors by employing a logit/probit regression model, controlling for labour market factors and jobseeker characteristics.
Krug and Stephan (2013) explore the effectiveness of quasi markets for placement services relative to their public deliverance in Germany, through a randomised field experiment, concluding that even in the cases of hard-to-place jobseekers, “the public provision of placement services can be at least as effective as contracting-out”.

immigrants and disabled persons.

Here Another noteworthy randomised experiment is that of Bennmarker et al.
(2013), who focus specifically on the following three groups in Sweden: those under the age of 25 who are unemployed, the authors constructed an instrumental variable for private job placement through random assignment.

The authors find that the probability of employment for all three of these groups remains unchanged between the two providers.

Meanwhile, positive impacts on migrant employment chances and negative effects on young job-seekers were found.
However, over time these impacts diminish, suggesting a lack of long-term impacts.

24 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection A further paper examining contracted PES in Sweden is Sund (2015).

Employing data from the Swedish PES and exploiting both within region and period variation, the author implemented a differences-in-differences method.
Sund found that those regions that engaged with the private contractors experienced lower turnover to employment.

Combining this result with data collected by the Swedish National Audit Office indicates the result can be in part attributed to “increased administrative workload on the public employment officers due to introduction of the private contractors, but also by the ill-designed incentive scheme”.
However, the Sund (2015) points out that these findings could also be a result of the fact that these private contractors were a new actor in the Swedish labour market and thus, initial frictions could be experienced by such a new entrant.

Rehwald et al.

(2017) compare the job finding rates of unemployed people exposed to either public or private providers of employment services.
The authors conduct a randomised field experiment in Denmark, targeting those who are newly registered as unemployed and have completed university level education.

These people were then randomly assigned to either the Public Employment Service (PES) or the private, contracted-out, provider.

Whereas many of the other studies have target “economically disadvantaged populations”, this study focusses on highly-educated jobseekers.
No difference was seen in terms of outcomes in the labour market but cost analysis finds privately provided employment services significantly more expensive than publicly provided services.

Despite the more intense engagement provided by the private providers, Rehwald et al.

(2017) found client satisfaction to be higher with public providers.
Finn (2011) reviewed literature and impact studies on contracted employment services in Europe, including case studies from Britain, Germany, France, and Sweden demonstrating variations in types of subcontracted programmes, implementation, and impacts.
Evaluation of intensive employment and training programmes in Britain, including Employment Zones and a New Deal for Disable People programmes, found that both programmes had a positive impact on long-term unemployed people, but the employment zones were more effective (29).

In Germany procurement reforms reduced bid competition and evaluations demonstrated worse outcomes with a probability of unemployment rising by 7% for short- term unemployed people.
However, the long-term unemployed population had varied effects, with positive impacts for hard to reach groups but negative outcomes for those with recent work experience (29).

French contracted services increased employment by 4-9% but the public employment services reached more populations, with an effect that was “about twice as large” (29).
Results from Sweden demonstrated better employment and wage outcomes for immigrant populations after 12 months, but worse outcomes than the PES for younger jobseekers (30).

Regardless of the type of subcontracting, Finn (2011) does highlight the importance of having constant “monitoring, evaluation, and modification” of contracts, including quality information systems to track data and participant experiences.
Overall the variation of findings demonstrate that private, contracted employment services can, in certain circumstances with quality contractual arrangements, improve employment outcomes for certain jobseekers.

As noted throughout this section, a variety of factors contribute to unemployment and, more particularly, long-term unemployment.

Evaluations of programmes designed to measure the success of these programmes must account for the complexities of data related to these populations.
Given that the long-term unemployed are not homogenous, the results of any intervention must be interpreted across different sub-cohorts.

The following section gives an overview of cluster analysis, which was used in this analysis to capture the complexities of jobseekers in Ireland.
25 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Cluster analysis: applications for similar evaluation challenges Cluster analysis is a useful tool in the analysis of multivariate data and has been employed in this context for the following reason.

The quasi-random referral process in JobPath means that very different jobseekers will receive the JobPath service at the same time.
Compared to other labour market evaluations, there is little risk of results being compromised by a selection effect but the interpretation of results across different sub-cohorts is a more extensive task.

Given that the long-term unemployed are heterogeneous and face a variety of different barriers to employment, it is useful to divide the population into segments to understand where JobPath works better or less well.

Cluster analysis has uses applicable to a variety of disciplines.
The ultimate aim of a cluster analysis is the identification of homogenous or similar sub-groupings of subjects, whether it be countries, corporations, households or individuals, in accordance with selected variables, such as population density, unemployment rate, earnings or age (Řezanková, 2014).

The following studies employ some form of clustering technique to conduct analysis.
Common forms of clustering include hierarchical clustering, which attempts to find a hierarchical ranking of the identified clusters, k-means and non-hierarchical clustering.

Generally, each clustering approach includes a number of core preparatory steps including: the selection of objects and features that define them, data transformation, selection of measures of distance, selection of the clustering method and a decision on the appropriate number of clusters (Florczak, Jabłonowski and Kupc, 2015).
Bánociová and Slavomira (2017) set out to examine spending on Active Labour Market Policies (ALMPs) in the context of changes to unemployment levels and assess the competitiveness of these policies in 21 European Union member states.

In order to assess the competitiveness of funded ALMPs, the authors employ non-hierarchical clustering and find that, as the crisis unfolded, the make-up of these clusters began to change.
The authors find the most effective resource allocation, combined with the lowest unemployment rates, in Nordic countries and Luxembourg.

A recent OECD paper by Browne et al.

(2018) entitled “Faces of Joblessness in Ireland” uses latent class analysis to measure and explore the employment barriers faced by Irish individuals with low levels or lack of labour market attachment, using EU-SILC (Survey on Income and Living Conditions) household-level micro-data.
After creating a set of indicators within the groupings of work-related capabilities, incentives and employment opportunities, a clustering approach is applied to pinpoint latent groupings of people facing similar employment barriers.

Some latent classes or clusters of individuals are identified, each with a set of employment barriers distinct from other groupings.

Another labour market study employing cluster analysis is Ross and Holmes (2017).
While the “out-of-work” or “unemployed” are often viewed or discussed as one general grouping, Ross and Holmes seek to emphasise the opposite.

It extends the subject of its analysis beyond unemployed people to include a range of cohorts with varying intentions to seek employment.

Employing complete linkage agglomerative hierarchical clustering, the overall out-of-work population is sorted into relatively homogenous clusters.
Evaluations in a dynamic treatment environment In the evaluation of labour market programmes the standard experimental approach of establishing control and treatment groups often may not be applicable in its traditional form.
This issue of simultaneity arises from the fact that the key outcome variable (jobseeker 26 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection labour market status) and a jobseeker’s treatment status (whether or not they took part in the programme) are both functions of the potential unemployment duration.

Consequently, a number of papers have set out to specifically explore this problem of dynamic treatment assignment.
Sianesi (2004) examines Sweden’s Active Labour Market Policies, which operate in a dynamic treatment environment rather than a static one, given the fact that programmes are consistently ongoing and any jobseeker has the potential to become a participant.

Sianesi employs a non-parametric approach and estimates effects by examining the impact of joining the treatment or programme at a given period of unemployment, versus not joining (at least up to that point).
Thus, the control group or basis of comparison is those people who are jobseekers up until a given point in time and have not taken part in the programme at least up to then.

Therefore, as Vikström (2017) puts it, Sianesi essentially converts this dynamic treatment problem into a static one through this approach.
Vikstrom (2017) proposes a solution to the complexities of dynamic treatment assignment by selection on time-variant covariates and a dynamic inverse probability weighting (DIPW) estimator for the average treatment effect on the treated in a certain period.

This compares those treated against no treatment now or thereafter.
This approach is applied to a Swedish work practice programme aimed at increasing the skills of unemployed people over 2003- 2006, with results demonstrating employment rate increases 15 months after enrolment.

The DIPW involves weighting the treatment and control group for each time period and estimating a counterfactual survival rate.

Participation in the programme results in increased employment rates compared to those who did not participate.
Pathways to Work evaluations In order to measure the success of the Pathways to Work strategy, an intrinsic element of the strategy is the suite of evaluations on activation programmes.

This section provides an overview of the evaluations under Pathways to Work, all of which are carried out using DEASP administrative data.

The Department of Employment Affairs and Social Protection has itself, or in association with the ESRI and Indecon, produced a number of evaluations of specific schemes in recent years.
In summary these indicate that schemes with a strong employer connection, such as JobBridge and the Back to Work Enterprise Allowance scheme, have markedly positive impacts.

However, echoing O’Connell (2011), the evidence in respect of long-duration general education schemes is not encouraging as employment impacts appear to be negative.

The first evaluation to employs the Jobseekers Longitudinal Dataset (JLD) is the ESRI’s evaluation of the Back to Education Allowance (BTEA), by Kelly et al.
(2015), which describes the creation of the JLD as “a significant step forward in Ireland’s data collection approach”.

While the overarching goal of the study was to examine the effectiveness of the BTEA in aiding jobseekers to progress toward employment, it also served as “a ‘pathfinder’ with regard to the use of the JLD as a tool for evaluating the effectiveness of the Department’s activation programmes.
The results find jobseekers who began a second chance education programme at second level in September/October of 2008 were 28 to 30 percentage points less likely to have left the Live Register in June 2012, relative to a control group with similar unemployment durations.

Those pursuing the third level path from September/October 2008 were 14 to 23 percentage points less likely to be in employment in June of 2012, as well as June 2014, when compared to the control group.
27 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection The Back to Work Enterprise Allowance (BTWEA) aims to encourage long-term unemployed people to take up self-employment, with participants allowed to retain a portion of unemployment assistance payment for two years while setting up a new business.

Cronin et al.
Cronin et al.

(2017) sought to estimate the impact of the BTWEA on whether those who participated on the programme were more likely to be in employment (either self-employment or as an employee) for participants who started the programme between May 2009 and the end of 2011.
The evaluation finds the treatment group were more likely to be in employment at six and 18 months after completion, concluding that the programme has a positive impact on participant employment rates of 27 percentage points, although this effect is moderated when the control group only includes those with an interest in self-employment.

Indecon International Research Economists conducted an evaluation of JobBridge activation programme.
With the JobBridge, participation was based on self-selection, and impact is estimated using Inverse Probability Weighted Regression Adjustment (IPWRA) estimator as well as Propensity Score Matching.

From this model, Indecon’s analysis indicates that completing a JobBridge internship increased the likelihood of finding employment within 12 months by approximately 12 percentage points, from 36.6%.
A forthcoming evaluation (Kelly et al, 2019) will estimate the impact of the introduction of the Intreo reforms using a difference in differences design by comparing the offices that switched to the Intreo model in the early phase with a control group consisting of offices implementing the NEAP PES system at the time of the evaluation.
An evaluation of the employment impact of JobsPlus – a collaboration between DEASP and the European Commission’s counterfactual impact evaluation experts at the Joint Research Centre – is underway at present.
28 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection V Data and Description The Jobseekers Longitudinal Dataset and additional administrative datasets The Jobseekers Longitudinal Dataset (JLD) is an administrative dataset that tracks social welfare claims, activation and training, and employment histories over time, covering people with jobseeker or one parent family claims since 2004.
It draws together payment and administrative data from the Department of Employment Affairs and Social Protection and data from SOLAS and the Revenue Commissioners.

It has its origins in efforts to make best use of the sizeable volume of data collected or generated by the Department and to structure the recording of episodes of unemployment and training in a meaningful way.
The JLD is an innovative database that combines DEASP, Revenue and SOLAS data to produce a uniquely detailed view of the Irish labour market from the height of the economic boom to deep crisis and recovery.
It contains information on a claimant’s sex, age, marital status, nationality, educational attainment, previous occupation, employment and unemployment histories (duration and number of episodes), unemployment training history (type, duration and number of episodes), benefit type (JA, JB), spousal earnings (to qualify for an adult dependent allowance), number of child dependents, family payment type (i.e.

adult and child dependent allowances, adult only, etc.)

and geographic location.


Through the development of the JLD, administrative data events are linked to episodes of welfare or work, thus enabling the better ex ante and ex post analysis of jobseekers.
The process of developing the Jobseekers Longitudinal Database (JLD) was initially informed by a 2011 overview commissioned by the DEASP with University College Dublin (Harmon, Morrin and Murphy 2011) of the DEASP’s management of the Live Register and more generally its use and collection of data relating to the labour market.
The report provided a great deal of insight into strategies to improve data collection and noted many challenges such as the duplication of data in various IT systems, missing information (i.e.

education levels, reasons for signing off, destination of employment, etc.

), a lack of a longitudinal reporting process, and the lack of a centralized and integrated data infrastructure.
Therefore, in 2012, a rich analytical database consisting of approximately 13 million individual episodes of welfare and work since 2004 was developed to form the JLD.

The dataset takes operational data from a range of sources and rearranges them into a view of each individual’s periods of unemployment, employment, and training.

The data are structured in a way that bears some relation to a panel dataset but with important distinctions.
To reflect the individual experience of employment and unemployment, the data are re-arranged as a series of episodes, with one episode beginning when the person begins a spell of unemployment and ending when the person moves to employment or another activation or training programme.

The next episode begins when the person’s employment or training status changes again.
In this way, it differs from panel data in that observations are not recorded at a fixed point but at points of transition from one status to another.

One of the advantages of restructuring the administrative data of the Department in this way is that it retains some element of the individual’s experience of unemployment.
When a client of the Department of Employment Affairs and Social Protection moves from Jobseekers Benefit to Jobseekers Allowance, it is treated as an exit from the former and an entry to the latter on the Live Register.
In the JLD, contiguous periods on Jobseekers Benefit and Jobseekers Allowance can be linked and represented as one episode of unemployment, which is arguably a better representation of the experience of the absence of work, 29 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection regardless of whether it is on a social insurance or social assistance programme of income support.
The JLD has been used for a variety of analytical tasks and published evaluations.

For this exercise, it was supplemented by DEASP data on earnings from employment (collected on behalf of the DEASP by the Revenue Commissioners for PRSI purposes) social welfare payments data, and social welfare status data.

This means the analysis is informed by a wider understanding of a person’s labour market status before and after becoming eligible for referral to JobPath.
For earnings from employment data, what appear to be data entry errors are excluded by dropping observations where:  earnings per week were greater than €352 and  the proportion of total PRSI per week to earnings per week is less than 3.5% Where the JLD only captures jobseeker and One-parent Family Payment status (payments such as Jobseekers Allowance, Jobseekers Benefit, casual jobseekers), this evaluation is enhanced by data on receipt of other weekly social welfare payments such as Disability Allowance and Carers Allowance, as well as in-work benefits such as the Working Family Payment (previously Family Income Supplement).
Description of data Throughout the paper, results are estimated in respect of Q1 2016.

All open claims on the Live Register in Q1 2016 are divided into treatment and control groups (those who receive the JobPath service and those who do not).
The sample size is trimmed according to the follow steps:  Removing those over the age of 60 (accounting for operational activation practices)  Removing those with durations of unemployment under 365 days to capture only those in long-term unemployment  Removing those who have already received the JobPath service Adjustments All Live Register claims open end-2015 Minus those who: Have no JobPath eligibility at Q1 2016 based on claim type (credits or casual claims) Are over 60 years of age Have done JobPath previously Have a Live Register Duration <365 days (short-term unemployed) Remaining JobPath Evaluation Population Table 8: Adjustments made to the Live Register to make the JobPath sample size Number of observations 327,031 - 97, 618 - 17, 305 -51 - 108, 620 103, 437 For comparison, the Live Register figures for January, February and March are outlined in Table 9.
The published Live Register figures differ slightly in that claimants over 65 are excluded from the Live Register but appear on the JLD (see exclusions, Table 8, above).

Also, the Live Register includes claims pending at the time of publication, whereas any claims that have been dropped subsequently, or not awarded, will not appear on the JLD.
30 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Month Jan-16 Feb-16 Total 321,513 319,449 Mar-16 Table 9: Live Register Figures for Q1 2016; Source: CSO, LRM17 315,364 A straightforward measurement of the average outcome for those who participate in JobPath (the treatment group) and those who do not (the control group) will give an estimate of the impact of JobPath if the treatment and control groups are balanced.
In other words, if the two groups look similar on the basis of the data we record before commencement of JobPath, the impact can be measured by comparing the average outcome for each group.

However, if the two groups look different before commencement, then such a measurement could reflect existing differences and not the impact of JobPath.

Some descriptive statistics of the two groups will indicate to what extent they differ prior to the treatment.
Personal Characteristic Sex (Share of Group) Male Female Median Age Marital Status Single Married Widowed Family structure No Adult or Child Dependent Allowance Child Dependent Allowance only Adult Dependent Allowance only Adult and Child Dependent Allowance Control Treatment 69 31 38 0.72 0.28 0.00 0.64 0.12 0.06 0.18 72 28 40 0.72 0.28 0.00 0.62 0.11 0.07 0.21 Table 10: Personal Characteristics of the Control and Treatment groups While the personal characteristics of the control and treatment groups are relatively similar (Table 10), it is evident from Table 12 that there are differences in the mean earnings of the two groups.
More specifically, the mean earnings of the control group are higher than the treatment group and the mean duration in days of unemployment for the treatment group is slightly higher than the control group.
31 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Labour Market History Mean Earnings in previous year(Euros) Control Treatment 1,411 698 Mean Unemployment Duration (Days) 1,530 1,841 Previous occupation (Share of Group) Unknown, Not Stated, or Never Worked Other Occupation Plant and Machine Operatives Sales and Customer Service Occupations Personal and Protective Service Occupations Craft and Related Occupations Clerical and Secretarial Occupations Associate Professional and Technical Occupations Professional Occupations Managers and Administrators 0.08 0.15 0.18 0.09 0.11 0.23 0.07 0.03 0.03 0.03 0.08 0.17 0.19 0.09 0.11 0.24 0.06 0.02 0.03 0.02 Table 11: Labour Market history of the Control and Treatment groups Furthermore, while Table 12 suggests the Live Register history of both groups is relatively similar, the Treatment group has, on average, received a higher total in social welfare payments from 2013 to 2015.
As evident in Table 12 this trend continues with the treatment group having a higher mean of social welfare payments in 2017 and significantly lower mean earnings in 2017.
Social welfare payment history Live Register History (Share of Group) Control Treatment Jobseekers Allowance (UA) Jobseekers Allowance to Benefit Jobseekers Benefit (UB) Jobseekers Benefit to Allowance 0.80 0.00 0.01 0.19 0.82 0.00 0.00 0.18 Mean Social Welfare Payment (Euros) 9,330.00 10,035.00 Table 12: Social welfare payment history of the Control and Treatment groups Finally, as the evaluation examines outcomes across a period of an improving labour market, it is worth highlighting the changing profile of the Live Register and, particularly, the changing profile of those eligible for referral to JobPath.
Figure 15 outlines the increase in the median duration of days on the Live Register for each quarter after the sample has been adjusted (see Table 8).

The value increases from 880 in Quarter 2 of 2014 to 1,025 in Quarter 3 of 2016.

In general, those with shorter durations of unemployment have a higher chance of finding employment whereas those eligible for JobPath in the later periods have been unemployed for longer durations, which suggests they face greater barriers to finding employment.
32 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Median Duration on the Live Register Data Source: DEASP Administrative Data - - JobPath Trimmed Population Total Live Register Population 1000 800 400 200 2014 02 2014 03 2014 04 2015 01 2015 02 2015 03 2015 Q4 2016 01 2016 02 2016 03 Period Figure 15: Median Duration of days on the Live Register This means the evaluation can provide results on the impact of JobPath in respect of an increasingly challenging objective – finding employment for the long-term unemployed as the duration of those referred to the service is increasing.
However, for any given period, the comparison is always between treatment and control cases in that period.

Cluster modelling One of the novel features of this evaluation is the use of cluster analysis to interpret the results of the impact of JobPath.

This recognises that jobseekers are not a homogenous group.

Any programme or service can be expected to have a different impact on different jobseekers and what works particularly well for some will work less well for others.
The cluster analysis has two functions:   It provides new information about the population of the Live Register at any given point in time (not restricted to those eligible for JobPath), and It aids in enriching and nuancing the estimate of how JobPath affects different cohorts.

An important feature of this exercise is that it uses an unsupervised approach to generating clusters.
Statistics on jobseeker numbers and unemployment are often reported in respect of how the duration of fit pre-determined criteria (for example, whether unemployment is over 12 months, whether they are under 25 years).

jobseekers It is, of course, useful to track over time the number of people with durations over 12 months and to compare absolute levels for different age categories.

In certain circumstances, however, this approach of deterministic grouping can be a somewhat blunt analytical instrument.
For example, those with 11 months’ duration may be quite similar to people with 13 months’ duration but a strict categorisation by duration places them in separate categories.

In contrast, the cluster analysis approach does not start out by deciding how many categories of jobseeker exist or by specifying any characteristics a cluster should have.

Instead, probabilistic modelling is used to segment the Live Register into cohorts.
A rich dataset is compiled and a clustering algorithm calculates the optimal number of clusters, so 33 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection that each cluster is, to the greatest extent possible, internally consistent (individuals in the same cluster are similar to each other) and distinct from other clusters (individuals in one cluster are different from those in other clusters).
The result is a set of clusters using all of the available data to describe the jobseeker population (not just those eligible for JobPath).

The labour market data takes five years of claims and earnings from employment data to construct a labour market history for each individual.

This probabilistic approach means each jobseeker is assigned to the cluster to which he or she is closest, as there are no explicit membership criteria.
For each cluster created in this process, we describe the cluster as having a higher share of jobseekers with certain characteristics:  Younger Casual Claimants  Younger Professionals  Intermittent Labour Market Attachment  Shorter Durations  Older, With Strong Employment History  Self Employed  Longer Durations The clustering approach is as follows:  At the beginning of each quarter, from the entire Live Register population, create a set of clusters that include people who are similar, based on personal and labour market characteristics (such as age, sex, location, family structure, previous occupation, previous earnings) and employment, welfare and training history up to that point in time (duration of unemployment, any episodes of casual employment, participation in activation to date).
 Each cluster will reflect a broad similarity among its members at that point in time.

Membership of a given cluster will evolve over time, as individuals who remain unemployed become longer unemployed; those who have increased their skills in the interim become part of a more skilled group etc.

Since each cluster is created using a probabilistic approach, membership of a given cluster changes over time.

As new jobseekers join and others leave, the population changes.
We can test cluster stability by examining movements of jobseekers and comparing those who remain in the same cluster over time, those who move to another cluster, or those who leave the cluster population (i.e exits from unemployment claims).

Detailed findings in the appendix show the cluster populations remaining broadly stable.

Only a small share of the population transitions from one cluster to another during the time periods.
In summary, the clustering exercise provides us with a greater understanding of the entire Live Register population (of which the long-term unemployed are one part), and allows us to interpret the impact of JobPath for distinct cohorts (i.e.

separate estimates for clusters with a greater share of long-term unemployed people in the 40-50 age group or with a greater share of people with a particular sectoral background).
34 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection The clusters are described in further detail next, again using Q1 2016 as a sample quarter, with further detail on the technical processes behind the clustering process at the end of the section and in the appendix.
Cluster characteristics --3 Younger Casual Claimants Age distnbutton for Cluster 3 000 (UM 0.03 000 in short spells This cluster is the youngest cohort, and includes people on casual jobseeker claims of with durations.

unemployment As the youngest cohort, they have earnings only the previous calendar years but have the second highest median number of weeks of insurable employment.
This cluster has a large share of Craft Related Occupations (31%) but a low share of managerial and professional occupations (11%), which can be partly attributed to the young age of jobseekers in this cohort.

This cluster includes jobseekers on casual claims, jobseeker meaning they are in part-time work of fewer than four days and receive an unemployment payment in respect of the days not worked.

Generally, this cluster can be categorized as younger, casual claimants with short unemployment durations.
Figure 16: Younger Casual Claimants age distribution and ., .., 000 002 age 001 :I> 10 Younger Casual Claimants Population Eligible for JobPath Male: Female Employed in the 5 preceding years 30, 637 33% 70:30 87% Median unemployment duration 175 days Table 13: Descriptive characteristics of the Younger Casual Claimants cluster 35 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Younger Professionals - 004 000 000 003 c:luaterO of and Age d1stnbubon for Cklster 0 This cluster can be classified as young individuals with high weeks previous employment, short spells of unemployment, high numbers of people previously in professional occupations.
The majority of people in this cluster are under the age of 30.

Unlike the other clusters, which are male dominated; this cluster broadly has the same ratio of men (53%) to woman (47%).

Short-Term the Following Unemployed, this group has the second highest number of weeks of insurable employment.

This market labour cluster’s is above average, attachment with 97% having been in employment at some point in the five preceding calendar years.
This cluster is above average in the share of jobseekers reporting previous professional occupations.
Figure 17: Younger Professionals age distribution "' "' age 000 002 001 10 ti) 7D Younger Professionals Population Eligible for JobPath Male: Female Employed in the 5 preceding years 16,061 39% 53:47 97% Median unemployment duration 200 days Table 14: Descriptive characteristics of the Younger Professionals clusters 36 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Intermittent Labour Market Attachment 000 J101!,- diabibubon for Clustet' ~ --· 004 OOJ 002 and spells group This contains individuals from a range of ages who have been in and out of the labour market over the past five years, with of multiple unemployment low median weeks of insurable employment.
This cohort contains people at both ends of the age spectrum, with a mix of old and young people but more of the latter.

In this cluster, to jobseekers have low median weeks of insurable employment.

Within this cluster, 82% of individuals previously had higher ranked occupations, such as Craft and Related Occupations and Clerical and Secretarial Occupations.

Generally, these individuals are in and out of the labour market, with little to no sign of labour market attachment.
Figure 18: Intermittent Labour Market Attachment age distribution tend 001 :a, 10 40 Intermittent Labour Market Attachment Population Eligible for JobPath Male: Female Employed in the 5 preceding years 18,258 39% 62:38 83% Median unemployment duration 221 days Table 15: Descriptive characteristics of Intermittent Labour Market Attachment group 37 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Shorter Durations - 0.030 0020 0025 0035 dusterl this that from Poe distribution for Cluster 1 comparison This group has a majority of jobseekers between 30 and 40 years of age, and is characterised by short-term unemployment, moving out of the Live Register quickest to other in clusters.
Similar to the Young Professionals, cluster differs the majority of are male clusters dominated, with a broadly similar share of men (56%) to These (44%).

women individuals have strong labour market attachment, with an above average share (95%) of jobseekers that were previously in employment in the preceding calendar years.

In this cluster, those with previous professional occupations have a significantly lower unemployment durations compared to other clusters.
It has an above average share of jobseekers whose previous occupation was in clerical and secretarial positions.

Figure 19: Shorter Durations age distribution .., 0015 0.000 0.010 (1005 age 10 6'.)
Shorter Duration Population Eligible for JobPath Male: Female Employed in the 5 preceding years 121, 932 45% 56:44 95% Median unemployment duration 242 days Table 16: Descriptive characteristics of Shorter Durations group 38 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Older, With Strong Employment History (103 (105 004 in of This Individuals who in higher This group has a mostly older were population previously rank occupations, with little or no labour market sign of low median attachment and insurable weeks cluster employment.
contains mostly older individuals and makes up 4% of the total this population.

cluster have shown little to no sign of labour market attachment, low median weeks of with insurable employment.

Within this individuals cluster, 88% previously held higher rank occupations, with the majority in Craft and Related Occupations.

Furthermore, this cluster has shown the least age variation of previous occupations.

In sum, this cluster as be individuals who will likely retire in the near future.
classified can of "' (102 (100 <101 10 Age distribubon for Cluster 5 dusters .., age 6'.)
JO Figure 20: Older, With Strong Employment History age distribution Older, With Strong Employment History Population Eligible for JobPath Male: Female Employed in the 5 preceding years 12, 789 51% 63:37 87% Median unemployment duration 305 days Table 17: Descriptive characteristics of the Older, With Strong Employment History cluster 39 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Self-Employed weak This group has individuals on both ends of the age spectrum, but more of these individuals are older and often self- employed prior to their claim, with the second highest median unemployment duration.
They have labour market attachment and their average claim duration longest among all the clusters.

Among those who were employed within this cluster, 85% held higher rank occupations and this cluster has a large share of previously self- employed individuals.
the second is Poe distnbutJon for Cluster 6 - ctnw& 005 Q(M 003 002 001 000 10 l'.l Cl !I) ti) JO Figure 21: Self-Employed age distribution ""' Self-Employed Population Eligible for JobPath Male: Female Employed in the 5 preceding years 29, 408 67% 61:39 84% Median unemployment duration 661 days Table 18: Descriptive characteristics for the Self-Employed cluster 40 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Persistent Longer Durations c1ua1 ... 2 - 0030 0035 0025 0.020 in Age d1Stnbubon 10< Cluster 2 the past This group can be classified as the longest unemployed individuals from the widest range of ages, and the cluster the highest share of with jobseekers.
JobPath eligible This cohort is the farthest from the labour market, with only 56% having had an episode of employment five years.

This figure is below the for other average of 80% clusters.

This weak labour market attachment is reflected in the cluster’s median earnings of 0 in the last 3 years.

This cluster has a concentration of those whose previous occupation was plant and machine operatives (14%) and the lowest share of those who were previously in managerial professional or occupations (7%).
Overall, this cluster includes the longest unemployed individuals, who are furthest from the labour market.
Figure 22: Persistent Longer Durations age distribution 0015 0010 0005 0000 IO Cl) Persistent Longer Durations Population Eligible for JobPath Male: Female Employed in the 5 preceding years 97, 946 82% 65:35 56% Median unemployment duration 1, 534 days Table 19: Descriptive Characteristics for the Persistent Longer Durations cluster 41 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Technical description of clustering methodology The first phase in the cluster analysis process is data extraction, transformation and loading.
This process began with the JLD in its original format, which is transformed into a CSV dataset and in turn into a SQL table of client-centred labour market and income data.

A detailed description of this process can be found in Appendix 1.

Clustering and feature selection is done in accordance to the following sequential processes: 1.

Variable selection via statistical profiling and business insight 2.

Assessment of the number of clusters 3.


Feature selection via associated supervised task Due to the complexity of the JLD and the business processes from which data is derived, the variables that describe the different phases of people's unemployment history may suffer from a lack of diversity or an excess number of missing values.
In the context of clustering, and more generally with unsupervised and supervised learning, variables that are constants across a dataset do not play a role for model estimation.

Similarly, variables that exhibit a large ratio of missing values pose problems for modelling.
In order to minimise modelling problems in successive steps, we implement a simple filtering schema based on the statistical properties of the variables: constants and variables with a ratio of missing values bigger than a defined threshold are not selected for clustering and feature selection.

As a second step, we consider variables’ cross-correlation and select as candidate variables for removal those that exhibit strong correlation.
Finally, subject matter expertise and general understanding drives the final selection of variables, so to ensure that the mathematical procedures have the correct business drivers, although some of the statistical requirements may not be met.

The number of clusters is assessed comparing standard metrics used in statistics and machine learning for model selection: Bayesian Information Criterion (BIC) and Akaike Information Criterion (AIC).
Both methods are related and grounded in information theory – they are applied to estimate the relative information lost when a given model is used to represent the process that generated the data.

From a methodological point of view, the goodness of fit of Generalised Mixture Models (GMMs) is assessed by calculating BIC and AIC while varying the number of clusters.
To address variability in model fitting via Expectation Maximization (EM), GMM clustering is run multiple times with random initialisation accumulating BIC and AIC scores for each run and for each number of clusters (e.g.

from 1 to 20 clusters).4 The number of clusters is estimated minimising both mean BIC and mean AIC curves, considering also twice the standard deviation of the mean as guidance for basic null-hypothesis testing.
In the case that BIC and AIC curves suggest different number of clusters, the smaller number is selected (on the basis of Occam's razor, with the simpler hypothesis selected).

The importance of the variables used for clustering is assessed re-casting the unsupervised task into a supervised classification problem, using the clusters labels calculated by the GMM as class labels.
To predict the class label, we split the data randomly in train set (66%) and test set (remaining 34%) and then train a Random Forest ensemble on the train set.

The 4 The Gaussian Mixture Model (GMM) is a clustering algorithm for density estimation which creates a generative probabilistic model that describes the distribution of the data.

We extend the GMM to cluster multivariate longitudinal jobseeker data at every quarter (four points during the year) to identify similar patterns over time.
42 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection process is repeated multiple times with random initialisation, and feature importance is calculated as average importance over all runs.
43 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection VI Evaluation Approach Estimation of JobPath Effects This evaluation looks at those who received JobPath compared to those who were eligible to receive the service but did not receive it in Q1 2016.
Before the roll-out of JobPath, options for long-term unemployed individuals were limited to the education and training programmes, public employment programmes such as Community Employment, or self-employment incentives, with no job search and assistance programme designed for, and offered specifically to, long-term unemployed people.

The JobPath programme is the first intensive job search and assistance programme targeted at the long-term unemployed.
There is no systematic referral of those not selected for JobPath to another concurrent job search and assistance intervention.

Accordingly, this evaluation will provide an insight into the broader question of whether intensive case management of the long-term unemployed works by comparing outcomes between those undergoing intensive case management and those not receiving the service.
As already outlined, one of the features of JobPath is that any long-term unemployed jobseeker is potentially eligible for referral for as long as he or she remains unemployed.

As a result, the probability of being referred, as well as the likely employment outcome, changes over time.

As seen below, a number of people who did not start JobPath in Q1 2016 did commence subsequently.
It is problematic to remove these people from this study since, by definition, they are people who remain unemployed long enough to start JobPath in later periods, so that excluding them would bias the remainder of the control group towards those who left the Live Register before they could receive JobPath.

Equally, it is problematic to retain these cases in the control group because we know that they did in fact receive JobPath at a later point.
The solution to this dilemma lies in applying dynamic treatment (see ‘Further Analysis’ below).

In the present paper, however, all of those who do not start JobPath in Q1 2016 are retained.
Treatment Control Received JobPath in Q1 2016 Received JobPath in Q2 2016 Received JobPath in Q3 2016 Received JobPath in Q4 2016 Received JobPath in Q1 2017 Received JobPath in Q2 2017 Received JobPath in Q3 2017 Received JobPath in Q4 2017 No JobPath in 2016 or 2017 5,581 24,096 9,015 7,687 4,393 2,668 1,832 2,028 52,835 Table 20: Those who were eligible for JobPath in Q1 2016 and those who received the service in subsequent quarters Typically, reliable estimates of impact using counterfactual impact evaluation techniques require a comparison between those who received a service or participated in a programme (called the treatment group) and a similar group who did not receive the service or participate in the programme (the control group).
The design of JobPath has to address a difficult challenge in identifying a control group with a reliable counterfactual outcome, and therefore estimating the impact of JobPath, for two main methodological reasons: 44 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection  All jobseekers may be referred to a JobPath provider immediately or at a later point in time, which rules out a straightforward comparison between those referred to JobPath and those not referred.
The key outcome variable (jobseeker labour market status) and a jobseeker’s referral status (whether or not they took part in JobPath) are both functions of the potential unemployment duration.

At the same time, the referral process means a jobseeker can enter JobPath at any point beyond 12 months in an unemployment episode.

 The measured effect of JobPath is contingent on the time when referral occurred and the time that has elapsed since referral.
For this reason, subsequent analysis will attempt to measure who does better – jobseekers referred soon after becoming eligible or jobseekers referred to JobPath long after passing the eligibility threshold.
The selection process for JobPath – how long-term unemployed people are referred to the programme – is also relevant for the evaluation framework and the application of the dynamic treatment assignment method:  The Department of Employment Affairs and Social Protection (DEASP) selects jobseekers on a random basis for referral to JobPath.
More precisely, all long-term unemployed people who are on the Live Register, aged between 18 and 61 years old (inclusive), are categorised into groups based on their unemployment duration (i.e.

1- 2 years, 2-3 years, etc.).

 Selection for referral is by means of a system-based stratified random sampling using the groupings defined above.
While the stratified random selection identifies the sample of long-term unemployed people to be referred, it is possible that, at the level of local Intreo centres, the sample referred may not match the stratification of duration bands.

Not every Intreo centre will be able to refer exactly the required number of long-term jobseekers in exactly the proportions that would correspond to a stratified random selection.
Furthermore, the stratified sampling generates a sample of jobseekers who are referred but do not necessarily commence the JobPath service (see Section III).

As this evaluation measures the impact of receiving the JobPath service, being referred is a necessary but not sufficient condition for inclusion in the population of interest.
When examining those who started JobPath in Q1 2016 (a subset of those referred) and those who were eligible but not referred, the distribution of the duration of the ongoing claim at that time is markedly different between the two groups.

Figure 23 illustrates how the two groups vary, with a higher share of shorter claims (even though all are greater than 12 months) in the population of eligible but not referred jobseekers.
As duration of unemployment is a significant predictor of future labour market outcomes, it is necessary to reweight the two groups - those who received the service and those who were eligible but did not - to ensure the measurement of outcomes at a later stage is a reasonable comparison.

On a related point, the amount of earnings from employment in previous years is another useful predictor of labour market outcomes.
Again, the two groups differ somewhat in the years before JobPath is rolled out (2013-2015).

As expected, the group with higher claim durations in the years preceding Q1 2016 have lower earnings from employment.

Initial analysis shows that those who received the JobPath service increased their earnings by more (in absolute terms) but that they had lower earnings in previous year.
45 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Duration of claim open for JobPath participants and eligible non-participants, Ql 2016 Without JobPath With Job Path 0 .00100 0.00075 0.00050 0.00025 0.00000 0 2000 Duration (days) 4000+ 0 2000 Duration (days) 4000+ Figure 23: Duration of claim open for JobPath participants and eligible non-participants, Q1 2016 Mode lling Covariate ba lancing Counter factual back propagation Figure 24: JobPath evaluation model pipeline The process of evaluation begins by selecting the eligible jobseekers in a given quarter and dividing them into those who were eligible but did not start JobPath or exit the Live Register, in that quarter and those who started JobPath.
The pool of eligible people – both those who start JobPath in subsequent quarters and the diminishing pool of people who are eligible to be referred to JobPath but do not start the programme and do not exit the Live Register – are tracked across successive quarters.

Next, the probability of treatment is estimated using logistic regression with a binary outcome of treated, or not, in a given period.

Figure 26 shows the receiver operating characteristic (ROC) curve for the regression model.
This shows the measure of success in separating the distribution of propensity scores among the treatment and control groups.
With a model that 46 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection can predict assignment, distributions of propensity scores among the treatment and control Variation in age d ist ribution 0 .030 0.025 0 .020 0 .015 0.010 0 .005 10 20 30 40 so 60 Figure 25: Age distribution for control and treatment groups are separated and the score increases towards one.
In this case, the distributions overlap to a large extent and the area under the curve is .59.

This is because there is, within categories of claim duration, a substantial element of randomness to whether people are assigned to JobPath.

Receiver operating characteristic ,, .............. ..
LO 0.8 V lo a: V 06 ~ ·;;;; 0 0.. 0.4 V ::, .= ,, .... -------------- ,, ............ .. A consequence of this is that propensity scores occur within a range and narrow largely are overlapping for both groups, which means the inverse probability weights are modest.5 0.2 .. ----------- - - 0.0 0.0 0.
2 0.4 Logistic Regression (area = 0 .592) summary, the of can identify some more and likely less candidates but the use of stratified random sampling means it is difficult to predict, with any degree of success, who will be referred.

In modelling propensity treatment Figure 26: JobPath evaluation methodology: logistic regression False Positive Rate LO 0.8 0.6 5 Large weights can results from treatment cases with a low propensity score or control cases with high propensity scores.
Such cases would require the calculation of stabilised weights - these are not necessary here in view of the fact that modest weights are applied to what is a narrow range of propensity.
47 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Un/weighted standardised differences duration -e age - - - - - - - - - - - ----• 2014 earnings •-----------------• (I) :0 "' ~ social welfare pay 2014 2015 earnings • social welfare pay 2015 • 0 2 •--------- • • e Weighted • Unweighted 4 8 Absolute standardised difference(%) 12 10 6 14 16 Figure 27: Weighted and Unweighted Standardized Differences labour market characteristics.
The logistic regression generates for each scores probability individual and allows us to estimate inverse probability of treatment weights – these are the reciprocal of the probability of the referral status (to JobPath, or not) that occurred.
Adding weights to each observation in the control group means we can ensure the treatment and control groups are adequately balanced that any and, consequently, subsequent comparison of mean values their reflects only differing treatment status and not existing differences in their Examining standardised differences shows the difference in values for the treatment and control groups before and after weighting.
Given the degree of random assignment involved in referral to JobPath, it is to be expected that the unweighted covariates do not show extreme differences.

The ten percent line in Figure 27 reflects a rule of thumb that a standardised difference6 of less than 10% indicates that a covariate is adequately balanced between groups.

For several unweighted variables, the standardised difference was over 10%.
Reassuringly, Figure 27 shows covariates are balanced after weighting is applied, as reflected in the difference between treatment and control approaching zero and well below Un/weighted Kolmogorov-Smirnov .. duration age 2014 earnings (I) :0 "' -~ > social welfare pay 2014 2015 earnings social welfare pay 2015 • , I I I I +: I I I I I I I I I I I I I e ' I --,-, I T I I 1 1 1 1 1 1 I : : .

: I I 1 1 1 1 I I I •---+H• I :.


I I I I 1 1 I I I I • • • a= 10% a=5% a= 1% Weighted • • Unweighted • 0.00 0.01 0.02 0.03 0.04 0.05 0.06 O.Q7 0.08 Figure 28: Weighted and Unweighted Kolmogorov-Smirnov statistic the 10% threshold.

the can As well as measures of central tendency, an examination of the reveal distribution differences between two groups (see Figure 27).
Without these some correction for differences in mean values among key covariates, further analysis may reflect underlying labour market trajectories and not necessarily the impact of JobPath.

The Kolmogorov- Smirnov test measures the furthest points between the two groups across the entire distribution.
To examine how similar the distributions are, we calculated the p-value (α) for each variable at which we would reject the null hypothesis that treatment and control come from the same 6 Standardized difference is the difference in the mean of a variable between two groups divided by an estimate of the standard deviation of that variable and is used to measure effect size (Austin 2009).
48 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection distribution.

For a given p-value (α), we rejected the null if the Kolmogorov-Smirnov statistic was greater than where 𝑐(𝛼)√ 𝑛 + 𝑚 𝑛𝑚 , 𝑐(𝛼) = √ − ln 𝛼 2 and n and m are the sizes of the 2 samples.

Using this criterion, the vertical dashed lines in Figure 28 show the thresholds for the Kolmogorov-Smirnov statistic for α = 10%, 5% and 1%.
We reject the null for all the unweighted variables at the 1% level of significance.

For the weighted variables, other than social welfare pay 2014 and 2015, we do not reject the null at the 1% or 5% level, or – with the exception of age – at the 10% level.
In conclusion, comparing treatment and control, the weighted variables have very low standardised differences and similar distributions for the following variables: Figure 28 confirms weighting based on the inverse probability of treatment has resulted in samples with means that are similar for the covariates below, and that the distributions are similar after weighting for the following variables:   total social welfare pay in 2014 total social welfare pay in 2015,  earnings from employment in 2014 :  earnings from employment in 2015,  duration of the current claim and  age The procedures outlined above – examining measures of central tendency and the distribution of variables – means the two groups are well balanced in respect of observable differences relevant to labour market outcomes.
The factors associated with labour market outcomes referred to here are the observed characteristics.

Labour market outcomes are also driven by unobserved characteristics, such as ability, motivation, social skills etc.

These are unobserved, and rarely susceptible to measurement, so observed data are often used as a proxy.

In the case of measuring the effect of an intervention, observed characteristics can be controlled for but unobserved characteristics cannot be.
More problematically, the probability of choosing to participate in an intervention may be systematically correlated with labour market outcomes via some of these unobserved characteristics.

This is the self-selection problem that many evaluations face.

The more motivated jobseekers may, for example, choose to participate in a training course.
If this motivation (an unobserved characteristic) is 49 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection also associated with better labour market outcomes, any evaluation that does not adequately control for this correlation will overstate the impact of the training.
A further challenge is dealing with administrative selection, where individuals do not automatically access a programme but are chosen from a pool of applicants by the programme administrators.

If those who go on to participate are already more (or less) likely to succeed than the comparison group, and are chosen for this reason by the administrators, the programme effect will be overstated (or understated).

Both selection challenges are largely absent in this evaluation.
Jobseekers do not self-select into JobPath, and the administrative selection process is based on a stratified random sample based on duration.

At the point of commencement (not referral), JobPath participants have longer durations than in the comparison group and, consequentially, lower mean earnings in previous years.

The reweighting based on inverse probability of treatment gives two groups that are, on examination of key baseline covariates, well balanced.
As a result, we can have more confidence that any observed differences in outcomes between weighted groups correspond to the effects of participation in JobPath.

50 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Outcome Presentation Rationale: Earnings and Social Welfare Payments The earnings of people in employment, when examined over a reasonable period of time, can give a useful indication of their labour market success.
Conversely, total amounts received in social welfare support are a strong indication that people are in need of income assistance.

Together, average earnings and average social welfare payments over a number of years when aggregated over a large number of jobseekers, can give us a solid indication of the impact of JobPath.

The circumstances surrounding long-term unemployed jobseekers are multifaceted and measuring outcomes only in financial terms may not provide the full picture.
This evaluation attempts to capture the complexity and diversity of long-term jobseekers in Ireland.

Due to the wide-ranging and complex nature of the Irish social welfare system, and the comprehensive set of supports it offers, it is always envisaged that some individuals may, at once, be in employment and also receiving social welfare support.

For example, casual jobseekers are in employment while also receiving a partial jobseeker payment in respect of the days they are not employed.
Therefore, the outcome measures account for the possibility of individuals receiving earnings from employment and social welfare payments in the same year, and possibly at the same time.

This includes individuals receiving the Back to Work Enterprise Allowance, Back to Work Family Dividend or Working Family Payment, who are in employment while also receiving a weekly social welfare payment.
This can be further examined once additional modelling work has been completed such that any four-quarter period can be reported on and not just the calendar year.
As the data in the evaluation cover the period cover social welfare income from 2013 to 2018 and earnings from employment over the period 2013 to 2017, the tables below (Table 21, Table 22 Table 23) outline the percentage change in earnings, the percentage change in the rate at which the main jobseeker payments have been paid, and the percentage change in the consumer price index in recent years.
Year Rate 2013 -0.3 2014 0.3 2015 1.1 2016 1.3 2017 2.0 Table 21: Annual Earnings Rate Change Source: CSO, EHA05 Jobseeker payment Jobseeker's Allowance- aged 26 and over Jobseeker's Allowance - aged 25 Jobseeker's Allowance - aged under 25 -46.8 0.0 Jobseeker's Benefit 0.0 0.0 2013 2014 2015 2016 2017 0.0 0.0 -23.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.7 2.6 2.7 2.7 Table 22: Social Welfare Payment Rate, percentage change on previous year Source: DEASP Administrative Data Year CPI Change 2010 2011 2012 2013 2014 2015 2016 2017 -1.0 2.6 1.7 0.5 0.2 -0.3 0.0 0.4 Table 23: CPI Percentage Change on previous year Source: CSO, CPA01 51 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection V. Results: labour market outcomes Main Results: Earnings Social Welfare Payments The earnings of people in employment, when examined over a reasonable period of time, can give a useful indication of how successful they are in the labour market.
Conversely, total amounts received in social welfare support are a strong indication that people are in need of the social safety net represented by income support.

Together, average earnings and average social welfare payments over a number of years when aggregated over a large number of jobseekers, can give us a solid indication of the impact of JobPath.

The results show a strong improvement in labour market earnings in 2017, the year subsequent to commencement in JobPath.
Table 24 shows the difference in mean earnings between the treatment and the weighted control group.

The effect of JobPath means those who received the service have earnings in 2017 €1,190 higher than the control group, representing an earnings gain of 35%.

This estimate is at the high end of the spectrum compared to the evaluations of similar programmes in other countries.
This is worth noting considering that the effect attributed to the participation in JobPath should be interpreted as lower bound for two reasons.

First, the estimation sample does not remove those referred to JobPath after Quarter 1 of 2016.

This means that the control group includes also those who received JobPath in subsequent periods, who have probably higher earnings in 2017 compared to those who did not receive JobPath at all.

Second, the focus on the first quarter of 2016, i.e.
five months after the full roll out of the programme, means that the estimated effect does not take into account potential efficiency gains in the day-by-day administration of the programme at the local level.

As described by Section VI, future analysis will extend the evaluation to other quarters and estimate the difference in impacts between early and late referral to JobPath (for those with a similar duration of unemployment and other relevant characteristics).
Mean Weighted Total Earnings, 2017 (€) Without JobPath With JobPath Difference % Change 3,389.75 4,579.86 1,190.11 35% Table 24: Mean Weighted Total Earnings, 2017 (€) Mean Weighted Social Welfare Payments, 2017 (€) Without JobPath With JobPath Difference % Change 10,491.81 10,067.29 -424.52 -4% Table 25: Mean Weighted Social Welfare Payments, 2017, (€) 52 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Mean Weighted Weeks of Insurable Employment, 2017 Without JobPath With JobPath Difference % Change 9 11 1 16% Table 26: Mean Weighted Weeks of Insurable Employment, 2017 Data on earnings from employment up to and including 2017 values are complete.
However, the 2018 values for earnings from employment are reduced across the board as they do not include the tax returns from self-employed people and company directors.

The 2018 earnings data will be complete in early 2020, allowing some time for data cleaning subsequent to the 2018 deadline of November 2019.

This means comparisons between 2018 earnings of those who participated in JobPath and those who did not will be artificially lower until the complete earnings file is available.
However, as the reduction will most likely apply in equal measure to both groups, the comparison remains valid.
Mean Weighted Total Earnings, 2018 (€) Without JobPath With JobPath Difference % Change 2,873.11 3,926.28 1,053.16 37% Table 27: Mean Weighted Total Earnings, 2018 (€) Mean Weighted Social Welfare Payments, 2018 (€) Without JobPath With JobPath Difference % Change 4,860.75 4,403.78 -456.97 -9% Table 28: Mean Weighted Social Welfare Payments, 2018 (€) Mean Weighted Weeks of Insurable Employment, 2018 Without JobPath With JobPath Difference % Change 8 10 3 36% Table 29: Mean Weighted Weeks of Insurable Employment, 2018 Variance between clusters The clustering exercise outlined in Section V uses all of the available data to generate clusters of similar jobseekers.
The tables below outline how JobPath participation leads to differing effects for each cluster.

Effects indeed vary substantially between groups, confirming that intensive engagement with jobseekers is particularly beneficial for some of them.
In absolute and relative terms, the earnings increase that can be attributed to JobPath 53 R0193(ii) PAC33 A An Roinn Gnothai Fostaiochta agus Coimirce Soisialaf Department of Employment Affairs and Social Protection is largest for those with intermittent labour market attachment.

However, JobPath participation leads to a significant improvement in earnings capacity for all clusters.
Younger Casual Claimants Younger Professionals Intermittent Labour Market Attachment Older, With Strong Employment History Shorter Duration Self- Employed Persistent Longer Duration Without JobPath With JobPath Difference % Change 4089.49 4645.5 3923.19 4700.18 5499.41 3727.99 2651.43 6573.11 2483.6 61% 7177.27 2531.8 54% 7858.76 3935.6 100% 7224.1 2523.9 54% 6261.24 761.8 14% 5030.86 1302.9 35% 3296.62 645.2 24% Table 30: Mean Weighted Total Earnings by Cluster, 2017 (€) Includes all individuals with or without earnings in 2017 Younger Casual Claimants Younger Professionals Intermittent Labour Market Attachment Older, With Strong Employment History Shorter Duration Self- Employed Persistent Longer Duration 383.61 398.25 366.83 394.14 390.45 346.59 352.58 466.03 82 21.5% 419.73 470.56 459.94 372.71 364.48 402.12 21.48 5.4% 103.73 28.3% 65.80 16.7% - 17.74 -4.5% 17.89 5.2% 49.54 14.1% Without JobPath With JobPath Difference % Change Table 31: Mean weighted earnings per week of insurable employment by Cluster, 2018 (€) Includes all individuals with or without earnings in 2017 Younger Casual Claimants Younger Professionals Intermittent Labour Market Attachment Older, With Strong Employment History Shorter Duration Self- Employed Persistent Longer Duration Without JobPath With JobPath Difference % Change 3453 3332.08 3488.28 3499.32 3546.55 4025.36 5752.55 3298.98 -154.0 -4% 3461.62 129.5 4% 3333.14 -155.1 -4% 3683.38 184.1 5% 3779.84 233.3 7% 3893.88 -131.5 -3% 4859.38 -893.2 -16% Table 32: Mean Social Welfare Payment by Cluster, 2018 (€) Includes all individuals with or without earnings in 2018 For all tables, clusters ordered by Unemployment Duration (and JobPath Eligibility) Short Duration Long Duration 54 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection A corollary of increased earnings from employment is a decreased reliance on income support provided by the Department of Employment Affairs and Social Protection.
Table 32 outlines the decrease for each cluster in the payments made to those who received the JobPath service compared to those who did not.

When interpreting these results, it is useful to bear in mind the labour market context, as described in Section II.

JobPath was a response to a major crisis in unemployment and in the ability of the PES to flexibly respond to large volumes of unemployment claims.
It was rolled out in late 2015, when recovery and economic growth was already underway, leading to strong demand for labour and better employment opportunities for unemployed people.

Notwithstanding the disadvantages faced by long-term unemployed people, those who received the JobPath service in Q1 2016 were seeking employment under favourable conditions.
However, the comparison made here is only between jobseekers who face the same economic conditions, who have a minimum of one year of unemployment and, after weighting, have the same distributions across key variables associated with labour market outcomes.

Therefore, we can say with confidence that the divergence in outcomes in 2017 is causally attributable to participation in JobPath.
55 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection VIII.

Discussion of policy implications, future directions and conclusions Policy implications This analysis provides a robust estimate of the impact of JobPath in Q1 2016 and how it has affected employment outcomes in 2017.
This provides strong evidence of a positive effect of systematic engagement with the long-term unemployed as delivered through a contracted public employment service with JobPath.

It is worth noting the factors that will affect the extrapolation of this impact to other time periods.

The labour market improvement evident since 2013 means those referred to JobPath are looking for employment in favourable conditions.
Furthermore, under these conditions, those who secure employment are more likely to be retained in employment.

This should translate into lower expenditure on Live Register payments and higher payments to JobPath providers through job sustainment fees.
At the same time, as economic conditions continue to improve, those who remain unemployed long enough to be referred to the service are, prima facie, more difficult to place in employment, meaning a slower reduction in expenditure on Live Register payments and a slower increase in payments to JobPath providers through job sustainment fees.

This means the cohort of long-term unemployed has changed somewhat since the initial roll-out of JobPath.
Given the inherent difficulty of designing performance pay metrics for contracted services when expenditure is dependent on an unknown future labour market context, this analysis provides an input into future contracted PES design while acknowledging the uncertainty in generalising to very different labour market contexts.
Monitoring this effect over different points in the economic cycle can provide an understanding of how this effect varies in, for example, times of recession and rapidly increasing unemployment.

The optimal timing of the deployment of additional Public Employment Service resources (e.g.

the contracted service of JobPath) should take into account the economic cycle to ensure maximum benefit for public expenditure.
Long-term unemployment is damaging to people’s confidence, skills, sectoral knowledge and soft skills.

Moreover, there is a danger that long-term unemployment will lead to discouraged jobseekers moving from unemployment to inactivity.
It is reasonable to infer that the increased employment activity attributable to receiving the JobPath service prevents a drift out of the labour force to inactivity by long-term unemployed people at a time when increasing the size of the labour force through increased participation is a strategic priority.

People who are long-term unemployed represent a particularly challenging cohort for any Public Employment Service.
The success of the JobPath model in improving the employment prospects of such a cohort can provide an indication of a possible service provision model for other cohorts who are distant from the labour market and who represent a particular challenge.

Further analysis This initial working paper represents a robust estimate of the impact of JobPath.
In Cooperation with the OECD, it is intended to enhance this initial analysis in a number of directions over 2019-2010: 56 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection 1.

Additional measures of employment:  2018 earnings data (full return available later in 2019)  2019 real-time information on earnings from employment 2.
Probabilistic assignment of earnings and employment periods to specific weeks A further enhancement of this approach is to develop more sophisticated measures of employment status, updated on the basis of a Bayesian probability approach by updating missing status information according to the levels of reliability of the data.

This will coincide with more timely data on employment.

3.
3.

Other effects of JobPath: While this analysis examines the labour market outcomes of those who have been referred to and started JobPath, it is important to analyse what happens to those who are referred to JobPath but never start (see Section III).

This involves an examination of this cohort and their later statuses, including receipt of illness and disability payments and participation in education and training programmes.
Similarly, this cohort will be examined in respect of employment earnings, social welfare income and various labour market statuses.

4.

Satisfaction ratings and outcomes: Since 2016, the Department has carried out customer satisfaction surveys of Intreo and JobPath customers twice a year.

These provide an insight into jobseekers’ satisfaction levels with the JobPath offices, staff, services, and processes, as well as jobseekers’ views of JobPath compared to Intreo.
Analysing this qualitative material in combination with the quantitative analysis presented here will point towards the channels through which JobPath improves labour market outcomes.

5.

Other Steps:  Furthermore, it is important to understand if the programme outcomes improve with time or if the impact varies systemically with labour market conditions.
 Additionally, in an effort to better understand the impact of JobPath, further analysis will explore how outcomes differ depending on the point during their unemployment spell at which people start JobPath.

 Lastly, in order to understand if the impact of JobPath was evenly distributed based on regional provider, a further analysis will explore a comparison between JobPath providers and outcomes.
Conclusion This report contributes to the debate about approaches to long-term unemployment in two respects:  It provides a robust empirical estimate of the impact of the JobPath service, by measuring the change in earnings from employment and the change in labour market status between those who participated in Q1 2016 and those who did not but were, in all relevant respects, identical; and 57 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection  It clusters jobseekers into identifiable groups so that the PES can better identify jobseekers at risk of drifting into long-term unemployment.
This can be further enhanced by developing estimated trajectories and using it as a means of identifying what course of action might be useful to tailor an approach that leads from unemployment to employment.

The Public Employment Service (PES) performs an important role in providing the support needed to people who lose their job and to help them return to employment in as short a time as possible.

Performing this task well helps to minimise the drift to long-term unemployment.
This, in turn, minimises the scale of the challenge faced by the PES in addressing the complex challenges of the long-term unemployment.

JobPath makes an important contribution to this task.

In Ireland and elsewhere it is well established that those who become long-term unemployed (defined as being out of work for over twelve months) face diminishing prospects of securing employment.

The longer a person is unemployed the less likely it is he or she will secure employment.
For this reason, the quality of the service provided by the PES to this cohort is particularly important in helping to identify and address steps that they can take to secure stable employment and to support them in taking those steps.

The evidence from research internationally indicates that case-work based employment counselling and job-search assistance has a positive impact in terms of improving employment outcomes for this group (Spermann, 2015).
This is the service that JobPath is designed to deliver.

If it is delivering the service well, the employment outcomes and earnings for people who receive the service should be noticeably better than the equivalent outcomes for those people who do not receive the service.

Based on the econometric analysis undertaken in this research it is clear that JobPath has been effective in supporting long-term unemployed people secure work and in improving employment earnings for those who do secure work.
In summary the effect of JobPath is to 4.

Increase employment outcomes and annual earnings from employment for those who participated in JobPath 5.

Increase the earnings per week of employment 6.
Decrease reliance on social welfare income supports in the period after participation on the programme Each of these factors has a positive impact on the current situation of the individuals concerned, their expected labour market outcomes, the Exchequer finances and Each of these factors has a positive impact on the current situation of the individuals concerned, their expected labour market outcomes, the Exchequer finances and future entitlements to social insurance benefits.
The effect on employment outcomes – the likelihood of a person getting a job – is very significant with a 20%+ improvement in employment outcomes in 2017 and 26%+ in 2018.

Of equal note is that the weekly employment earnings of people who secured employment with the support of JobPath are 16% higher than the weekly employment earnings of people who secured employment without the support of JobPath in 2017 and 17% higher in 2018.
In total therefore the positive employment/earnings impact is in the order of 35% in 2017 and 37% in 2018..The impacts were positive not only on an overall basis but for each of seven different clusters of Jobseekers with the positive employment earnings impact ranging from 24% for people with a prior history of being very long term unemployed to 100% for those people with prior history of intermittent employment.
58 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Although evaluation methods and target groups differ between studies, compared to other employment schemes that have been the subject of econometric analysis this is  Significantly better than the Back to Education Allowance Scheme (where the ESRI econometric evaluation indicated negative employment outcomes).
 Slightly ahead of the impact of the JobBridge programme - where the differential employment impact was estimated at c 14 percentage points (32% improvement)  Somewhat lower than improvement previously reported (2017) for the Back to Work Enterprise Allowance Scheme (a scheme that supports people start their own business meaning that all participants, by definition, see an improvement in employment outcomes).
These findings indicate, firstly, that it is possible to achieve positive results for unemployed people with a payments-by-results contractual model; and secondly, that the State should continue to prioritise providing case-managed employment advisory services to long-term unemployed people.
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[Online] http://dx.doi.org/10.1787/empl_outlook-2015-en [Accessed 9 April 2019] Rehwald, K., Rosholm, M., and Svarer, M. (2017) 'Do public or private providers of employment services matter for employment?
Evidence from a randomized experiment', Labour Economics, 45, Field experiments in labor economics and social policies, pp.

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(2017) Dynamic treatment assignment and evaluation of active labor market policies.

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62 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection VIII Appendix Standardised processes for data preparation – SQL based Standardised Processes For Clustering Evaluation - SQL Based C: 0 :p "' :, ] w en C: ·c ~ :, D Process Variable Profiling PPS Ce ntric + Income Data SQL Table: Variables Profile Automat:icaly Cre a ted CSVFi le Export of Variab~ Stat istics t Variable type Count ofNilN, Ra t io ofN'°iN Count o fz.ro Ra t io of Zero suggests selecti on Fi la Ma1nu~y Editad to force sel«tion/d.-.
sele cti on of vui .ables due to business i nsi ght or oth@r consi d e rilt:i oni Process: Apply Clust ering to Other Datasets Apply Mixture Model to Datasets 3 Aut omatic Process User i nput required for sel ecti on of n. of d usters and othar params.

T he i mport:uw;:e of the variable used f« clustering is assessed re · casting the unsupervi sed task i nto a sup«vi sed classi fi cati on problem.

usi no the clusters l abels c-akul ated by the GMM as class labels.
T o pre did the class label, we s pl it the d a ta randomly i n train set ( 66%) andtest:set ( remai nino 3 4 %) and the n tra i n a Random Forest ensemble on the trai n set T h e p rocess is repeated 10 times with random i n it i a l izati on and importa nce c11kul ated as a ve rage importance of the i s assessed compwing stand.-d matrics u M!d in Statistics ilnd M«hine leilrni n g for modiii!I H tla ction: B.yasian Information Crit w i on ( SIC) and ~ Information Critel"ion ( AIC), Tl-Ni goodl"IQSs of f1tofGMMs i s i i~~ m i n i m ising BIC and AIC varyi n g the number o f dusters .
U se r required to review' m i n i m i zation curves ( BIC/AI C) and i dentify ideal n, d du5ters.

Fe11ture Imp orunce SQL T able, Cl ust1t" C..n1Tn SQL Table Cl u s t erino model i s built and then a pplied t o the sel ected d atasets R esults (duster+ ~ are saved to SQL All major processes are encoded in Python and st ream lined as !.lJlri!fil.
Notebooks All process are generic as any episodic-centric SQL Table can be analysed User intervention required to define inputs/outputs parameters Standardised Processes For Data Preparation - SQL Based Process SAS t o CSV Process: CSV t o S L Process: FLAT View Process: Join Income Data JLD SAS Dataset csv Dataset JLD SQL Table PPS Centric SQL Table PPS Centric + Income Data SQL Table C: 0 :p e "' a.
~ 0.. .El "' 0 Data D ictionary Automati calv Created CSVFi le Manualy Edit ed to: Set typ e ,1nd formilb (!<a), • ' sex' as numeric Se l ect Vari ables St art/End Evant D.ita of Bi rth UID (l!R!.
!V Person.ii Info Toto1I Summary Epi sode Summ.-y 2 Data Mappi no Ad·Hoc Proced...-e A utomaticalv c.reated CSV Fi le Roll· up variabltts v,1 lues T he s u~procass use"S: freq uency t .iblas; of v al ues bu"Si ness rul es and p rovi des a 3 col umns flat t able mapprlo va ri able/okl va lua/n-,value Automati calv c.reated SQL T able T he T abl e i n SQL cont a i ns th• orio i nal JLD ( SAS) , with variablH type·cuted accordi no to Data D ictionary -and val ue.s re-mapped accordi ng to Data Mappi ng Autom.itic.ily 0--ted SQL T abl a Conta ins PPS Centric ( FLAT) Vi ew of JLD.
V ari abl e extracted accorclino t o Data Oicl:ion,1ry definit i ons a nd ( if requir ed ) user d efined specif ic porlt in t i n"lli o1n d o1d- hoc ~ Personal Info Tota l Nu mber of Epi sodes Tota l Duration cl Episodes Tota l SurTifnafY across £e!.2 h istory Nume ric variabl es: SUM,MEAN Nomi nal Vari ables: c::OIJNT, DU RATION Epi sode SurT'W'fflll"/ (fix number of ep.
::5) • VALUE, DU RAT ION All processes are encoded in Python and streamlined as ~ Notebooks All process are generic as any episodic-ce ntric SAS/CSV dataset can be conve rted User intervention required to define inputs/outputs parameters J.PN.atytcs Te-~ l Oocume.nt.atiltft 11 Figure 29: Standardized Processes for Data Preparation- SQL Based 63 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection JobPath Providers by Region and Location Seetec County Locations Number Cavan Donegal Dublin Galway Kildare Leitrim Cavan Town Buncrana, Dungloe, Letterkenny, Dunfanaghy, Killybegs, Donegal Town, Ballyshannon Amiens Street, Blanchardstown, Navan Road, Bishop Square, Balbriggan, Finglas, Ballymun, Dun Laoghaire, Clondalkin, Ballyfermot, Tallaght, Coolock, Swords 1 7 13 Galway City, Loughrea, Clifden, Tuam, Carraroe, Ballinasloe Maynooth Carrick-on-Shannon, Manorhamilton 6 1 2 1 2 3 3 2 2 2 2 2 49 Number 1 2 6 2 2 1 2 1 5 2 4 3 41 Carlow Town Ennis, Kilrush Carlow Clare Cork Kerry Cork City, Bandon, Clonakilty, Kinsale, Midleton, Bantry, Macroom, Skibbereen, Mallow, Fermoy 10 Cahirciveen, Dingle, Kenmare, Killarney, Tralee, Listowel Longford Longford Louth Mayo Meath Dundalk, Drogheda Castlebar, Ballina, Belmullet Navan, Kells, Trim Monaghan Monaghan Town, Carrickmacross Offaly Edenderry, Birr Roscommon Roscommon, Castlerea Sligo Sligo City, Tubbercurry Westmeath Athlone, Mullingar Total Seetec Locations: County Locations Turas Nua Kildare Athy, Naas Kilkenny Thomastown, Kilkenny City Laois Portlaoise Limerick Limerick City, Newcastlewest Offaly Tullamore Tipperary Thurles, Roscrea, Clonmel, Nenagh, Tipperary Town Waterford Waterford City, Dungarvan Wexford Wexford Town, Gorey, New Ross, Enniscorthy Wicklow Bray, Wicklow, Arklow Total Turas Nua Locations: Table 33: JobPath Providers by Location 64 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection JobPath rollout dates by
 quarter and DSP claim office Quarterly Go- Live Date DSP Claim Office DSP office Type Division 2015 Q3 Bray Longford Intreo Centre Intreo Centre Mid Leinster Midlands North 2015 Q4 Cork Abbey Court Intreo Centre Cork Hanover Street Intreo Centre Galway Carlow Newbridge Waterford Mullingar Cavan Dundalk Ennis Kilkenny Wexford Carrigaline Castlebar Cobh Clonmel Limerick Westport Ballina Navan Thurles Arklow Tullamore Achill Belmullet Letterkenny Buncrana Clifden Dungloe Loughrea Listowel Bishop Square Cahirciveen Drogheda Finglas Intreo Centre Intreo Centre Intreo Centre Intreo Centre SWLO Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre SWLO SWLO Intreo Centre Intreo Centre Intreo Centre Intreo Centre SWLO Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre Cork Central Cork Central West Mid Leinster Mid Leinster South East Midlands North North East North East Mid West Midlands South South East Cork Central West Cork Central Midlands South Mid West West West Midlands North Midlands South Mid Leinster Midlands South West West North West North West West North West West South West Dublin Central South West North East Dublin North Newcastlewest Intreo Centre Mid West 2016 Q1 Swords Tallaght Tralee Cork St Sligo Dublin North Dublin South South West Dublin Central North West Intreo Centre Intreo Centre Intreo Centre Intreo Centre Intreo Centre 65 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Blanchardstown Intreo Centre Dublin Central Coolock Athlone Intreo Centre Intreo Centre Dublin North Midlands North Carrick-on-Shannon Intreo Centre North West Birr Monaghan Branch Branch Manorhamilton Intreo Centre Enniscorthy Gorey Branch Branch Dunfanaghy Intreo Centre 2016 Q2 Carrickmacross Cahir Cashel Ck-on-Suir
 Ennistymon New Ross Portarlington Portlaoise Rathdowney Tipperary Tulla Navan Road Baltinglass Midleton Youghal Kenmare Killarney Athy Muine Bheag Tullow Dungarvan Kilmallock Kilrush Nenagh Roscrea Thomastown Wicklow Parnell Tubbercurry Mallow Bantry Fermoy Macroom Newmarket Skibbereen Midlands North North East North West South East South East North West North East Midlands South Midlands South South East Mid West South East Midlands South Midlands South Midlands South Midlands South Mid West Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Intreo Centre Dublin Central Branch Branch Branch Intreo Centre Intreo Centre Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Mid Leinster Cork Central Cork Central South West South West Mid Leinster Mid Leinster Mid Leinster South East Mid West Mid West Midlands South Midlands South Midlands South Mid Leinster Intreo Centre Dublin Central North West South West South West South West South West South West South West Branch Branch Branch Branch Branch Branch Branch 66 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Dingle Ardee Gort Killorglin Castleblaney Bandon Clonakilty Kinsale Ballinrobe Claremorris Edenderry Castlepollard Swinford Castletownbere Balllyshannon Kells Boyle Roscommon Maynooth Ballinasloe Tuam Trim Ballyfermot Killybegs Clondalkin Ballyconnell Balbriggan Nutgrove Dun Laoghaire Kilbarrack Donegal Ballybofey Castlerea Ballymun Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch South West North East Mid West South West North East Cork Central Cork Central Cork Central West West Intreo Centre Midlands North Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Branch Midlands North West South West North West Midlands North Midlands North Midlands North Dublin South Midlands North West Midlands North Intreo Centre Dublin South Branch North West Intreo Centre
 Dublin South Branch Intreo Centre Intreo Centre Intreo Centre Intreo Centre Branch Branch Branch North East Dublin North Dublin Central Dublin South Dublin North North West North West Midlands North Intreo Centre Dublin North 67 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Table 34: JobPath rollout dates by quarter and DSP claim office 2017 time lag between JobPath referral and start date 2017 Time Lag between Referral and Start Date Source : DEASP Administrative Data 0.200 0.175 0.150 0.125 >, u C: ~ 0.100 O' ~ u.. 0.075 0.050 0.025 0.000 0 20 40 60 80 100 Days Diffe rence Figure 30: 2017 time lag between JobPath referral and start date 68 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection 1400 1200 ~ 1000 ~ ~ 0 800 N V, "' C ·1: 600 :;; w 400 200 0 0 control / treatment Figure 31: Earnings 2013-2015, unweighted, treatment and control 800 700 600 ~ 0 ~ 500 0 N v, 400 "' C .E ~ 300 200 100 0 0 control / treat m ent Figure 32: Earnings 2013-2015, weighted – treatment and control 69 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Clusters of jobseekers on the Live Register In order to understand the stability of clusters, this section gives an overview of the movements of individuals who remain in the same cluster over time, those who move to another cluster, or those who leave the cluster population.
The persistence rate represents the rate that individuals remain in each cluster during a period of time.

Whereas, the exit rate represents the number of individuals from each cluster that leave the total cluster population because they have gone off the Live Register during a certain period of time in which clusters are being compared.

However, while these individuals leave the cluster population during one period, they may reappear later if they are back on the Live Register.
The rates below are taken from an average of cluster stability measurements during various quarters from Q1 2015 to Q4 2016.

Overall, the majority of cluster populations remain stable within the same cluster or exit the cluster population entirely.

A small share of the population changes from one cluster to another during the time periods.
Clusters of jobseekers on the Live Register Young Casual Claimants Second highest median number of weeks of insurable employment Population: 30, 637 Eligible for JoblPath: 33% Median unemployment duration: 175 days Young Professionals 97% have been in employment at some point in the five preceding calendar years Population: 16, 061 Eligible for JoblPath: 39% Median unemployment duration: 200 days Intermittent Labour Market Attachment Low median weeks of insurable employment Population: 18, 258 Eligible for JoblPath: 39% Median unemployment duration: 221 days Shorter- Durations 30 and 40 years of age Population: 121, 932 Eligible for JoblPath: 45% Median unemployment duration: 242 days Older, with Strong Employment History Largely male, close to retirement age Population: 12, 789 Eligible for JoblPath: 51 % Median unemployment duration: 305 days Self Employed Second highest median unemployment duration Population: 29, 408 Eligible for JoblPath: 67% Median unemployment duration: 661 days Clusters ordered by Unemployment Duration (and JobPath Eligibility) Short Duration Figure 33: Clusters of Jobseekers on the Live Register Persistent Longer Durations Lowest share of those who were previously in managerial or professional occupations Population: 97, 946 Eligible for JoblPath: 82% Median unemployment duration: 1,534 days Long Duration 70 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Cluster Stability Cluster Persistence Rates 2015-2016 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Younger Casual Claimant s Younger Intermittent Professionals Labour Market Durat ions Attachment Shorter Older, w ith Self-Employed Strong Employment Hist ory Persistent Longer Du rations ■ Persistence Rate ■ Exit Rat e ■ Change Clust er Rate Figure 34: Cluster Persistence Rates Younger Casual Claimants This group has an average persistence rate of 60% and an average exit rate of 34%.
From one quarter to the next, 76% of the cluster population remain in the cluster and 23% exit the total cluster population during this period.

Younger Professionals This group has an average persistence rate of 78% and an average exit rate of 19%.

From one quarter to the next one, 90% of individuals remain in this cluster and nearly 10% leave the total cluster population during this period.
Intermittent Labour Market Attachment This group has an average persistence rate of 57% and an average exit rate of 35%.

From one quarter to the next, 77% of cluster 4 remains in the cluster, whereas 22% of this cluster exits the total cluster population during this period.

Shorter Durations On average, 58% of this cluster stays in that cluster from one period to another, 5% moves to another cluster, and 29% exit the total cluster population.
From one quarter to the next one, 78% of individuals remain in this cluster, 5% move to another cluster, and 18% left the total cluster population during this period.

Older, With Strong Employment History This group has an average persistence rate of 64% and an average exit rate of 31%.

On average, 2% of this cluster moves to another cluster.

From one quarter to the next, 80% of cluster 5 remains in the cluster, whereas 20% leave the total cluster population during this period.
Self Employed On average, 53% of this cohort remains within the cluster, 3% move from this cluster to another, and 32% exit the total cluster population.

From one quarter to the next, 75% of this cluster remains in the cluster, while 6% move to another cluster, and 20% leaves the total cluster population during this period.
71 R0193(ii) PAC33 A An Roinn Gn6thai Fostafochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection Persistent Longer Durations This group has an average persistence rate of 72% and an average exit rate of 24%.

From one quarter to the next, 86% of this cluster population remains in the cluster, whereas 14% exit the total cluster population during this period.
72 R0193(ii) PAC33 A An Roinn Airgeadais Department of Finance bbbbbbbb An Roinn Gn6thai Fostaiochta agus Coimirce S6isialai Department of Employment Affairs and Social Protection The use of intermediary-type structures and self-employment arrangements: Implications for Social Insurance and Tax Revenues January, 2018.
R0193(iii) PAC33 A 2 R0193(iii) PAC33 A Contents Introduction .............................................................................................................................. 4 Section One: Employment arrangements ..................................................................... 5 Section two: Public consultation .................................................................................... 21 Section three: Developing a way forward .................................................................. 26 Appendix A – Current Irish tax and social insurance systems for employed and self-employed ........................................................................................................................... 30 Appendix B – Treatment of Economically Dependent Workers in EU Countries which apply Specific Provisions ........................................................................................ 36 Appendix C – list of submissions to public consultation .......................................... 40 Appendix D Report from the Construction Sub-Group ............................................. 42 3 R0193(iii) PAC33 A Introduction The purpose of this report is to identify and estimate any potential loss of tax1 and Pay Related Social Insurance (PRSI) resulting from intermediate-type structures and certain self-employment arrangements.
The report has been prepared by a working group comprising officials from the Department of Employment Affairs and Social Protection, the Department of Finance and the Revenue Commissioners.
The report is informed by a public consultation2 held in early 2016 to invite views on possible measures to address the potential loss of tax and PRSI under arrangements where i) an individual, who would otherwise be an employee, establishes a company to provide his or her services or ii) where an individual, who is dependent on and under the control of a single employer, is classified as a self-employed individual.
Such arrangements may also result in fewer social protection rights for the employees concerned, such as illness benefit, jobseekers benefit or redundancy and insolvency payments.

Twenty-four3 individuals and organisations made submissions to the public consultation which closed on 31st March.

These submissions are summarised in Section Two of the report.
The report is intended to broaden and deepen the understanding of the impacts of what is often termed “disguised employment” for Exchequer revenues and the debate on the potential measures to address these impacts.

“Disguised employment” in this context is defined as any relationship which creates an appearance that a person who is ‘de facto’ an employee of a business is self-employed.

Alternatively, the individual may provide his/her services through a corporate structure.
In both scenarios, the effect is to reduce employer and employee tax and social insurance liabilities.

Disguising employment in this manner also enables employers to avoid some employment law obligations and can undermine the employment rights of the workers concerned.

The report is structured as follows.

Section 1, “Employment arrangements,” outlines the changing nature of the labour market and provides some data on recent trends in employment and self-employment.
Section 2, “Public consultation,” summarises the twenty-four submissions received in response to the public consultation.

It presents the views of respondents about the nature and scale of the issues and the policy options available.

Section 3, “Developing a way forward,” sets out possible policy options.

1 For the purposes of this report, “tax” means income tax and universal social charge (USC).
2 The consultation paper is available at http://www.finance.gov.ie/wp-content/uploads/2017/09/PSC- Consultation-Paper-final.pdf 3 Twenty–three were received at the time; one further submission was received late but was also accepted.
4 R0193(iii) PAC33 A Section One: Employment arrangements 1.1 THE CHANGING NATURE OF EMPLOYMENT Trends in world labour markets show a move away from the binary concept that a worker, who is not unemployed, is either employed in a mutually dependent ‘contract of service’ relationship with an employer, or, is a self-employed free agent competing for business on a ‘contract for services’ basis , moving between clients as opportunities for work present themselves.
Practices such as outsourcing labour activity and contracting-in services and the emergence of new forms of service relationships in the so-called ‘gig’ and ‘sharing’ economies have blurred the lines as to what constitutes contracts of service as opposed to contracts for services.

This raises concerns that this blurring of the lines can be, and is being, taken advantage of both to reduce employment rights and responsibilities, and to avoid tax and social insurance liabilities.
Many workers are genuinely and contentedly operating in an autonomous self- employed capacity whether that is in the traditional form of self-employment or in one of the new platform-based companies which are part of the emerging ‘gig’ and ‘sharing’ economy.
In some cases workers, although nominally self-employed under a contract for services, are in fact wholly dependent on, and subject to the control and supervision of, a single employer in manner which is tantamount to employment under a contract of service.

Workers engaged under these types of terms are “economically dependent workers”4 and constitute what is now sometimes known as disguised employment.
Whether or not individual workers are content to be employed on this basis does not alter the fact that they are de facto employees of the contracting body/employer and that they and their employer should be subject to the laws and regulations, including taxation and social insurance regulations, proper to a contract of service employment relationship.

It should be acknowledged that there are differing views on the role of intermediary employment arrangements in the Irish economy.
While many people are concerned at the impact on employment rights and the loss to the Exchequer, there is an alternative view which considers that structures such as those under review are of importance to the economy, and in attracting investment and, talent into Ireland.

This is particularly true of higher value, specialised contractors in industries such as ICT, pharma and finance.
In this view, the continued existence of these structures in their present forms 4 This term has been in use by both the International Labour Organisation and the European Union since at least the 1990s.

The Taylor Review of Modern Working Practices, July 2017 examined this arrangement in a UK context.
It suggested people who work for platform-based companies be classed as dependent contractors and that there should be a clear distinction made between dependent contractors and those who are legitimately self-employed.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/627671/good-work- taylor-review-modern-working-practices-rg.pdf 5 R0193(iii) PAC33 A is seen as vital in attracting and retaining investment and in assisting indigenous companies scale up and become class leaders on a worldwide scale.
1.2 DISGUISED EMPLOYMENT Disguised employment as outlined above relates to circumstances where a worker is classified as self-employed but whose terms of work and working conditions, and the reality of the relationship (in particular as they relate to factors such as, but not confined to, attendance, control and supervision, and inter-dependence with other workers) are such that s/he should more appropriately be classified as an employee.
The third report of the Advisory Group on Tax and Social Welfare on “Extending Social Insurance Coverage for the Self-employed”, commented that: “The issue of ‘disguised employment’ remains a serious concern, particularly in the construction and food processing sectors.
Employment trends over the last two decades towards greater flexibility and casualisation have resulted in low paid and precarious employment, with some workers being classified as self-employed even though they might not possess those characteristics of entrepreneurship and risk- taking often perceived as features of the self-employed.”5 Hiring a worker in a self-employed capacity, to carry out work also, or previously, carried out by paid employees under the same or very similar management controls and supervision is one example of disguised employment.
From an employer’s perspective such arrangements may minimise obligations and costs arising from employment law and reduce social insurance costs.

From the worker’s perspective these types of arrangements can have a negative impact on employment rights and access to social insurance benefits but these negatives might, in some cases, be compensated by reduced tax and social insurance charges.
Therefore depending on the nature of the work and the individual circumstances facing each worker, the worker might be a ‘victim’ or a ‘proponent’ of disguised employment arrangements6.
The fact that there are incentives on both sides of the employment relationship is reflected in a 2012 report entitled Study of Precarious Work and Social Rights which looked at the growth of non-standard forms of employment relationships in 12 EU countries.7 It described disguised employment or “false employments” as “a relationship of unequal power”.
The report describes it as: 5 Page 10: Third Report: Extending Social Insurance Coverage for the Self-employed, Advisory Group on Tax and Social Welfare, May 2013.

6 Both views were represented in submissions received.

7 The countries surveyed were Bulgaria, France, Germany, Greece, Ireland, Italy, Latvia, the Netherlands, Poland, Spain, Sweden and UK.

6 R0193(iii) PAC33 A “A process where an individual seller is hired on the precondition that s/he declares that s/he is self- employed.
Despite that the working relationship is in practice the same as for a worker under an employment contract, it is more convenient for the buyer, involves less administration and provides greater flexibility, while it is often accepted or sought after by the worker because it can provide short- term benefits through reduced tax or social insurance obligations.”8 1.3 INTERMEDIARY ARRANGEMENTS The emergence of intermediary structures as the basis for engaging workers in some situations has given rise to concerns that these structures are being exploited for the purpose of disguising an employment relationship.
There are two main forms of intermediary structure – Personal Service Companies (PSC) and Managed Service Companies (MSC).

Personal Service Companies A personal service company is a limited company that typically has a sole director, the worker/contractor, who owns most or all of the shares in the company.

Under this arrangement a contract for services is not agreed directly between the worker and the employer but is agreed between the employer and an intermediate company owned/directed by the worker.
The intermediary used in such circumstances is what is known as a personal service company (PSC).

The employer pays the company for the services of the worker but does not deduct any tax or PRSI from such payments.

The company pays the worker who as the owner/director of the business is regarded as self-employed for PRSI purposes.
The worker can determine his/her own rate of pay and how much of the revenue will be consumed in wages (to him/herself) and how much will be declared as profit after other expenses.

In this way the worker can optimise for their own benefit the amount of tax, PRSI and corporation tax that is paid.

In some circumstances, such arrangements can amount to a mechanism to enable both the employer and the worker to avoid tax and PRSI that would otherwise be due.
The professional services commonly provided include IT, accounting and engineering skills.

In many cases, the individuals involved are genuinely self-employed.

Where there is only one end user of the services over a period of time, the relationship may be more akin to an employer/employee relationship.

Managed Service Companies A variation on the PSC arrangement involves the use of what has become known as a “managed service company (MSC)”.
In essence this involves setting up a company, which is generally structured with a number of worker shareholders who may or may 8 P6: “Study of Precarious Work and Social Rights” undertaken for the European Commission by the Working Lives Research Institute, Faculty of Social Sciences and Humanities, London Metropolitan University 2012.

7 R0193(iii) PAC33 A not be involved in delivering similar services to the same employer.
The MSC is typically facilitated by a third party agent who organises the legal and administrative affairs of the company.

As with a PSC the workers can optimise for their own benefit the amount of tax, PRSI and corporation tax that is paid.

As such intermediaries are not deemed to be employment agencies they avoid the social insurance provisions whereby an employment agency is deemed to be the “employer” of those whose services it provides to a third party.
The development of PSCs and MSCs creates a triangular employment relationship where the services of the worker are secured through a third entity thereby distancing the employer from direct engagement with the worker under either a contract of service or a contract for services.

This creates complexities in establishing the rights and responsibilities of each of the parties with regard to tax, social insurance and employment rights.
Some critics argue that the avoidance of tax and social insurance obligations is the primary motivation for the use of PSCs and MSCs and that workers are increasingly being directed by employers to supply their labour through these types of intermediaries.9 The fact that these arrangements can provide a method of channelling the money from the end user to the individual may mean that any corporation tax or close company surcharge on these companies is likely to be insignificant.
Professional high-demand/high-value services commonly provided through company structures include pharma, airlines, IT, accounting and engineering.

In many cases, the individuals involved are legitimately self-employed people.

Where there is only one end user of the services over a period of time, the relationship may be more akin to an employer/employee relationship.
For example, people who work exclusively for a single business, who must wear the business uniform and work according to schedules or requirements established by the business, may be treated as self-employed workers and share-holders of intermediary companies that provide services to the business.

In some cases, workers set up companies to provide their services back to their former employer - another example of disguised employment.
1.4 LABOUR MARKET TRENDS AND PROFILE OF SELF-EMPLOYED IN IRELAND There are no quantitative data on the incidence of disguised employment in Ireland.

However trends in the CSO Quarterly National Household Survey (QNHS) data for self- employment and temporary employment10 (and to a lesser extent part-time and under- 9 A number of responses to the consultation process raised this issue.

10 The QNHS is a survey of respondents’ self-perception.
Accordingly reported levels of self-employment may understate the actual level of disguised self-employment if the respondent believes that they are in fact employed rather than self-employed.

However it is likely, assuming a constant reporting error, that the trend in the reported numbers over time should accurately reflect any underlying change.
In addition the measure of temporary employment should reveal any underlying change in employment contracts related to a shift from a contract of service to a contract for service relationship.

8 R0193(iii) PAC33 A employment) can be applied to discern if there is any evidence of an increasing level of disguised employment.
Percentage Employment Type Share of Total Employment 24.62 30 25 20 15 10 19.23 16.66 7.32 21.54 15.27 5.92 Part-time Temporary Self-employed Figure 1: Trend in Employment Type Share of Total Employment, 1999-2017 Overall Trends At an aggregate level (Figure 1) there is no evidence that there has been any significant change in the level of self-employment and temporary employment in the economy.
In fact the data indicate that the share of total employment accounted for by self- employment and temporary employment has been very stable over the period since 1999, even during the recession of 2008 – 2012.

If anything there has been a slight downward trend in the proportion of the labour force engaged in self-employment or on a temporary contract basis.
The change in the share of part-time employment is however much more marked with part-time employment increasing from about 16.5% of total employment at the turn of the century to almost 25% in 2013, before dropping to 21.5% at the start of 2017.

Types of Self-Employment The QNHS distinguishes two types of self-employment: self-employed with employees and self-employed without employees, also known as ‘own-account’ workers.
In Q1 2017, the number of persons in employment was 2,045,100, of which self- employed workers were 312,300.

This represents 15.3% of total employment.

This is in line with the average rate of self-employment in the EU.

There are significantly more own account self-employed workers than self-employed workers with employees: 220,800 compared with 91,500 but this distribution is again in line with EU averages.
In terms of relative share of the employed labour force own account self-employed and 9 R0193(iii) PAC33 A self-employed people with employees account for 10.8% and 4.5% respectively of all those in employment (Figure 2).
Composition of employment, 2017 0.57% 4.47% 10.80% 84.16% ■ Self-employed (with paid employees) ■ Self-employed (with no paid employees) Employee ■ Other ■ Figure 2: Self-Employment Share of Total Employment (Q1 2017) Self-Employment by Sector The agriculture and construction sectors between them account for about 45% of own- account’ self-employed people with no employees; the balance being relatively evenly distributed across the other main sectors.
(Figure 3) Looked at within sectors agriculture and construction also show the highest level of self-employment, and in particular ‘own-account’ self-employment as a share of total employment within the sector.
(Figure 4) 10 R0193(iii) PAC33 A ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Figure 3: Sectoral Composition of ‘Own Account’ Self-Employment ■ ■ ■ Figure 4: Employment Composition by Sector 11 30%15%6%8%2%4%8%3%3%3%7%2%9%Sectoral compostion of 'Own Account' Self-EmploymentAgricultureConstructionWholesale, RetailTransportAccom.
& FoodICTProfessional ActivitiesAdministrative activitiesEducationHealthIndustryFinanceOther0%10%20%30%40%50%60%70%80%90%100%Employment Composition by SectorPaid EmploymentSelf-Employed with EmployeesOwn-Account Self-EmploymentR0193(iii) PAC33 A Self-employment as percentage share of total employment by sector 1999, 2007 and 2017 All NACE economic sectors Agriculture, forestry and fishing (A) Construction (F) Wholesale and retail trade; repair of vehicles (G) Transportation and storage (H) Accommodation and food service activities (I) Information and communication (J) Professional, scientific and technical activities (M) Administrative and support service activities (N) Education (P) Human health and social work activities (Q) Industry (B to E) Industry and Construction (B to F) Financial, insurance and real estate activities (K, L) Services (G to U) Other NACE activities (R to U) 1999Q1 2007Q1 2017Q1 Number of sectors with self-employment increasing from 1999 to 2017 Number of sectors with self-employment increasing from 2007 to 2017 7 10 Table 1(a): Self-Employment Share of Employment by Sector, 1999-2017.
Self-employment as percentage share of total employment by sector 2013-2017 All NACE economic sectors Agriculture, forestry and fishing (A) Construction (F) Wholesale and retail trade; repair of vehicles (G) Transportation and storage (H) Accommodation and food service activities (I) Information and communication (J) Professional, scientific and technical activities (M) Administrative and support service activities (N) Education (P) Human health and social work activities (Q) 12 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 R0193(iii) PAC33 A Industry (B to E) Industry and Construction (B to F) Financial, insurance and real estate activities (K, L) Services (G to U) Other NACE activities (R to U) 8.87 18.07 7.82 12.27 23.25 8.73 17.51 6.95 12.41 25.35 Number of sectors with self-employment increasing from 2013 to 2017 8.12 8.68 17.60 17.91 8.04 11.95 11.95 24.66 26.13 8.60 8.19 16.27 6.18 11.02 26.29 2 Table 1(b): Self-Employment Share of Employment by Sector, 2013-2017.
Trends by Sector While the trend in the levels of self-employment at an aggregate level do not give rise to any significant concern (Figure 1) the trend at sectoral level does show some changes in the composition of employment within sectors that are worthy of note (Tables 1(a) and 1(b)) with seven out of the fourteen major sectors showing an increase in the share of self-employment from 1999 to 2017, and ten from 2007 to 2017.
The overall trend masks a reduction in self-employment between 1999 and 2017 in some traditional high-employment sectors such as:  Accommodation and food services (from 16.43% to 8.08%);  Retail and wholesale sectors (from 17.46% to 10.74%).

The same period (1999 – 2017) saw an increase in sectors such as construction, ICT and “Other NACE activities” (which includes sport, the arts, gambling and computer repairs).
It is worth noting, however, that in more recent years (Table 1b) the trend has been a decrease in self-employment in all sectors with the exception of ICT and “Other NACE activities”.
Share of Self-employment as % of Total Employment Self employed with paid employees Self employed with no paid employees All self employed 15.27 10.80 4.47 25 20 19.23 12.97 6.26 15 10 13 R0193(iii) PAC33 A Figure 5: Trend in Self –Employment Share of Total Employment, 1998-2017 Trends by Type of Self-Employment Similarly while the overall trend in self-employment share of total employment is stable, or somewhat downward, a slightly different picture appears when the trend is disaggregated by type of self-employment.
Figure 5, above, shows that the share of ‘own account’ self-employed workers was falling faster than the overall level of self-employment in the period up to 2007, but during the recession, the trend reversed and the share of workers reported as self- employed on their own account with no employees increased.
The data indicate that the share of ‘own account’ self-employment initially fell from c 12.6% to 10.5% in the period from 1999 to 2007 but then increased to 12.4% in the period of the recession before falling back somewhat to 10.8% at the beginning of 2017 In contrast the share of self-employed people who had employees working with them fell from a stable level of c 6% throughout the 1999 to 2007 period to about 4.7% in 2016.
Can the changing nature in the composition of self-employment be taken to indicate that although the overall level of self-employment is falling there are more people now working as sole agents on their own account, potentially as dependent or disguised self- employed workers, rather than as self-employed entrepreneurs with businesses and employees?
Caution needs to be exercised in interpreting the trends, for two main reasons: First, the overall share of ‘own account’ self-employed is still at a relatively low level and is in fact lower than in 1999.

Second, the impact of the recession and the shifts in the composition of employment type that would have occurred during the recession and subsequently during the recovery period needs to be taken into account.
It is likely that some self-employed entrepreneurs may have reduced the number of their employees during the recession resulting in a shift in share between ‘self-employed own account employment’ and ‘self- employed with employees’ employment.

This would, at least partly, explain the fall in the number of people who report as self-employed with employees in the period after 2007.

14 R0193(iii) PAC33 A Self-Employment in the Construction Sector.
Employment in the Construction Sector 250 200 150 100 50 0 202.3 Self employed with paid employees Self employed with no paid employees Employee (including schemes) 41.9 35 56.3 26.8 9.3 97.2 30.4 14. Figure 6: Employment Trends in the Construction Sector The impact of the recession followed by recovery is most apparent in the construction sector (Figure 6).
The construction industry is of interest because it is the second largest user of self-employment and accounts, after agriculture, for most of the growth in self-employment in recent years.

It is also a sector identified by some commentators as being particularly prone to disguised employment practices.

As can be seen the number of employees in paid employment in the construction sector fell dramatically from a high of c. 202,000 people to about 56,000 people in 2013 – a fall of c. 73%.
This reduction was mirrored by a fall, in percentage terms, in the number of people who reported that they were self-employed with paid employees on their payroll from c. 35,000 to c. 9,500, again a fall of about 73%.

However the reduction in the number of ‘own account’ self-employed workers without staff fell by a lower figure 36%, i.e.

about half the fall in employment in the construction sector generally.
While the overall level of self-employment in the economy has grown by 11% since 2012, construction self-employment has grown by c. 22%.

However these data have to be considered against the background that prior to the recession the construction sector accounted for c. 20% of all self-employment (second only to agriculture) but its share fell back to c. 13% in 2012 before recovering to c. 14.5% in 2016.
In addition although construction sector self-employment has grown by 15 R0193(iii) PAC33 A c. 22% in recent years, total construction employment has grown by a higher figure of 36% since its lowest point in the recession (Q1 2013).
Paid employment in the construction sector has increased by 50% during this period and within the self-employed category, growth in the number of people reporting that they are ‘self-employed with employees’ of 22% has been greater than that of ‘own account - self-employed no employees’ (the sub-category most likely to give rise to disguised employment) of 17%.
Therefore, notwithstanding concern expressed regarding a shift towards disguised employment in the construction sector, the data indicate that self-employed people continued to engage in activity during the recession at a higher rate than other construction workers.

As the sector recovers early indications are that the balance of employed and self-employed in the industry is moving in the direction it was before the recession.
Summary To summarise,  At an aggregate level the data are not indicative of a significant increase in the prevalence of self-employment in the economy over the past 16 years.

 Self-employment is however becoming more prevalent in some sectors – most notably the ICT sector.

 The increased share of self-employment in the construction sector during the recession appears to be unwinding as employment in the sector picks up.
1.5 LEGAL AND ADMINISTRATIVE TREATMENT OF WORKERS The classification of a worker as either an employee or self-employed is significant in a number of legal and administrative domains:  Taxation: Tax is required to be deducted by employers for all of their employees under the PAYE system and remitted on a monthly basis to the Revenue Commissioners.

Self-employed people make an annual tax payment to the Revenue Commissioners under the self-assessed system of tax collection.
Through the deduction of certain work-related expenses, self-employed people can have a smaller tax liability compared to an employed person.

Also, they can adopt remuneration strategies which are more “tax efficient”.

On the other hand self-employed workers have a smaller Earned Income tax credit of up to €95011 11 Will increase to €1,150 with effect from 2018 16 R0193(iii) PAC33 A compared to the employee PAYE tax credit, worth up to €1,650.
In addition those on earnings of €100,000 or more pay a USC surcharge of 3%.

 Social Insurance: The total social insurance contribution paid in respect of employees amounts to 14.75% in most cases.

In addition to the social insurance contributions payable by employees (generally 4%), employees benefit from contributions paid on their behalf by their employers.

Employers are required to pay contributions of between 8.25% and 10.75% of the salary paid to their employees.
This gives employees the right to the full range of short-term benefits (e.g.

in respect of unemployment) and long-term benefits (e.g.

invalidity and old-age pensions).

The total contribution in respect of self-employment is limited to the contribution of 4%, paid by the self-employed person, on their self- employed earnings.

There is no contribution equivalent to the employer contribution paid in respect of employees.
A single annual social insurance payment can be made by a self-employed person subject to a minimum of €500 and this entitles the person to a full 52 weeks of contributions irrespective of the number of weeks actually worked.

In the past the differential in social insurance payment rates was justified by reference to the reduced benefits available to self- employed people.
The extension of Treatment Benefits, and in particular Invalidity Pension (from December 2017) benefits, to self-employed people significantly erodes this ‘benefit gap’ and may increase the incentive for people to agree to work arrangements which enable them to present as self-employed rather than employed.

 Employment rights: Employers are required to abide by a wide range of obligations in respect of people hired as employees on a contract of service basis.
These relate to unfair dismissal, minimum wage, health and safety, collective redundancies, insolvency and the transfer of undertakings, consultation with workers, working hours, equal treatment and pay, as well as the right to parental leave and leave for family reasons.

These obligations do not extend to people hired under a contract for services as ‘self-employed’ workers.

Self-employed people have protection for their health and safety12 and, in some cases, protection against discrimination.
Treatment of economically dependent workers in other countries A 2010 report which examined the position of economically dependent workers in all EU members found that, of the EU27 plus Norway, 21 of the 28 countries treat such workers as self-employed for social protection purposes.
The seven countries which treat them as a separate category in their own right, for either social protection or employment protection purposes were Austria, Belgium, Germany, Spain, Italy, Norway 12 The Safety, Health and Welfare at Work Act 2005 sets out the main provisions for securing and improving the safety, health and welfare of people at work.

The law applies to all places of work regardless of how many workers are employed and includes the self-employed.

17 R0193(iii) PAC33 A and Portugal.


An extract from the report detailing the treatment of economically dependent workers in these countries is provided in Appendix B.

13 1.6 ESTIMATED LOSS TO THE EXCHEQUER Comparison of outcomes – at individual level As indicated above the use of intermediary-type structures and self-employment arrangements, in situations where a worker could otherwise be considered an employee, gives rise to tax and PRSI losses to the Exchequer.
Tables 2 (a) and 2(b) overleaf illustrate the potential for losses across a range of earning levels.

It should be noted that these comparisons relate to a worker who is engaged as self-employed or through intermediary arrangements but who would otherwise be classed as an employee.

The payment made by the end-user for their services, which is treated as revenue for a self-employed person, is compared with a salary paid in similar circumstances.
For the purpose of these comparisons, it has been assumed that expenses totalling 10% of receipts have been deducted for tax purposes in the non-employment scenarios below; further, it has been assumed that all after tax income is distributed to shareholders in the PSC/MSC scenarios and that class S PRSI is applied.

These figures are illustrative and actual losses may differ depending on the particular circumstances of individual cases.
Employment Tax Receipts Social Insurance Receipts Self- Employment Total Receipts Tax Receipts Impact on Exchequer receipts Social Insurance Receipts Total Receipts Loss to the Exchequer % Reduction in Revenue % Reduction attributable to reduced tax % Reduction attributable to reduced social insurance Payment To Worker (€) -3% 44% 19% 35% 32% 23% 30% 103% 81% 77% 70% 13 Table 4: Self-employed Workers: industrial Relations and Working Conditions, European Foundation for the Improvement of Living and Working Conditions, 2010.
18 R0193(iii) PAC33 A Table 2(a) Comparison between Exchequer receipts under standard employment and self-employment situations.
Employment Tax Receipts Social Insurance Receipts Total Receipts PSC/MSC Tax Receipts Impact on Exchequer receipts Social Insurance Receipts Total Receipts Loss to the Exchequer % Reduction in Revenue % Reduction attributable to reduced tax % Reduction attributable to reduced social insurance Payment To Worker (€) -14% 12% 12% 22% 114% 88% 88% 78% Table 2(b) Comparison between Exchequer receipts under standard employment and use of intermediary situations.
Although illustrative, these data do indicate that the potential loss to the Exchequer for a person engaged in work at a rate equivalent to the average industrial wage (€37,500) amounts to c €5,000 p.a.

under both self-employment and PSC/MSC arrangements rising to c €8,000 p.a.

at a payment level of €60,000 and c €15,000 at a salary of €100,000.
These losses are in the range of c. 30 – 45% of tax/social insurance receipts under a standard employment arrangement indicating the strong fiscal incentives that exist for employers and workers to create the appearance of self-employment when, in reality, the relationship between the end user and the individual is effectively in the nature of a contract of service.
They also indicate that the bulk of the potential loss – 70% and upwards - is attributable to the differential in social insurance (PRSI) rates, suggesting that any reduction in the differential in PRSI rates charged between self-employed and employed people would help to reduce the revenue loss.
19 R0193(iii) PAC33 A Intermediary arrangements In the absence of specific quantitative data on the numbers of people engaged in disguised employment or the precise nature of the payment arrangements and the level of payments it is not possible to be definitive on the overall cost to the Exchequer of the use of such forms of employment.
Estimates by Revenue suggest that the number of people employed under PSC and MSC arrangements is of the order of 15,000, with average annual receipts per contractor of €60,000.

If the relationship between the end user and say 50% of the individuals involved is effectively in the nature of a contract of service, and if the PAYE system was applied by the end user, the estimated gain to the Exchequer would be of the order of €60 million per annum.
If the figure was 25%, the estimated gain to the Exchequer would be of the order of €30 million per annum Other forms of disguised employment There is no straightforward basis for estimating the numbers of people reporting as self-employed but who are effectively under the control and direction of a single employer in the much the same way as an employee.
Some respondents stated that they believe that in the construction sector a minimum of 25% of those reported as self- employed without employees are engaged in disguised employment.

However, no definitive evidence was presented to support this claim, and as noted above, the percentage engaged in self-employment in construction in recent years has been falling, not rising.
In terms of the potential loss to the Exchequer, assuming an average annual income of €37,500, the potential loss in respect of each individual case in this situation is approximately €5,000.

It should be noted that any loss to the Exchequer through disguised employment or the use of intermediary arrangements is off-set to some extent by the fact that the self- employed cannot avail of the full range of Social Welfare benefits, relying instead on means tested allowance payments.
The Actuarial Review of the Social Insurance Fund, 2015 has some data on the cost of extending benefits for the self-employed which may be useful in this regard.14 14 https://www.welfare.ie/en/downloads/actrev311215.pdf See Chapter 12.13.

20 R0193(iii) PAC33 A Section two: Public consultation A public consultation was launched on 28th January 2016, seeking views from interested parties based on the consultation document, Use of Intermediary-type Structures and Self-employment Arrangements.
The public consultation closed on 31st March, 2016 with a total of twenty-four responses being received15 (Appendix C).

This section presents an overview of the responses received.

It is important to note that the views summarised in this section are those of the respondents to the consultation and should not be taken as the views of the working group.
2.1 FOCUS OF THE CONSULTATION Interested parties were invited to make submissions in relation to the general issue of disguised employment with specific regard to four potential options for addressing tax and PRSI issues:  Option 1: treat the worker as a class A contributor, with the employer contribution to be paid by the end-user.
This option would not impact on workplace employment law;  Option 2: treat a payment made by an end-user, either to defined classes of intermediary or to defined classes of individual, to be a payment to the worker liable to tax under Schedule E16.
This option would not impact on workplace employment law;  Option 3: where an intermediary-type structure is in place, apply a surcharge to undistributed income of the intermediary; or  Option 4: where an intermediary-type structure is in place, deem any undistributed income of an intermediary company to be paid to the individual who carried out the work.
The twenty-four respondents to the consultation can be grouped as follows:  Representative organisations (employees/employers) (10)  Professional bodies and practices (8)  Government department (1)  Individuals (5) 15 Twenty–three were received at the time; one further submission was received late but was also accepted.

16 Under the Taxes Consolidation Act 1997, employment income is charged under Schedule E (section 19).
The PAYE system obliges an employer to deduct tax from employee pay (sections 985, 986).

21 R0193(iii) PAC33 A 2.2 SUMMARY OF THE SUBMISSIONS RECEIVED The consultation process attracted a wide range of views on the use of intermediary arrangements, the motivations for such arrangements and the consequences for the Exchequer and employment in general.
Many submissions did not directly address the questions asked and, for those that did, a cohort suggested that there was no significant issue to be addressed; there was no clear consensus from the others on the preferred solution.

In addition to more general responses, submissions were received from groups expressing views on or involved in particular sectors of work.

Several of the submissions relate, or refer specifically, to the construction sector.
In response, the Working Group set up a Construction Sub-Group to examine issues in that sector.

Their report is at Appendix D. The reasons for giving a special focus to the sector are: (i) working arrangements within the construction sector was one of the main triggers for the public consultation; (ii) economic recovery is evident in the construction sector which is undergoing significant growth after a period of high unemployment during the recession.
It is important that we learn from experiences in the sector.

Few respondents provided direct commentary on each option, but many provided combined comments on the proposal as a whole, addressing the issues raised in composite answers.

Many of the submissions addressed issues outside the scope of the consultation, including broader issues to do with taxation, PRSI, workers’ rights and the economy.

A range of peripheral issues were raised which are not relevant to the Consultation (e.g.
issues such as close company surcharge, professional services withholding tax (PSWT) and Departmental internal structural issues) and they do not feature in the Report.
Scale of Self-employment/Intermediary Employment Structures There were mixed views among respondents about the significance of the use of self- employment/intermediary employment structures:  Some respondents pointed to research and CSO data to argue that the use of such arrangements was increasing and that this increase was an indication of growth in disguised employment.
 Others questioned if there were any definitive data indicative of an increasing prevalence of self-employment/intermediary employment pointing out, for 22 R0193(iii) PAC33 A example, that the share of employment taken up by self-employment is not increasing.
Motivations for the use of Self-employment/Intermediary Employment Structures To the extent that there has been an increase in the absolute number of people categorised as self-employed there were also mixed views as to the reasons for this increase:  For some this is simply a necessary evolution to cater for the flexibility required by both employers and workers in project oriented activities with a short to medium term life-span (e.g.
the design and build phase of a new process, IT system or production line).

These respondents expressed the view that businesses did not use self-employment/intermediary arrangements to minimise labour costs or reduce payments to the Exchequer.

 For some it is an attempt by employers, and in some cases workers, to avoid tax and social insurance liabilities through disguising employment.
 Among this second group increased precariousness in the workplace and an attempt by employers to avoid employment law obligations and reduce wages.

is also considered evidence of it  In a not dissimilar manner some respondents also argued that employers used self-employment/intermediate employment relationships as a basis to undercut the prices charged by ‘legitimate’ competitors in their industry/sector.
Options for Reducing Exchequer Loss There was no clear consensus as to the merits of the options identified for addressing the revenue loss to the Exchequer arising from the use of such arrangements:  Some respondents cautioned against any policy interventions that might have labour market unforeseen consequences and might damage both Irish competitiveness and the attractiveness of Ireland as a location for foreign investment.
 Some questioned the practicality of measures designed to levy social insurance and tax charges on the ‘employer’/end-user of self-employed services (Options 1 and 2 in section 2.1 above) pointing out the difficulties with regard to identifying ‘genuine’ as opposed to ‘artificial’ use of self-employment/ intermediary arrangements and the transaction complexity and costs that would be likely to be associated with such measures.
 Some respondents argued that a basis for determining the appropriate taxation and social insurance charges already existed in the Code of Practice for 23 R0193(iii) PAC33 A Determining the Employment of Self-employment Status of Individuals.

It was suggested that if this code was established on a legislative basis and more rigorously applied there would be no need for changes to existing taxation/social insurance rates or collection methods.
 Some respondents pointed to existing provisions enabling the Revenue Commissioners to levy surcharges on undistributed income arguing, in effect, that Option 3 is already available to be used.

 Some respondents also argued that deeming all undistributed income in a business identified as an MSC/PSC as wages/salary (Option 4) would undermine the retention of income for the purpose of reinvestment.
 Some respondents argued that the fundamental problem giving rise to the use of self-employment/intermediary structures related to the differential in social insurance rates and that the social insurance rates for self-employed people and ‘employed’ people should be standardised.

(Some argued for a voluntary higher rate for self-employed people).
 In a similar vein one respondent argued for a fundamental reform of the social insurance system and its establishment on a ‘self-funded’ basis with rates and benefits to be aligned on an actuarial basis.
Other points/issues raised in the Responses In addition to issues identified in the consultation document a number of respondents took the opportunity to make some general points including:  Any measures taken to limit Exchequer losses would have to have regard to the complexity in law of establishing the nature of contracts, whether for service or of service.
 Tax policy is not the way to deal with potential misuse of legitimate structures; employment status is separate from tax treatment and if the legal status of employment were clarified the tax issues could be addressed within existing tax legislation and framework.

 There should be clear evidence provided of substantial loss to the Exchequer before changes are made which could be potentially damaging.
On the other hand, it was acknowledged that a substantial loss could present a risk to the social welfare system.

 Existing employment law tools should be used to address misuse of legitimate work arrangements.

24 R0193(iii) PAC33 A  Workers are vulnerable to exploitation through self-employment/intermediary structure arrangements, lack resources to engage the appropriate professional advice and do not report such exploitation for fear of ‘black-listing’.
In the construction sector this vulnerability has allowed employers to use the eRCT system to incorrectly classify workers as self-employed contractors.

 Compliance would be improved if there was a single agency, working within a single framework that defines the distinction between employment and self- employment and policed adherence to its determinations.
 The consultation paper, in seeking just to examine potential losses to the Exchequer, did not go far enough: other potential impacts should have been investigated, e.g.

market distortion.

25 R0193(iii) PAC33 A Section three: developing a way forward 3.1 RESPONSE TO ISSUES RAISED IN SUBMISSIONS A reminder of the options outlined in the consultation document: • Option 1: treat the worker as a class A contributor, with the employer contribution to be paid by the end-user.
This option would not impact on workplace employment law; • Option 2: treat a payment made by an end-user, either to defined classes of intermediary or to defined classes of individual, to be a payment to the worker liable to tax under Schedule E .
This option would not impact on workplace employment law; Option 3: where an intermediary-type structure is in place, apply a surcharge to • undistributed income of the intermediary; or • Option 4: where an intermediary-type structure is in place, deem any undistributed income of an intermediary company to be paid to the individual who carried out the work.
As is clear from the summary of responses set out in section 2 there is no consensus from the responses received as to an appropriate course of action to address the loss to the Exchequer arising as a consequence of the use of intermediary/self-employment arrangements in the manner outlined.
It is clear that the type of intermediary type structures and self-employment arrangements identified in the consultation paper can result in a not insignificant tax leakage in the system and pose a risk to the income tax (PAYE) and PRSI base.

As stated earlier in the report, the more complex range of ‘employment’ relationships which has emerged poses challenges for current tax and social insurance models.
There is a view at OECD and EU levels that the traditional distinction between “employed” or “self-employed” may not provide the framework necessary to address these challenges17.

The responses to the consultation have however informed the working group’s consideration of how losses to the Exchequer might best be mitigated.
17 See for example the report of the European Foundation for the Improvement of Living and Working Conditions (Eurofound) "Self-employed workers: industrial relations and working conditions".
http://www.eurofound.europa.eu/comparative/tn0801018s/index.htm 26 R0193(iii) PAC33 A (i) While concerns have been expressed about an administrative burden which may be associated with implementation of options 1 and 2, the group acknowledges that these options provide a basis for addressing the potential losses of tax and PRSI referred to in the consultation paper especially with regard to intermediary-type structures.
(ii) The group acknowledges the provisions already in place with regard to imposing a surcharge on retained earnings and notes that any changes to these provisions as proposed in options 3 and 4 may have an unintended impact on retaining earnings for investment purposes for some businesses.
(iii) The the notes group acknowledgement that intermediary/self-employment arrangements do allow employers to avoid social insurance payments, and that, even if the avoidance of such payments is not a motivating factor behind such arrangements, it is the avoidance of such payments that gives rise to most of the Exchequer losses.
respondents by (iv) The group notes that employers and workers can have recourse to the Scope insurability section of the Department of Employment Affairs and Social Protection for the purpose of securing a formal determination of their insurability status as either ‘employed’ or ‘self-employed’.
The group agrees that greater awareness of the remit of the Scope insurability section among workers and employers and more widespread application of the code of practice could help to reduce the prevalence of disguised employment.

(v) The group notes the concerns expressed with regard to the vulnerability of workers and the impact of disguised self-employment on workers’ rights and earnings.
Although addressing this issue is not within the remit of the group, it is mindful that it would be useful if any proposal it may make could act as a disincentive to the use of disguised employment.
The group notes the recent transfer of responsibility for employment rights policy and legislation to the renamed Department of Employment Affairs and Social Protection and considers that this may provide an opportunity for greater synergy in protecting vulnerable workers, including those in disguised employment.
(vi) The group concurs with the views expressed to the effect that the available data do not indicate that self-employment with employees or ‘own account’ self-employment, are accounting for any significant increasing share of the labour force and accordingly the perception of an increasing prevalence of disguised employment may be overestimated.
However the group notes that the data indicate an increasing use of self-employment arrangements in some sectors (notably finance and ICT) and also that the estimated cost to the Exchequer of disguised employment practices may not be insignificant.
27 R0193(iii) PAC33 A 3.2 Suggested Approach Taking these considerations together with the analysis in section 1 that indicates that the major part of the Exchequer loss is attributable to the much lower social insurance contribution payable by self-employed people as compared with the total social insurance contribution paid by and in respect of employees, the group is of the view that: 1.

The most effective step to take is to consider reducing the differential in social insurance rates.
This will act to reduce the financial incentive to employers and employees to use self-employment arrangements and intermediary-type structures for the purposes of disguising employment.

In addition to reducing the differential in social insurance rates, the ‘dis-incentive’ effect should have a second order impact of reducing income tax losses.
The group is conscious of the broader economic implications of making changes to PRSI rates as the economy continues to recover, but notes that these changes will be limited to self- employed workers and that the range of social insurance benefits available to such workers is in the process of being expanded and that such workers have indicated a willingness to make higher contributions (see below).

2.
2.

The group acknowledges the need for clear public information to ensure that workers and employers are aware of the mechanisms available where there is a dispute as to employment status.

The Department of Employment Affairs and Social Protection should consider undertaking an awareness campaign to promote the services of the Scope insurability section 3.
Notwithstanding the administrative difficulties identified during the consultation process, it is recommended that options 1 and 2 should be further explored.

Implementation of these options would reduce the scope for aggressive tax planning and the indefinite deferral of the payment of part or all of the remuneration and the consequential deferral of payment of the associated tax and PRSI.
In making these recommendations, the group is mindful that  In addition to impacting Exchequer receipts the use of self-employment arrangements inevitably distorts the transparent and efficient operation of the labour market (and downstream service and product markets) and that a key principle of taxation/social insurance policy should be to minimise any unnecessary negative impact on labour market operation.
 Intermediary types of arrangements do provide flexibility, in many instances, for both businesses and workers, where they are freely chosen by both parties.

28 R0193(iii) PAC33 A However the working group considers that much of the flexibility afforded companies by the use of intermediary arrangements would not be affected.
 Recent and forthcoming changes in social welfare have increased the range of benefits accessible to self-employed people such that they will, from December 2017, have access to benefits accounting for c 80% of social insurance expenditure.

The rationale linking a reduced payment rate to a reduced benefit potential is therefore no longer as strong as it was previously.
 The results of a survey of over 20,000 self-employed people recently published by the Department of Employment Affairs and Social Protection indicated that self-employed people would, on average, be prepared to pay an additional contribution of 6% in return for increased access to benefits.

 The self-employed are treated in various ways in other EU countries.

Appendix B compares treatment of self-employed across a number of countries.
Accordingly the group is of the view that there is a strong rationale for increased social insurance rates not just to reduce Exchequer revenue losses but to reduce distortive effects in the labour market, to reduce the incentive to construct disguised employment relationships that may undermine employment rights, to bring the Irish social insurance system into closer alignment with systems in other EU countries and to better reflect the increased range of benefits now available to self-employed people.
The fact that there is an apparent willingness among self-employed people to pay higher rates of social insurance further supports the closure of the differential with payment rates for employed people as the most appropriate policy response to the issue of disguised employment.
The group notes the commitment given by the Minister for Finance and Public Expenditure and Reform in Budget 2018 to “establishing a working group to plan, over the coming year, the process of amalgamating USC and PRSI over the medium term.” It is estimated that increasing self-employed PRSI rates by 0.5% would raise approximately €60 million per year.
29 R0193(iii) PAC33 A Appendix A – Current Irish tax and social insurance systems for employed and self-employed The manner in which a taxpayer pays tax and the class of PRSI contributions that are payable on his or her income is determined by whether the taxpayer is employed or self-employed.
The class of PRSI contributions which a taxpayer pays affects his or her entitlements to certain benefits from the Department of Employment Affairs and Social Protection Jobseeker’s Benefit, State Pension (Contributory), etc.).

It is important therefore, to know whether an individual is employed or self-employed.

Illness Benefit, (DEASP) (e.g.

Employees have tax and PRSI deducted at source under the PAYE system.
Self- employed taxpayers make their own tax payments and PRSI contributions under the self-assessment system.

The PAYE System The Irish income tax year is based on the calendar year.

Tax is deducted by employers from payments made to employees18 under what is known as the PAYE system.

In addition, employers must deduct PRSI where required.

Revenue collects PRSI on behalf of DEASP.

The PAYE system is a tax deduction system, which must be operated by each employer who pays remuneration (i.e.
wages or salaries) to employees.

The employer must calculate any tax due and deduct it each time a payment of wages or salary is made.

PAYE is often referred to as a ‘withholding tax’ as employers are required to withhold the amount of tax due from the employee’s wages and pay it over to Revenue on behalf of the employee.

The PAYE system operates on a payments basis, which means that tax is deducted from wages as they are paid to employees, regardless of when the wages were earned.
The PAYE system was introduced in 1960 to assist employees in paying their tax.

Prior to then, employees had to pay their tax on the same basis as self-employed taxpayers.

The introduction of the PAYE system was viewed as a positive move for employees.
Instead of paying tax in one instalment, the PAYE system divides the income tax year into 52 weekly, 26 fortnightly, 13 four-weekly or 12 monthly payments and deducts an employee’s tax accordingly on a weekly, fortnightly, four-weekly or monthly basis, according to how the taxpayer is paid.

18 “employee” includes an office holder (e.g.

a company director, a judge, etc.)


30 R0193(iii) PAC33 A PAYE Online Services The PAYE online service is a secure service, which allows PAYE taxpayers to manage their tax affairs electronically.

With PAYE Online Services, a PAYE taxpayer can avail of a range of services including viewing information held on his or her Revenue record, claim tax credits, declare additional income and update their personal information.
PAYE Modernisation Revenue is currently preparing for the introduction of a real-time PAYE system with effect from 1 January 2019.

Under such a system, employers will report tax deductions to Revenue every time an employee is paid i.e.

the payroll process and PAYE reporting process will be linked.

Details of new employees and employees leaving employment will be reported to Revenue in real time also.

Under the current model, employers provide Revenue with PAYE details annually.
However, this no longer reflects the changing nature of work where taxpayers move jobs more frequently and can hold multiple employments, resulting in the potential for underpayment or overpayment of tax.

The overall aim of PAYE Modernisation is to streamline the process for employers and remove inefficiencies from the current PAYE system.
The Self-Assessment System While employees have tax and PRSI deducted at source under the PAYE system, self- employed taxpayers make their own tax returns under the self-assessment system.

They pay their own tax and PRSI contributions directly to Revenue.

Self-assessment applies for tax purposes to self-employed taxpayers (i.e.
people carrying on their own business) and taxpayers receiving income from sources where all of the tax is not collected under the PAYE system, for example:  profits from rents,  investment income,  foreign income and foreign pensions,  maintenance payments made to separated persons or where a civil partnership is dissolved,  fees and other income not subject to the PAYE system, and  profit arising on exercising Share Options.
31 R0193(iii) PAC33 A Taxpayers register for self-assessment by advising their local Revenue office when a source of income (other than PAYE income) commences and completing the tax registration Form TR1.

When a taxpayer registers for self-assessment with Revenue he or she will automatically become registered for PRSI purposes with the DEASP.
Revenue On-Line Service (ROS) The most effective way for a self-assessed taxpayer to deal with his or her tax affairs is through Revenue On-Line Service (ROS) available at www.revenue.ie which enables taxpayers to file returns and make payments electronically.
Self-assessed taxpayers use the ‘Pay and File system’ which facilitates taxpayers on a single due date – 31 October19, to:  pay any preliminary tax for the current year,  file a tax return and self-assessment for the previous tax year, and  pay any balance of tax due for the previous year.

The PRSI System The Social Insurance system was first introduced in Ireland in 1911 while the current PRSI system was legislated for in the Social Welfare Act 1953.
PRSI is administered by the DEASP and collected by Revenue on DEASP’s behalf.

Individuals are required to pay PRSI based on the source and amount of their income.

However, unlike tax, the payment of PRSI contributions may entitle the individual to various social insurance benefits, for example Illness Benefit, Maternity Benefit, State Pension (Contributory), etc.

Such payments made by the DEASP are funded by PRSI contributions made by employees, employers, the self-employed and by the Exchequer.
The rate and amount of PRSI payable depends on the PRSI classification of a taxpayer’s income.

It is the income of a taxpayer which is classified for PRSI purposes and not, as is commonly believed, the taxpayer.

It is therefore possible for a taxpayer who has two different sources of income to have two different PRSI classifications, applied respectively to each source of income.
PRSI for employees and employers For PRSI purposes, an employee is defined (with some exceptions) as a worker who is engaged “under a contract of service”.

Exceptions include direct employment by a 19 By using ROS to both pay and file online, taxpayers benefit from an extended deadline to the second week of November each year.

32 R0193(iii) PAC33 A spouse.

Certain categories of workers are automatically regarded to be employees, such as agency workers.
Depending on the nature of the employment, different PRSI Classes apply.

The PRSI classes applying to employees are: A, B, C, D, E, H, J, K and M. Class A applies to the vast majority of employments as it caters for industrial, commercial and service-type employments and civil and public servants recruited after April 1995.

The PRSI class determines the rate of PRSI charged.

Generally there are 2 elements to the PRSI charge applied to employments – a charge payable by the employee and by the employer.
PRSI, along with tax, is deducted at source by the employer and remitted to Revenue under the PAYE system, together with the employer PRSI portion.

Out of the eleven different PRSI classes, most employees fall within Class A.

The rate of PRSI under Class A for an employee is 4% of the employee’s total reckonable earnings20 where earnings exceed €352 per week, €704 per fortnight or €1,525 per month.

An employee contribution is not payable where reckonable earnings do not exceed these amounts.
Employer PRSI of 10.75% is payable under Class A.

However, where the reckonable earnings21 for employer PRSI purposes do not exceed €356 per week (€712 per fortnight or €1,543 per month), a reduced rate of employer PRSI of 8.5% applies.

Class A employees have access to the full range of both short and long term social insurance benefits.
These benefits are State Pension (contributory) and Widow’s, Widower’s or Surviving Civil Partner’s Pension (contributory), Guardian’s Payment (Contributory), Maternity Benefit, Adoptive Benefit, Jobseeker’s Benefit, Illness Benefit, Partial Capacity Benefit, Invalidity Pension, Health and Safety Benefit, Carer’s Benefit, Treatment Benefit and Occupational Injuries Benefit including Disablement Benefit, as well as the new Paternity Benefit to be introduced later this year.
PRSI for the self-employed Self-employed workers are, for PRSI purposes, those who work under a “contract for service” and include employment by a company where they are the beneficial owner of that company or own or control 50% or more of its share capital.
There are a number of exceptions such as where annual income from all sources is less than €5,000 (before deducting any superannuation contributions or any allowances which are allowable for 20 Employee PRSI is payable on an employee’s reckonable earnings, which is an employee’s gross pay including the notional value of any Benefit in Kind (BIK) which is taxable through payroll and certain forms of share-based remuneration (i.e.
share awards, appropriation of shares from an Approved Profit Sharing Scheme (APSS) and any gain from a Save As You Earn (SAYE) scheme.

Any salary or wages sacrificed under a Revenue approved salary sacrifice scheme (i.e.

deductions from an approved travel pass, a bicycle under the cycle to work scheme or for shares under an APSS) can be deducted from gross pay to arrive at an employee’s reckonable earnings.
21 For employer PRSI purposes, reckonable earnings is reduced by the amount of Pension Related Seduction (PRD) payable by Public Servants and the amount of any share remuneration received by an employee.

This can result in employer PRSI being calculated on a lower earnings figure than the reckonable earnings used for the calculation of the employee PRSI.

33 R0193(iii) PAC33 A income tax purposes) or “prescribed relatives” (other than a spouse) who are not a partner in the business.
PRSI Class S applies to all self-employed contributors.

The self-employed pay their PRSI, along with their tax liability, under the self-assessed system of tax collection or, as in the case of directors who own or control their company, through the PAYE system of tax collection.

A self-employed contribution of 4% of reckonable income22 and/or reckonable emoluments23 is payable under Class S, subject to a minimum contribution of €500 per year.
There is no employer PRSI contribution payable under Class S. Class S PRSI contributions entitle the self-employed to State Pension (contributory) and Widow’s, Widower’s or Surviving Civil Partner’s Pension (contributory), as well as Guardian’s Payment (contributory), Maternity Benefit and Adoptive Benefit.

Self- employed contributors are also entitled to the new Paternity Benefit introduced in 2016.
Budget 2017 provided for increased benefits for the self-employed, with no additional PRSI contributions: o Invalidity Pension (from December 2017); o Treatment Benefit Scheme (from March 2017).

Determination of Status The Scope Section of DEASP deals with employers and employees, or their representatives, who may apply to have an employment investigated to make sure that the correct class of PRSI is applied.
Social Welfare Inspectors may also identify cases during the course of their inspection work which warrant investigation by Scope Section.

Insurability cases may also arise during the course of claims processing.

Scope Section liaises with Revenue to ensure, as far as possible, consistency in decision making in both organisations in relation to the classification of employments.

The terms ‘employed’ and self-employed’ are not defined in law.
Thus, the deciding officers must exercise a high degree of judgement in making their determinations.

In doing so, Officers have regard to a range of indicators that has evolved over time from the case law of the Courts.

In addition, Officers have regard to the Code of Practice for Determining Employment and Self-Employment Status of Individuals.

22 Reckonable income refers to income which is outside the scope of PAYE and on which tax is collected through the self-assessed system (e.g.
income earned from a trade or profession, rental or investment income, etc.)

23 Reckonable emoluments refer to income which is not derived from insurable employment but is taxed under the PAYE system (e.g.

salary paid to working directors who directly or indirectly own 50% or more of the ordinary share capital of that company).
34 R0193(iii) PAC33 A The Courts have found that the determination as to the appropriate insurability classification must be arrived at by looking at what a person actually does, the way in which it is done and the terms and conditions under which the person is engaged, be they written, verbal, or implied.

It is clear from relevant case law that there is no one factor which may be taken as determinative of either contract of service (employee) or contract for service (self-employed).
Reflecting precedent from the Courts, the Code of Practice places an emphasis on the need to look at the job as a whole, including working conditions and the reality of the relationship, when considering the nature of an employment relationship.

The Code of Practice states that the overriding test will always be whether the person performing the work does so ‘as a person in business on their own account’, known as the ‘economic test’.
It frames the question to be addressed in the following terms: is the person a free agent with an economic independence of the person engaging the service?

35 R0193(iii) PAC33 A Appendix B – Treatment of Economically Dependent Workers in EU Countries which apply Specific Provisions Country Types and sectors of employment Social coverage security time, Working maternity/parental and sickness leave Austria Traders, ‘liberal’ Traditional: craftspeople, professionals, farmers.
Economically dependent ‘Free service workers: contract’ and the ‘new self-employed’ workers.

Self-employed workers, free service contract and self-employed new workers are covered by the Social Insurance Act Self-Employed on Persons, which includes the insurance against risks sickness, of injuries and industrial old age.

Belgium artists, Traditional: ‘Liberal’ professionals, traders.
Economically dependent workers: spouses’ of ‘Assisting self- Self-employed workers are responsible for all obligations towards social security.

For these workers, the social contributions three sectors of cover the 36 Working time: Both ‘free service contract’ self- ‘new and employed’ workers are free to schedule their own working time Maternity/parental service leave: Free contract workers benefit by statutory maternity leave during the statutory protection period.
New self-employed workers are – under certain – circumstances receive to eligible maternity allowances.

Both groups cannot claim parental leave, but are eligible to receive childcare benefits.

Sickness leave: Both free service contract and new self-employed workers cannot claim sickness benefits or leave.

self- New employed workers can opt for an additional insurance health package sick benefits.

Working specific rules.


Maternity/parental and sickness leave: Assisting spouses are obliged to be affiliated to time: No for R0193(iii) PAC33 A so-called ‘maxi- the status’ – a special social security scheme that covers pension, family benefits, health care, disability, invalidity and maternity benefits.

No specific rules.

time: No Working specific rules.


Maternity/parental and sickness leave: Employer coordinated freelancer workers and project workers are entitled to protection for sickness pregnancy, and injury and an allowance for parental leave.

employed people.

social security scheme: pension, family allowance and health insurance (sickness and disability).

Germany Italy farmers, Traditional: Craftspeople, artists, journalists,‘liberal’ professionals.
Economically dependent workers: Using 5 employment criteria established in 1999, the security social administration can identify that a person is ‘economically dependent’ on one employer.

Traditional: ‘Liberal’ professions, traders, craftspeople, farmers.

Economically dependent workers: coordinated freelance workers’ and ‘project workers’.

‘Employer a join After the reform of 1995, self-employed workers can health insurance scheme, either a private or the statutory one, on a voluntary basis.
Since 2006, these workers (under certain conditions) can be included in the public unemployment insurance scheme.

Some occupational categories of self-employed worker have social special security funds.

of instance, occupational Several categories self- employed workers have special social security Separate funds.

independent funds exist for free professionals – lawyers, for architects and doctors.
For self-employed workers in other, less jobs, old-age regulated is provided protection by schemes financed by compulsory insurance or by basic pension schemes, as for subordinate employees.

Social The National Security Institute manages social security for coverage traders, craftworkers, and and A sharecroppers.

farmers public 37 R0193(iii) PAC33 A Norway Traditional: ‘Liberal’ professionals, traders, craftspeople.
Economically dependent workers: ‘Not-employed (or employee’ ‘freelancer’), that is, a person who is not officially employed but acts as an employee.

Portugal ‘Liberal’ Traditional: professionals, artists, craftspeople, farmers.
Economically dependent workers: workers’ workers with a ‘special and regime workers with ‘service rendering contract’ labour ‘Home ‘special’ social security coverage provides for certain categories of self- employed workers, such employer- as coordinated freelance workers and project workers.

the social security The provides system for universal coverage an extensive set of social risks.
Self-employed workers are covered by a special social security regime which two provides contribution schemes: a basic mandatory scheme covering maternity, invalidity, old age and death, and a broader scheme voluntary providing further protections in the event of illness, occupational disease family- and related expenses.

38 time: No Working specific rules.

Maternity/parental leave: Self-employed workers have the same rights to maternity/parental leave as employees but rate.
at lower a are ‘Freelancers’ entitled to maternity/parental leave only.

Sickness leave: Self- employed workers and Freelancers are entitled to paid sick leave.

the and time Working time: Service contract rendering workers self- workers employed same have regarding regulations working and holidays.

Maternity/parental leave: rendering workers entitled maternity/paternity leave.

leave: Sickness Service rendering contract workers are not entitled to sickness leave.
Service contract not to are R0193(iii) PAC33 A Spain ‘liberal’ Traditional: Traders, farmers, craftspeople, artists, professionals.

Economically dependent workers: ‘Economically self- dependent employed workers’.

time: Working Economically dependent self- employed workers are entitled to 18 working days’ annual leave.

Maternity/parental leave: These workers are entitled to ‘benefits the stoppage of for including activities’, and both paternity maternity leave.
Sickness leave: They also have entitlement to social protection for temporary sickness.

In 2007 measures were introduced to bring the security social these entitlements of workers closer to those granted to employees.

by the general social system.


The security main measures are: 1) benefits for the stoppage of activities and includes and paternity both 2) maternity leave; social protection for temporary sickness; 3) early retirement provision, which covers self-employed workers toxic, involved dangerous or painful economic activities and provides for the same protections for employees.
in 39 R0193(iii) PAC33 A Appendix C – list of submissions to public consultation The Minister for Finance and the Minister for Employment Affairs and Social Protection are grateful to the following organisations and individuals who made submission to the public consultation:  Representative organisations (employees/employers) (10)  Professional bodies and practices (8)  Government department (1)  Individuals (5) Names of those who made submissions  Barry, Declan  Cahill, Niall  Congress - Irish Congress of Trade Unions  Construction Workers Alliance  Consultative Committee of Accountancy Bodies – Ireland (CCAB-I)  Deloitte  Department of Jobs, Enterprise and Innovation (DJEI)  Derham, Niall  Hosford, Pascal    IALPA - Irish Air Line Pilots' Association (Branch of IMPACT) IBEC - Irish Business and Employers' Confederation IPCI - Independent Professional Contractors Ireland  Irish Tax Institute  ISME - Irish Small and Medium Enterprises Association  Noone Casey, Chartered Accountants  OSK Accountants  Paramount HR Solutions 40 R0193(iii) PAC33 A  PCSO - Professional Contractors Services Organisation  Ryanair Pilot Group  Scanlon, Patrick  SFA – Small Firms Association  TASC  UNITE  Wallace O’Donoghue Accountants 41 R0193(iii) PAC33 A Appendix D Report from the Construction Sub-Group 1.
Background In addition to more general responses made as part of the public consultation, submissions were received from groups expressing views on or involved in particular sectors of work.

Several of the submissions related, or referred specifically, to the construction sector.

In response, the Working Group set up a Construction Sub-Group to examine issues in that sector.
The construction sector is an area of high risk internationally in terms of tax and social insurance evasion and Ireland’s construction sector has a similar risk profile.

The high- risk rating is due to many factors, including the mobile nature of the workforce and the complex nature of the sector due to the number of different contractors involved in many projects.

The scale and value of activity carried out within the sector also contributes to its high-risk rating.
It is important to note that the Consultation Paper is concerned exclusively with one area of tax and social insurance risk, which is the use of intermediary-type structures and certain self-employment arrangements.
Other risks within the construction sector include:- - Non-adherence to the requirements of the Relevant Contracts Tax (“RCT”) system; - Non-operation of PAYE/PRSI when an employee is engaged; - Incorrect operation of the VAT reverse-charge system; - The use of bogus invoices; - Unrecorded payments and ‘missing traders’ to evade tax; and - Fraudulently claiming social welfare benefits while working.
A number of submissions to the Consultation aver that the practice of employers incorrectly treating employees as self-employed contractors is widespread in the construction sector.

It is claimed that, in many cases, tradespeople do not have a choice with regard to whether they are engaged as an employee or self-employed worker and are being forced to take up self-employment rather than being engaged as an employee.

The plastering and block-laying trades are specifically highlighted in this regard.
It is also suggested in several of the submissions to the Consultation that the electronic RCT (“eRCT”) system partly facilitates the mischaracterisation of employees as self- employed contractors.

42 R0193(iii) PAC33 A This Appendix seeks to address the issues raised in the submissions (as outlined above) and highlights the activities undertaken by the State bodies that administer the tax and PRSI systems to meet the evolving risk areas within the construction sector.

2.
2.

Construction Sector – DEASP/Revenue issues raised As outlined in Section 1 above, a number of submissions claim that the eRCT system partly facilitates the mischaracterisation of employees as self-employed contractors.

Section 2.1 below deals with this issue.


Section 2.2 below provides a summary of the compliance activities that the Department of Employment Affairs and Social Protection (“DEASP”) and Revenue carry out to ensure that tax and social insurance compliance is maintained within the construction sector.
It is important to outline the strong focus that both Revenue and DEASP have on this sector in order to highlight the efforts that are being made by both bodies to tackle the myriad of tax and social welfare risks within the sector.

2.1 Relevant Contracts Tax (“RCT”) RCT is a withholding tax that operates in the construction, forestry and meat processing sectors.
It allows for tax to be withheld from payments to subcontractors depending on the tax compliance position of the subcontractor, and where withheld, this tax is then set against the tax liabilities of the subcontractor.

The RCT system is similar to the PAYE system, in that it is a tax deduction at source system.

Neither the PAYE system nor the RCT system determines whether a person in the construction sector – or indeed, in any other sector – is an employee or a self- employed worker.
The construction sector is the same as every other sector in terms of how it should determine whether a worker should be classed as an employee or self-employed.

Whether a person is engaged either under a contract of services (i.e.

engaged as an employee and who pays tax under the PAYE system of tax deduction at source) or under a contact for service (i.e.
as a self-employed contactor and who pays tax under the self- assessment system with a credit granted for tax paid by deduction at source under the RCT system) is determined by the facts and evidence of each case.

Guidance on that matter is provided in the Code of Practice for Determining Employment or Self-Employment Status of Individuals (“the Code of Practice”).
The category that a worker falls into depends on what they actually do, the way they do it and the terms and conditions under which they are engaged, whether written, verbal or implied.

It is not simply a matter of a principal contractor or a subcontractor calling the engagement 'employment' or 'self-employment' to suit themselves.
43 R0193(iii) PAC33 A Under the RCT system, principal contractors in the construction, meat processing and forestry sectors are required to submit to Revenue the details of relevant contracts entered into by those principals and their sub-contractors.

Up to 1 January 2012, such details were submitted to Revenue on a paper form, known as a Form RCT1.

From 1 January 2012, the RCT system was updated to an entirely electronic platform, known as the eRCT system.
A number of submissions to the Consultation point out that under the paper-based regime that existed pre 1 January 2012, the contractor and the sub-contractor jointly agreed and signed the Form RCT1 and claim that this prevented the sub-contractor being mischaracterised as self-employed rather than an employee.

In addition, these submissions claim that the eRCT system partly facilitates the mischaracterisation of employees as self-employed contractors.

However, this claim is unfounded.


There are safeguards built into the eRCT system for those workers who may have concerns that they are employees but are characterised incorrectly by the principal contractor as self-employed contractors.

For example, when Revenue receives the details of a relevant contract from the principal contractor in real time, Revenue immediately informs the relevant sub- contractor of those details.
If a sub-contractor is of the view that any of the details supplied by the principal contractor are incorrect, including if the sub-contractor is incorrectly classified as self- employed, the sub-contractor can notify Revenue immediately.

Revenue will then investigate the matter and make appropriate interventions, including engaging with the employer to encourage self-review and engaging with DEASP’s Scope section to ensure the correct classification is in place.
Introduction of the eRCT system has resulted in very significant benefits for both the construction industry and Revenue:-   It has significantly reduced the administrative burden on contractors and subcontractors through the use of electronic channels and elimination of all paper based forms and returns.

It has reduced the obligations on principal contractors with regard to the submission of information, data and returns.
 Subcontractors are no longer required to claim credit for RCT deducted; based on information supplied by principal contractors, credit is automatically offset against outstanding tax liabilities.

  It has improved the cash-flow position of tax compliant subcontractors.

It has reduced the administrative burden on Revenue, thus allowing for the concentration of resources on more effective compliance activities.

 It has reduced the opportunity for tax fraud.


44 R0193(iii) PAC33 A 2.2 DEASP/Revenue compliance initiatives focused on the construction sector This section outlines the strong focus that DEASP and Revenue, separately and jointly, have on ensuring that tax and social insurance compliance is maintained within the construction sector.

DEASP and Revenue continually monitor developments to ensure that their compliance programmes, including joint initiatives, are tailored to meet evolving risk areas.
In view of the size of the construction sector, both DEASP and Revenue take a risk-based approach to compliance interventions.

DEASP compliance initiatives DEASP’s focus is on tackling social welfare fraud, primarily where individuals are concurrently claiming social welfare benefits and working.

The DEASP’s Scope Section examines whether an individual worker is an employee or a self-employed contractor.

Any cases of concurrent working and claiming of benefits and tax non-compliance are pursued.
Where individuals from other jurisdictions are interviewed on construction sites, details are referred to the relevant social security authorities for investigation regarding any potential live claims or overlaps in their jurisdictions.

In April 2014, DEASP launched its Compliance and Anti-Fraud Initiative (2014-2018).

This provides an overall framework and outlines the actions to be undertaken to prevent, detect and deter social welfare fraud.
Under the Strategy, there is a particular focus on inter-agency co-operation and an emphasis on undertaking joint projects and pooling of knowledge amongst State bodies.

DEASPs Special Investigation Unit (“SIU”) also has a key role to play to combat social welfare fraud and evasion in the construction sector.

The Unit comprises 91 officers and 19 members of An Garda Síochána whose exclusive function is to investigate and report on social welfare fraud and non-compliance.
Inspections are also being conducted by DEASP’s SIU on once-off builds, using data from local authorities in relation to planning permissions and commencement notices.

Under the provisions of the Social Welfare Consolidation Act, there are specific offences in relation to employment contributions, their remittance and the maintenance of prescribed wages and employment records.

On conviction, fines and or imprisonment can ultimately be imposed.
Revenue compliance initiatives Revenue’s focus is on protecting the various income streams to the Exchequer across all tax heads, including VAT, customs duties, income tax (including the operation of RCT) and corporation tax.

Revenue has always had a strong focus on maintaining tax compliance in the construction sector.

Revenue conducts a full range of interventions to combat tax 45 R0193(iii) PAC33 A evasion in the sector.
This includes risk management interventions (informed by Revenue’s Risk Evaluation Analysis and Profiling (“REAP”) system), Revenue audits and investigations, in addition to site visits.

This process is aided by the data Revenue receives through the eRCT system as well as other third party data sources.
Over the years, several initiatives have been introduced with a view to improving compliance while at the same time reducing the administrative burden on the sector, including:-  In 2008, the VAT Reverse Charge mechanism was extended to construction services.

This had the effect of moving VAT liabilities up the chain to a smaller number of principal contractors whose compliance could be managed more effectively.

 As detailed in Section 2.1 above, eRCT was introduced in 2012.
It has removed all paper forms from the system and has reduced the administrative burden on contractors.

 In 2013, the Home Renovation Incentive came into effect.

This measure has the twin objectives of incentivising homeowners to use tax compliant contractors when renovating or improving their homes and encouraging contractors who may have been operating in the shadow economy to regularise their tax affairs.

To the end of 2016, nearly 10,000 contractors had carried out works on over 57,000 properties.
The estimated value of these works is approximately €1.4bn.

 During 2015, in response to the upturn in the industry, Revenue set up a national programme to monitor risk in the construction sector.

The programme is centrally controlled and co-ordinated, with each Revenue Region having a senior manager with specific responsibility for ‘minding the risks’ in construction for their Region.
Full use is made of Revenue’s suite of compliance interventions, ranging from aspect queries to address specific risks, to full audits or investigations to tackle more complex non-compliance.

As the recovery has strengthened, visits to construction sites are a regular feature of Revenue’s compliance activity.

 As part of its strategy to manage and improve compliance in the sector, Revenue is engaging with stakeholders to inform them of their obligations.
Revenue has published guidance on their website and organised presentations to industry groups.

It closely monitors emerging trends and tailors compliance programmes accordingly.
The outcome of Revenue’s work to combat tax evasion in the sector includes recovering unpaid tax (including PAYE tax and PRSI contributions from employers who failed to operate the PAYE system on payments made), the payment of interest on late payment and the pursuit of penalties for failure to notify Revenue, through the eRCT system, of contracts entered into and payments made under these contracts.
46 R0193(iii) PAC33 A In 2016, 1,065 Revenue audits were carried out on the sector with a yield of €27.3 million.

Other Revenue interventions secured a further additional yield of €27.4 million in the sector.

Revenue and DEASP joint-compliance initiatives Formal collaboration between Revenue and DEASP takes place through what is known as the Joint Investigation Unit (“JIU”).

The Workplace Relations Commission also participates in the work of the JIU.
The JIU regularly undertakes high-visibility site visits and inspections on construction sites.

The work involves the examination of contractors and employees engaged on such sites.

A key objective is to ensure that all visits are properly planned, executed and reported on.

The JIU participated in 2,126 construction site visits in 2016.

The JIU visits are generally un-announced but efforts are made to ensure that disruption to construction activity is minimal.
They serve to support compliance by affording Revenue and other agencies an opportunity to engage with contractors, sub-contractors and employees present on a site to ensure that they are aware of their obligations and to detect, disrupt and deter non-compliance.

This is achieved by interviewing those persons present on a site.

11,699 such interviews were conducted during 2016.


In 2016 special emphasis was placed on challenging inappropriate classification of workers as self-employed Principal contractors engaging a large number of individual sub- contractors.

contractors, and with several layers of sub-contractors below them, were selected for examination.

This activity resulted in 848 individuals registering as PAYE employees, and the reclassification of 345 sub-contractors as employees.
Increasingly, the JIU places a particular emphasis on projects funded under the Public Capital Infrastructure Programme, including the Educating Programme which has been allocated €2 billion from 2016 to 2021.

In the latter programme, the focus is towards larger projects and sites, based on details supplied by the Department of Education & Skills.

3.
3.

Conclusions Due to the disguised nature of tax and social welfare evasion, it is difficult to quantify with respect to the construction sector the extent of the issues which have been highlighted in this report.

Indeed, some of the submissions to the Consultation claim that, in the construction sector, sub-contractors are reluctant to report any instances of ‘forced self-employment’ for concern of losing their work.
In many cases, the payment of a gross sum without tax and PRSI deductions is regarded by them as a benefit of the arrangement.

It is clear from the details of the compliance initiatives undertaken (outlined in Section 2.2 above) that Revenue and DEASP are actively pursuing non-compliance in this area of 47 R0193(iii) PAC33 A the law and are successfully encouraging and enforcing compliance in the cases selected where non-compliance is an issue.
While the joint-work of Revenue and DEASP, through the JIU, is playing a key role in combating social welfare fraud and tax evasion in the construction sector, the scale and value of the activity carried out within the sector pose challenges in terms of resources for Revenue and DEASP (similar to their counterparts in other jurisdictions) in tackling these issues.
48 R0193(iii) PAC33 A Self-Employment Trends Quarter 1, 2020 Update to Data and Charts presented in the: Report on the use of intermediary-type structures and self-employment arrangements: Implications for Social Insurance and Tax Revenues.

January, 2018 Department of Social Protection November, 2020 R0193(iv) PAC33 A Table 1(a) Update.
Share of Self-Employment By Sector 1998200720172020All NACE economic sectors18.27%15.02%14.72%14.09%Agriculture, forestry and fishing (A)71.45%72.69%68.06%66.17%Construction (F)24.80%23.40%30.26%30.33%Wholesale and retail trade; repair of motor vehicles and motorcycles (G)17.10%12.01%10.44%10.97%Transportation and storage (H)22.02%25.05%20.39%17.94%Accommodation and food service activities (I)15.82%10.20%7.88%8.68%Information and communication (J)8.07%11.51%14.16%11.27%Professional, scientific and technical activities (M)28.46%23.49%25.37%23.68%Administrative and support service activities (N)11.87%12.32%12.90%13.95%Public administration and defence; compulsory social security (O)Education (P)4.26%3.42%4.44%5.04%Human health and social work activities (Q)6.27%5.08%5.64%5.28%Industry (B to E)6.10%7.49%7.76%6.18%Financial, insurance and real estate activities (K, L)7.14%6.77%6.20%7.94%Services (G to U)13.29%11.16%11.21%10.94%Other NACE activities (R to U)20.47%19.86%25.54%25.45%7/76/8No of sectors Increasing/Decreasing from 1998 to 2020No of sectors Increasing/Decreasing from 2017 to 2020Self-Employment Share of Total Employment By SectorQuarter 1 in Each YearR0193(iv) PAC33 A ■ ■ ■ ■ Figure 2 (Update): Self-Employment Share of Total Employment 2020 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Figure 3 Update: Sectoral Composition of ‘Own-Account’ Self-Employment 4%10%85%1%Composition of Employment 2020 (Q1)Self-employed (with paidemployees)Self-employed (with no piademployees)EmployeeOther27%12%7%7%2%5%11%5%3%5%4%2%10%Sectoral compostion of 'Own Account' Self-EmploymentAgricultureConstructionWholesale, RetailTransportAccom.
& FoodICTProfessional ActivitiesAdministrative activitiesEducationHealthIndustryFinanceOtherR0193(iv) PAC33 A - - - - - 1 - - .... - ....._ .... - ....._ - - - ~ - ....._ .... - ....._ - 1 - - - 1 - - - ~ - ....._ - 1 - - 1 - - 1 - - 1 - - 1 - - 1 - - 1 - - - 1 - - - 1 - - 1 - - 1 - - 1 - - 1 - - 1 - - 1 - - ---- 1 - --- - - - 1 - - 1 - - - I - I - ,_ - - I - ,_ - - ■ ■ ■ - Figure 4 Update: Employment Composition by Sector (Q1 2020) Figure 5 Update: Trend in Self-employment Share of Total Employment 1998 – 2020 (Q1) 0%10%20%30%40%50%60%70%80%90%100%Employment Composition by SectorPaid EmploymentSelf-Employed with EmployeesOwn-Account Self-Employment11.88%9.73%9.74%5.68%4.16%17.57%14.98%13.91%0.00%2.00%4.00%6.00%8.00%10.00%12.00%14.00%16.00%18.00%20.00%1998Q41999Q32000Q22001Q12001Q42002Q32003Q22004Q12004Q42005Q32006Q22007Q12007Q42008Q32009Q22010Q12010Q42011Q32012Q22013Q12013Q42014Q32015Q22016Q12016Q42017Q32018Q22019Q12019Q4Share of Self-Employment as % of Total EmploymentSelf Empl.
No EmployeesSelf-Empl; With EmployeesAll Self-Empl.R0193(iv) PAC33 A Figure 6 Update: Employment Trends in the Construction Sector 34.12128.625.57.716.2181.147.6102.20204060801001201401601802001998Q11998Q41999Q32000Q22001Q12001Q42002Q32003Q22004Q12004Q42005Q32006Q22007Q12007Q42008Q32009Q22010Q12010Q42011Q32012Q22013Q12013Q42014Q32015Q22016Q12016Q42017Q32018Q22019Q12019Q4'000 of workersEmployment in the Construction Sector (No.of Employees)SE No EmplsSE with EmplsEmployeesR0193(iv) PAC33 A An Roinn Gn6tha{ Fostafochta agus Coimirce S6isiala{ Department of Employment Affairs and Social Protection TSG 20/04 Tax Strategy Group – 20/04 Pay Related Social Insurance for Self-Employed Workers August 2020 R0193(v) PAC33 A Pay Related Social Insurance – Budget 2021 TSG 20/04 The Social Insurance System 1.
The social insurance system is central to the provision of social security in Ireland.

It plays a major role in Irish life both in terms of the number of people who depend on it and also the financial and economic scale of the system.

2.

The basic principle underlying the social insurance system is that people, while they are economically active, make social insurance contributions in accordance with their earnings level or income from self-employment.
It is an important vehicle of income redistribution, social cohesion and solidarity between generations, including those in work and those who are not.

Contributions made today finance pension payments to an earlier generation of contributors and also pay for benefits to people who are temporarily economically inactive through, for example, illness or unemployment.
In return, contributors build up entitlement to receive benefits on foot of their contributions, which will be paid to them provided they satisfy any non-contribution based eligibility criteria for the particular scheme, without having to undergo a means test.

These benefits will be paid when contributors experience a specified contingency such as disability or unemployment or when they reach pension age.

3.
3.

This paper reviews the financial position of the Social Insurance Fund at the end of 2019 and the likely impact of the Covid-19 pandemic on the balance of the Fund at the end of 2020.

4.

The paper sets out recent developments in the expansion of access to the range of social insurance benefits to self-employed social insurance contributors.

5.

It also summarises the findings of a number of recent studies on the social protection of self-employed workers and the lessons arising for policy makers.
In light of the insights provided from the various studies, the paper concludes by setting out a proposal to adjust the current rate of Class S PRSI in order to better align contributions made by self- employed contributors with the range of benefits now being accessed by them.

Social Insurance Fund: Financial Position to 2019 6.
The Social Insurance Fund (SIF) operates on a pay-as-you-go basis, with the Exchequer acting as the residual financier of the Fund, where there is a shortfall between social insurance income into the Fund and the cost of social insurance benefits paid out of it.

7.

The SIF was established in the early 1950s and annual Exchequer contributions were the norm for over 40 years.
However, no Exchequer contribution was required over the period 1997 to 2007 inclusive, as social insurance income exceeded expenditure.

At the end of 2007, an accumulated surplus of €3.6 billion had built up.

Page 1 R0193(v) PAC33 A 8.

In 2008, the operating balance of the SIF moved into deficit and the annual deficit accelerated rapidly in 2009 (€2.5 billion) and 2010 (€2.75 billion) as the recession took hold.
This meant that the accumulated surplus built up over 11 years was exhausted in less than 3 years and the SIF incurred annual deficits totaling about €9 billion over the period 2008 – 2015.

These deficits were funded by transfers from the Exchequer.

9.

The annual deficit has declined significantly since 2013 with surpluses recorded since 2016 as set out in the graph below.

10.

At the end of 2019 the SIF had an accumulated surplus of €3.89 billion.
The 2020 Estimate published at the end of December 2019 projected that PRSI income would exceed expenditure by €1.86 billion, which would have brought the accumulated SIF surplus by end 2020 to €5.75 billion.

SIF income and expenditure 2013 to 2019 (€ Millions) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 -2,000 SIF Income ■ SIF Expenditure ■ Surplus/deficit ■ Social Insurance Fund: Impact of Covid-19 Pandemic 11.
As a result of the economic impact of the Covid-19 pandemic and the production of the Revised Estimates, the Department is estimating expenditure of €11.6 billion from the SIF in 2020 which is over €1.3 billion above that estimated at the beginning of the year.

In addition, the Department estimates income of €9.7 billion to the SIF in 2020 which is a reduction of €2.5 billion from that projected at the beginning of the year.
Accordingly, the SIF will, at a minimum, experience a €3.8 billion reduction over that projected at the beginning of the year and if realised, would result in a reduced SIF accumulated surplus of €1.9 billion at the end of the year.

12.
12.

The decrease in income arises from the significant reduction in the yield value of employer Page 2 R0193(v) PAC33 A and employee PRSI contributions from the decline or cessation of economic activity and the growth in expenditure is due to increased Jobseeker’s and Illness Benefit payments.
Expenditure on Jobseeker’s Benefit is expected to further increase as recipients with an entitlement to that benefit transition from the Covid-19 Pandemic Unemployment Payment scheme or from the Covid-19 Temporary Wage Subsidy/Employment Wage Subsidy schemes should they be laid off work.

13.

As part of the July Jobs Stimulus 2020, the Pandemic Unemployment Payment has been extended until 1 April 2021.

By the end of July, expenditure on the scheme was approximately €3 billion.
The cost of the Pandemic Unemployment Payment in the period August to December 2020 will depend on the ongoing suppression of the Covid-19 virus and on progress in reopening the economy and society.

The Social Welfare (Covid- 19)(Amendment) Act 2020 formally categorised the Pandemic Unemployment Payment as a social insurance benefit and consequently expenditure on the scheme will come from the SIF.
The Act also provides that expenditure incurred on the scheme prior to it being established as a social insurance benefit may also come from the SIF.

This may arise, for example, where social insurance contributors claiming the Pandemic Unemployment Payment had an underlying entitlement to a jobseeker’s scheme, such as Jobseeker’s Benefit, which is financed from the SIF.
Accordingly, given this change, it is now clear that the potential SIF accumulated surplus suggested at paragraph 11 is unlikely to be realised and that the SIF will likely be in deficit by the end of 2020.

14.

The 2020 SIF estimates are informed by the forecast of an average unemployment rate of 13.9% for 2020, as set out in Ireland’s Stability Programme April 2020 Update.1 In that respect they are subject to change as labour market and payment trends develop.

15.
15.

The performance of the labour market in the weeks and months ahead, including the capacity of employers to respond to the phased return to work and the level of any resulting residual unemployment, remains uncertain.

16.

The table below shows the income and expenditure position of the SIF over recent years and the revised estimate for 2020.
SIF income and expenditure 2013 to 2019 and revised estimate for 2020 1 https://www.gov.ie/en/publication/43a6dd-stability-programme-update-2020/ Page 3 2013 outturn2014 outturn2015 outturn2016 outturn2017 outturn2018 outturn2019 provisional outturn2020 REV Estimate€ Millions€ Millions€ Millions€ Millions€ Millions€ Millions€ Millions€ MillionsSIF Income7,3187,8918,4989,2179,81610,62511,6329,697SIF Expenditure8,6328,4318,6178,7649,0869,49110,01611,646Surplus/deficit-1,314-540-1194537301,1351,616-1,949R0193(v) PAC33 A Programme for Government Commitments 17.
The Programme for Government includes a number of commitments, as follows, that are likely to impact on the income and expenditure of the SIF.
 Consideration will be given to increasing all classes of PRSI over time to replenish the Social Insurance Fund to help pay for measures and changes to be agreed including, inter alia, to the state pension system, improvements in short-term sick pay benefits, parental leave benefits, pay-related jobseekers benefit and treatment benefits (medical, dental, optical, hearing).
 Establish a Commission on Pensions to examine sustainability and eligibility issues with state pensions and the Social Insurance Fund.

The Commission will outline options for Government to address issues including qualifying age, contribution rates, total contributions and eligibility requirements.

 Pending the report of the Commission on Pensions and any subsequent Government decisions on its recommendations, the State Pension age will remain at 66 years and the increase to 67 years will be deferred.
18.

The most recent Actuarial Review of the Social Insurance Fund projected that in the medium to long term, pension related expenditure will continue to be the predominant component of SIF expenditure, rising from 70% in 2016 to circa 80% in 2071.

This projection was premised on the pension age rising to 67 from January 2021 and to 68 from January 2028.

Social Insurance Contribution Rates and Benefits: Self-Employed Workers 19.
To put the PRSI rate paid by self-employed contributors into context, a comparison with the rate applying to employed contributors is illustrative.

A combined PRSI rate of 15.05% is paid in respect of most (PRSI Class A) employees.
This includes a 1% contribution to the National Training Fund.2 The employee PRSI charge comprises 4% payable by employees and 11.05% by their employer (there is an 8.8% employer PRSI rate, inclusive of the National Training Fund contribution, where weekly earnings do not exceed €395).3 Employees who pay PRSI at Class A are covered for all benefits and pensions.

20.
20.

Self-employed workers who earn €5,000 or more in a contribution year are liable for PRSI at the Class S rate of 4%, subject to a minimum payment of €500.4 21.

Self-employed workers who are Class S contributors are now covered for a range of benefits such as: the State Pension (Contributory), Widow's, Widower's or Surviving Civil Partner's Pension (Contributory), Guardian’s Payment (Contributory), Maternity and 2 The National Training Fund is administered by the Department of Education and Skills.
The contribution was increased from 0.9% to 1% in Budget 2020 3 The threshold at which the higher employer PRSI rate is charged was increased to €395 per week from 1 February 2020 to cater for the 2020 increase in the national minimum wage which took effect from that date 4 The 4% Class S PRSI rate is unchanged since January 2011 and the minimum charge of €500 is unchanged since January 2013 Page 4 R0193(v) PAC33 A Adoptive Benefits, Paternity Benefit (from September 2016), Treatment Benefits (from March 2017) and Invalidity Pension (from December 2017) which also qualifies them for Partial Capacity Benefit.
Class S contributors are also eligible for the Jobseeker’s Benefit (Self-Employed) and Parents’ Benefit schemes, which were introduced in November 2019.

In addition, they may qualify for the Covid-19 Pandemic Unemployment Payment introduced in March 2020.

Appendix 1 sets out the range of benefits accessible by PRSI Class A and Class S contributors.

22.
22.

Following these changes, self-employed contributors are now covered for most of the benefits available under the social insurance scheme which represents approximately 93% of the value of all benefits paid by the SIF.

In effect, self-employed contributors, in return for a contribution of 11 percentage points lower than that made in respect of employed contributors, have access to benefits which comprise over 90% of the value of all benefits available to employed contributors.
Class S contributors are currently not covered for Illness Benefit, Carer’s Benefit, Health and Safety Benefit and Occupational Injuries Benefits.5 Recent Studies on the Social Protection of Self-Employed Workers 23.

This section briefly discusses findings on social insurance protection and coverage for self- employed workers from a selection of work undertaken in recent years.

Third Report of the Advisory Group on Tax and Social Welfare6 24.
In September 2013, the third report of the Advisory Group on Tax and Social Welfare on Extending Social Insurance Coverage for the Self-Employed was published.
The Group:  was not convinced that there was a need for the extension of social insurance in respect of Jobseeker’s Benefit;  found that extending social insurance for self-employed workers was warranted in cases related to long term sickness or injuries and recommended that the rate of contribution for Class S should be increased by at least 1.5 percentage points; and  concluded that: “extension on a voluntary basis, through either an “opt in” or “opt out” basis, could lead to the selection of bad risks and would undermine the social solidarity and contributory principles that underline the social insurance system.”.
Survey of Self-Employed Class S Contributors7 25.

In August 2016, a survey of self-employed Class S contributors was conducted to understand how the PRSI system is perceived by self-employed workers.
The main findings of the survey were: 5 Self-employed workers may qualify for the Enhanced Illness Benefit for Covid-19 absences from work 6 https://www.gov.ie/pdf/?file=https://assets.gov.ie/77994/ace7d54b-9e62-4bd8-82be-08f8340d8685.pdf 7 https://www.gov.ie/pdf/?file=https://assets.gov.ie/77995/f6414964-6283-4c6f-bba9-6ba6caa7d84a.pdf Page 5 R0193(v) PAC33 A  Respondents rated cover illness and long-term unemployment as the most important extra benefits to them.
82% ranked long- term illness in their top three of preferred additional benefits.

illness, short-term for  The current headline rate of PRSI for self-employed workers is 4%.

A large majority of respondents (88%) said they would be willing to pay a higher rate of PRSI in return for at least one additional social insurance benefit.

 A smaller majority (74%) would welcome an option to keep paying the current PRSI rate but also pay additional voluntary contributions in return for extra benefit coverage.
 Respondents reported low levels of coverage from private insurance with just 28% being covered for long-term illness and only 2% for unemployment.

 Respondents were dissatisfied with the range of social insurance benefits available to them.

Over 80% of respondents rated both the range of benefits and the value for money as ‘poor’ or ‘very poor’.

26.
26.

It should be noted that the survey pre-dated the significant expansion of benefit coverage to self-employed workers in the years 2016 to date as set out in paragraph 21.

Actuarial Review of the Social Insurance Fund8 27.


The most recent Actuarial Review, published in 2017, examined the additional PRSI expenditure that would be incurred from the extension of invalidity pension and illness, jobseeker’s and carer’s benefits to Class S self-employed workers and the PRSI contribution rates required to provide these benefits on a revenue neutral basis.
 The review estimates the combined cost of introducing these four benefits for PRSI Class S contributions to be €118 million in 2018, rising steadily to €223 million in 2020.

By 2025 the projected cost is €413 million and, over the period of the review, the cost would rise to €1.3 billion in 2071.
 Where the level of increased expenditure in respect of these benefits is examined over a 20 year period, the income from Class S PRSI would need to be 78% higher than the current rate of 4% and when considered over the 55 year projection, this would require an increase in PRSI contribution of 94% - almost double the current contribution rate.

 This increased contribution rate is attributable to the costs of extending only these four additional benefits to PRSI Class S contributors.
It does not take account of the value to PRSI Class S contributors of access to the range of existing benefits, and in particular the State Pension (Contributory).

The actuaries estimated that the typical cost of the State Pension (Contributory) on its own is of the order of 15.5% of national average earnings at the time of the Review.
 Adding in the other four benefits referenced above, the total Class S rate of contribution to ensure revenue neutrality of just these five benefits is estimated to be of the order of 20% per annum.

When taking account of the other benefits 8 https://www.gov.ie/pdf/?file=https://assets.gov.ie/37220/99a896910d574b7daa0b65fbb00900e5.pdf Page 6 R0193(v) PAC33 A to which Class S contributors have access to, the overall percentage rate of contribution required would be in the early to mid twenties.
 All of the measures for self-employed workers that have been introduced in recent years were introduced without any increase in the rate of PRSI contribution paid by such contributors.

 As a consequence, self-employed workers have access to around 93%, in value terms, of the benefits paid by the SIF while making an effective contribution of 3.7% of earnings.
At 3.7% the effective rate of social insurance paid in respect of self-employed workers is around 28% of that paid in respect of other workers (effective rate of 13%) and just 24% of that required to cover pension entitlements alone (15.5%).9 The Future of Social Protection: What Works For Non-Standard Workers?

10 28.

This OECD publication examines the impact of non-standard working patterns including self-employment on social protection systems.
A number of policy insights are put forward in the work and include:  Where possible, countries should try to harmonise social security contributions across forms of employment.

Including workers that border between dependent and independent forms of work in social protection schemes not only help to close coverage gaps, but can be effective in ensuring that social protection systems cover those who are most at risk.
This approach can also curb the extent of non-standard employment and limit the erosion of the contribution base of social protection systems.

 Social security contribution differentiation is a driver of non-standard work as employers seek to minimise non-wage labour costs.

This can be countered by decreasing the difference in the tax/social security wedge between hiring an employee and engaging a self-employed worker.
 Voluntary schemes do not work well for non-standard workers as those who have the highest risk have the greatest incentive to join and unless a voluntary scheme achieves a very high coverage rate, this adverse selection either leads to a downward spiral of rising contributions and falling coverage or to additional costs in the system.
In designing effective voluntary contribution schemes, policy makers will have to accept substantial public subsidies if they want to achieve high coverage rates and avoid adverse selection.

 Making entitlements portable supports mobility across jobs and forms of employment.
Untying entitlements from specific relationships with employers, and tying them to individual contributions instead, not only makes it easier for workers to switch jobs, but also facilitates them to switch between self and dependent 9 Table 11.10(a) of the Actuarial Review of the Social Insurance Fund: September 2017 10 The Future of Social Protection: What Works for Non-standard Workers?

: OECD Publishing 2018 https://doi.org/10.1787/9789264306943-en Page 7 R0193(v) PAC33 A employment.
Furthermore, it facilitates the harmonisation of entitlements across contractual arrangements.

Individualised forms of social protection can only offer coverage if sufficient contributions are paid by or on behalf of the beneficiary.

29.

There is a high level of commonality on the policy principles that emerge from the foregoing studies.

From a financial perspective, the link between access to benefits and the level of contributions being made to warrant the delivery of such benefits is evident.
The response to the survey of self-employed contributors acknowledges the willingness of such contributors to contribute more for access to certain benefits.

30.

Voluntary social protection systems are considered ineffective and, given the risks associated with them, could only operate and be sustained if supported with significant state funding.

31.
31.

There is clearly an imperative to address the actuarial fact that the contributions being made by self-employed workers are hugely disproportionate to the level of social insurance benefits that they have access to.

This point is magnified by the access to further benefits that self-employed contributors have gained in recent years without any associated increase in their contribution rate.

32.
32.

The imperative to harmonise social insurance contributions across forms of employment cannot be met where a social insurance contribution differential prevails.

Currently, a large difference exists between the combined contribution of employees and their employers in the case of Class A contributors and the contribution of self-employed workers making Class S payments.
In addition, when considering the implications of self- employment for social insurance and tax revenues, the large differential in PRSI rates between self-employed and employed workers was found to be a major factor in incentivising the misclassification of employees as self-employed in an Irish context.11 33.

The current situation is increasingly irrational where access to the range of social insurance benefits accruing is merging.
The harmonisation of entitlement can only be achieved by ensuring that sufficient contributions are paid by or on behalf of those who ultimately benefit.

Proposal to Adjust the Class S PRSI Rate for Self-Employed Workers 34.
The Programme for Government “Our Shared Future” sets out how consideration will be given to increasing all classes of PRSI over time to replenish the SIF to help pay for measures and changes to be agreed including, inter alia, to the state pension system, improvements to short-term sick pay benefits, parental leave benefits, pay-related jobseekers benefit and treatment benefits (medical, dental, optical, hearing).
11 The use of intermediary-type structures and self-employment arrangements: Implications for Social Insurance and Tax Revenues, Department of Finance and Department of Employment Affairs and Social Protection: 2018 https://www.gov.ie/en/publication/cf024d-report-on-the-use-of-intermediary-type- structures-and-self-employmen/ Page 8 R0193(v) PAC33 A 35.
In line with the above analysis, the current precarious position of the SIF, the actuarial costs projections into the future, the need to bring greater coherence to the social insurance system from a contributions/benefits perspective and to bring greater balance to the level of contributions from various employment types, it is proposed that consideration be given to adjusting the level of social insurance contributions for self- employed workers (i.e.
Class S PRSI) to that of the standard rate of employer PRSI (i.e.

11.05%) incrementally over four budgets.

Based on current rates this could be achieved by increasing the Class S rate by 1.75% each year for three years and by 1.80% in the fourth year as follows:  Budget 2021 – increase from 4% to 5.75%  Budget 2022 – increase from 5.75% to 7.50%  Budget 2023 – increase from 7.5% to 9.25%  Budget 2024 – increase from 9.25% to 11.05% 36.
Remaining social insurance benefits not currently accessible by self-employed contributors such as Illness Benefit, Health and Safety Benefit, Occupational Injuries Benefits and Carer’s Benefit to be incrementally extended to them.
In light of the significant access to a range of social insurance benefits in recent years without any increase in the rate of contribution, access to the remaining benefits should be considered in the context of the Programme for Government commitment to improvements to short- term sick pay benefits.

37.
37.

The minimum annual charge of €500 for self-employed workers with incomes of €5,000 or more per annum to remain in place for the time being to avoid any adverse impact on lower earning self-employed workers in the current economic circumstances.

It is expected that the number of contributors liable to pay the minimum charge will decrease as increases in the percentage rate of contribution take effect.
This is because the current liability is either 4% of the annual reckonable income or €500 whichever is the greater amount.

38.

Provisional estimates of the yield to the SIF from the contributions of self-employed workers following the increases in the Class S PRSI rate as set out in paragraph 35 are provided at Appendix 2.

39.

The Tax Strategy Group is invited to consider this paper.
Page 9 R0193(v) PAC33 A Appendix 1 Benefit Entitlements and Rate of PRSI as a Percentage of Earnings contributed in respect of Class A and Class S contributors Benefit Entitlements Adoptive Benefit Guardian’s Payment (Contributory) Invalidity Pension Jobseekers Benefit (Self-Employed) Maternity Benefit Parent’s Benefit Paternity Benefit State Pension (Contributory) Treatment Benefit Widow’s, Widower’s or Surviving Civil Partner’s (Contributory) Pension Partial Capacity Benefit Covid-19 Pandemic Unemployment Payment Health and Safety Benefit Carer’s Benefit Illness Benefit Occupational Injuries Benefits Employed PRSI as % of earnings 15.05% PRSI Class A  Self-Employed PRSI as % of earnings 04.00% PRSI Class S                            Enhanced Illness Benefit for Covid-19 absences from work Page 10 R0193(v) PAC33 A Appendix 2 Provisional Estimated Yields from Proposed Increases in the Rate of Self-Employed Workers Class S PRSI Rate Full Year Yield € millions Current Rate of 4% Increase to 5.75% from January 2021 Increase to 7.50% from January 2022 Increase to 9.25% from January 2023 Increase to 11.05% from January 2024 550 780 1,000 1,250 1,500 Page 11 R0193(v) PAC33 A Appendix 1 The following Chapter from the Comptroller and Auditor General Report 2019 is being examined by the PAC on 12th November, 2020.
Chapter 4: Control over Welfare Payments (6 recommendations) Chapter 4: Control over Welfare Payments The C&AG conducted an examination of the Department’s control activities in relation to social welfare payments.
The objectives of this examination were: • To present an overview of the Department’s activities which are targeted at detecting and deterring fraud and error; and • To evaluate the department’s effectiveness in this regard by reference to the results emerging from its monitoring and control activities.

The chapter also includes an assessment of the regularity of social welfare payments, which the C&AG has conducted in recent years.
As in previous years the C&AG concludes, based on the outcome of the Department’s Control Surveys (previously known as “fraud and error surveys”), that the level of irregular payments found by the Department’s control surveys is material and has referred to this fact in his audit report.

There are six recommendations in this chapter, five of which are agreed to by the Accounting Officer and one recommendation part agreed.
Department of Social Protection Update The Department welcomes the recent publication by the Comptroller and Auditor General (C&AG) of his report on the Accounts of Public Services for 2019, and in particular, the chapter on "Control over Social Welfare Payments".
The Department's budget in 2019 was over €20bn, and the oversight of the C&AG is essential to ensuring public confidence in the control and anti-fraud measures in place to protect the monies entrusted by the taxpayer and authorised by the Oireachtas.

The Department operates approximately 80 schemes and programmes.

While the vast majority of payments made under these schemes are appropriate, payments in R0193(vi) PAC33 A excess of entitlement can and do happen.
These overpayments can arise in a number of ways, including through customer errors, official error by Department staff and through suspected fraudulent claiming of benefits.

The Department has published a Compliance and Anti-Fraud Strategy, covering the years 2019 to 2023, to ensure that a clear and strategic approach to preventing and detecting social welfare suspected fraud and error underpins the control work of the Department.
The Strategy consists of 4 pillars (Prevent, Deter, Detect and Account) which are leveraged to ensure that suspected fraud and non-compliance in our welfare system is kept to a minimum during the lifetime of the Strategy.

Under the strategy, the Department conducts control reviews of schemes to help ensure that our customers are entitled to a payment and that the level of payment is correct.
The majority of claims are selected for review based on risk analysis, including the level of expenditure and numbers of claimants on the scheme, emerging risks from analysis of schemes by the Department’s Business Analytics Unit and risks identified from outcomes of previous control reviews on the scheme.

Using this methodology allows the Department to identify both the risks with scheme operations and the steps that are necessary to address any control weaknesses.
The Department also carries out Control Surveys on two schemes each year.

These reviews are randomly selected and published each year and are used by the C&AG to monitor suspected fraud and error rates and make recommendations where they feel controls may need to be enhanced.

The Department has noted and will implement the recommendations issued by the C&AG as quickly as possible to ensure that weaknesses identified in control of payments are addressed.
Recommendation 4.1 The Department should address the causes of the delays in completing and publishing the results of the point-in-time control surveys and tightly control the administration, finalisation and publication of the newly introduced surveys based on continuous sampling.
Department of Social Protection Update The Department is currently reviewing the manner in which these surveys are conducted with a view to making whatever improvements are possible to complete the surveys in the most efficient and timely manner.

Some schemes, in particular, schemes with a medical component tend to take longer to complete due to their nature and underlying eligibility conditions of the scheme.
The move from standalone point in time surveys to a form of continuous sampling for larger schemes, in quarterly batches, will expedite the production of control survey reports.

R0193(v) PAC33 A Recommendation 4.2 The Department needs to review its approach to setting targets for the number of reviews to be conducted, to ensure the most effective use of available resources.
Department of Social Protection Update The Department is reviewing its overall approach to setting annual targets across the various scheme areas.

The Department’s Control Division is engaging with the major scheme areas to ensure that a comprehensive control policy for each scheme is in place, taking on board various C&AG recommendations from control surveys.
Recommendation 4.3 The Department should ensure that it has adequate resources to conduct planned reviews and monitor the completion of these reviews on an ongoing basis.

It should ensure that prompt action is taken where a significant shortfall between planned and actual reviews is likely to occur.

Department of Social Protection Update The Department will be examining its capacity to meet planned reviews, during the last quarter of 2020 and first quarter of 2021.
Recognition of the competing demands placed on staff resources need to be considered in setting review targets, such as has occurred during Covid 19 crisis.

While there is always a balance to be struck between the processing and administration of new claims or requests for reviews from claimants and control reviews, the Department will endeavour to ensure that dedicated resources allocated to control reviews will be maintained.
Reviews will be monitored on an ongoing basis to take action where significant shortfall is envisaged.

Recommendation 4.4 The Department should formalise the structure for collating and reporting significant control issues identified by control review testing for each scheme.

Department of Social Protection Update The Department operates a control board chaired at Assistant Secretary level that co-ordinates the work of Control Reviews and considers the output of these reviews.
The Assistant Secretary prepares and submits formal reports to the Management Board at least twice a year detailing progress and issues arising.

The Department through its Control Board, will continue to ensure that control issues are identified for each scheme.

A formal structure of communication will be implemented by the scheme areas to the Control Programme Board and vice versa.
Control Division will also analyse the underlying causes of overpayments and report R0193(v) PAC33 A the findings to the Control Programme Board.

This will facilitate a systematic approach the implementation of new controls or the modification of existing procedures.
identification of required actions which might include the to Recommendation 4.5 The Department should consider whether the current documentation in respect of the control reviews is sufficient or whether it should be changed in order to facilitate the systemic recording of work undertaken and decisions reached including the identification of potential improvements of scheme controls.
Department of Social Protection Update Control Division is currently examining how current documentation can be improved in respect of control reviews with a view to ensuring that there is as complete as possible a record as to how decisions are reached.

It aims to complete this process by end of Q1 2021 and will be consulting with all relevant stakeholders.
Recommendation 4.6 The Department should ensure that new systems are fully tested and relevant stakeholders have agreed to operate the new system, in advance of material changes to a process.

Department of Social Protection Update The Department already performs a detailed range of system, integration, and user tests before any IT system is deployed and has successfully migrated most of its main schemes (including pensions, disability, invalidity, carers, child benefit, treatment benefit etc.)
onto the BOMi IT platform.

Following the migration of Illness Benefit, the Department commissioned an independent review of the illness benefit system deployment, the results of which, including the need to ensure full co- operation by all stakeholders, even where such stakeholders are not affiliated with a recognised body for negotiating purposes, have now been considered by the Department’s programme governance committee and will be factored into all future system deployments.
R0193(v) PAC33 A Appendix 2 – Vote 37 Department of Employment Affairs and Social Protection ADMINISTRATION A.1 Salaries, Allowances Wages and A.2(ii) Travel and Subsistence A.2(iii) A.2(iv) A.2(v) Training and Development and Incidental Expenses Postal and Telecommunications Services Office External IT Services Equipment and A.2(vi) Office Premises Expenses A.2(vii) Consultancy Services A.2(viii) A.2(ix) Agency Related for Payments Services eGovernment Projects V37 ADMINISTRATION TOTAL 2019 Outturn 2020 September YTD * 2020 FREV**** V37: SERVICES SCHEMES + Pensions A.3 State Pension (Non-Con) 1,042,838 790,588 1,064,010 Subtotal: 1,042,838 790,588 1,064,010 Working Age – Income Supports Jobseeker's Allowance 1,628,172 1,207,506 1,636,700 One-Parent Family Payment 533,122 407,289 558,220 Widows’/Widowers’/Surviving Civil Partners (Non Con) Pension Deserted Wife’s Allowance Basic SWA Payments Farm Assist Exceptional Needs & Urgent Needs Payments Other Working Age – Income Supports Covid-19 Pandemic Unemployment Payment1 13,938 10,198 12,990 959 120,175 68,569 652 89,217 48,823 840 128,890 62,180 43,206 29,905 44,230 18,086 13,635 19,080 ---- 3,136,849 1,319,370 A.4 A.5 A.6 A.7 A.8 A.9 A.10 A.11 A.xx R0193(vii) PAC33 A Subtotal: 2,426,227 4,944,074 3,782,500 Working Age – Employment Supports Community Employment Programme Rural Social Scheme TÚS Jobs Initiative Back to Work (Enterprise) Allowance Youth Employment Support Scheme A.12 A.13 A.14 A.15 A.16 A.17 A.18 Back to Education Allowance JobsPlus2 Local Employment Service3 Jobs Clubs4 Other Working Age – Employment Supports5 Covid-19 Temporary Wage Subsidy Scheme1 Covid-19 Employers Wage Subsidy Scheme1 353,366 251,363 369,680 52,817 99,048 16,417 59,695 2,014 65,327 14,390 18,318 4,841 38,617 64,556 10,944 54,870 99,248 15,090 30,608 40,020 1,336
 3,350 46,669 4,233 13,209 3,318 77,200 10,100 19,300 5,400 7,785 5,620 27,160 ----- 2,735,622 2,784,300 ----- 12,112 1,740,000 Subtotal: 712,375 3,218,207 5,245,718 Illness, Disability and Carers Disability Allowance6 Blind Pension7 Carer’s Allowance8 Domiciliary Care Allowance9 Carer’s Support Grant10 Disability Activation Supports11 Wages Subsidy Scheme12 1,705,778 1,337,442 1,804,510 12,971 862,447 182,485 219,535 14,142 23,810 9,597 683,957 141,303 224,039 11,265 13,414 13,140 936,440 199,770 237,320 15,680 24,550 Subtotal: 3,021,168 2,421,017 3,231,410 Children Child Benefit13 2,102,435 1,577,120 2,119,980 Working Family Payment14 397,204 282,634 402,490 Back to Work Family Dividend15 Back-To-School Clothing & Footwear Allowance School Meals Scheme Other Child Related Payments 18,357 10,112 17,220 53,451 54,312 7,634 50,340 152,880 45,209 61,600 6,139 7,560 Subtotal: 2,615,036 1,971,554 2,761,730 2 A.19 A.20 A.21 A.22 A.yy A.zz A.23 A.24 A.25 A.26 A.27 A.28 A.29 A.30 A.31 A.32 A.33 A.34 A.35 R0193(vii) PAC33 A A.36 A.37 A.38 A.39 A.40 A.41 A.42 A.43 A.44 Supplementary Payments Rent Supplement Telephone Support Allowance Household Benefits Package Free Travel Fuel Allowance Grant to the Citizens Information Board Miscellaneous Services Low Pay Commission 125,248 8,143 69,290 93,919 97,506 6,330 57,689 68,054 164,600 8,239 75,479 95,000 147,363 119,009 183,485 56,462 11,589 363 40,427 61,774 7,429 422 17,841 Subtotal: 512,377 396,866 606,418 Vote SERVICES TOTAL 37 SCHEMES + 10,330,021 13,742,306 17,257,480 Subvention to the SIF Fund Payment To The Social Insurance Section 9(9) Of The Social Welfare Consolidation Act 2005 Under 0 0 93,195 Vote 37 GROSS TOTAL 10,871,161 14,131,213 17,350,675 Deduct: B. Appropriations-in-Aid 223,035 143,551 218,190 Vote 37 NET TOTAL 10,648,126 13,987,662 17,132,485 Footnotes: *September figures are provisional **** FREV not voted on yet 1 In 2020, Covid 19 Pandemic Unemployment Payment (PUP) is borne under A.xx, Covid 19 Temporary
 Wage Subsidy Scheme (TWSS) is borne under A.yy and Covid 19 Employers Wage Subsidy Scheme (EWSS) is borne under A.zz.
2 In 2019, JobPlus was borne under A.20 this is borne under A.19 for 2020.

3In 2019, Local Employment Service was borne under A.21 this is borne under A.20 for 2020.

4In 2019, Jobs Clubs was borne under A.22 this is borne under A.21 for 2020.

5In 2019, Other Working Age – Employment Supports was borne under A.23 this is borne under A.22 for 2020.

3 R0193(vii) PAC33 A 6In 2019, Disability Allowance was borne under A.24 this is borne under A.23 for 2020.
7In 2019, Blind Pension was borne under A.25 this is borne under A.24 for 2020.

8In 2019, Carers’s Allowance was borne under A.26 this is borne under A.25 for 2020.

9In 2019, Domiciliary Care Allowance was borne under A.27 this is borne under A.26 for 2020.

10In 2019, Carer’s Support Grant was borne under A.28 this is borne under A.27 for 2020.

11In 2019, Disability Activation Supports was borne under A.29 this is borne under A.28 for 2020.
12In 2019, Wage Subsidy Scheme was borne under A.30 this is now borne under A.29 for 2020.

13In 2019, Child Benefit was borne under A.31 this is now borne under A.30 for 2020.

14In 2019, Working Family Payment was borne under A.32 this is now borne under A.31 for 2020.

15In 2019, Back to Work Family Dividend was borne under A.19 this is now borne under A.32 for 2020.
4 R0193(vii) PAC33 A Appendix 3 – Social Insurance Fund INCOME 2019 Outturn 2020 September YTD* 2020 FREV*** €0 €0 €0 PRSI Contributions - Social Insurance 11,536,228 7,618,220 10,415,850 - Health Contributions - National Training Fund Redundancy and Insolvency Recoveries Benefit Overpayment Recoveries Recoverable Benefits Other Receipts 2,864 937 707,841 501,334 12,645 10,669 5,181 7,451 6,470 9,700 21,940 14,308 19,800 242 178 40 TOTAL INCOME 12,292,429 8,147,609 10,451,860 EXPENDITURE Administration Administration - Non Pay Schemes and Services Pensions State (Con) Pension State Pension (Transition) 230,014 162,088 Subtotal: 230,014 162,088 214,958 214,958 5,603,220 4,379,031 5,920,170 35 20 0 Widows', Widowers' (Con) Payment 1,558,940 1,195,575 1,593,870 Death Benefit Bereavement Grant 10,064 7,711 10,720 1 0 0 Subtotal: 7,172,260 5,582,337 7,524,760 Working Age - Income Supports Jobseeker's Benefit 345,904 318,181 433,140 R0193(viii) PAC33 A Deserted Wife's Benefit 71,909 50,942 69,820 Maternity Benefit Adoptive Benefit Paternity Benefit Parental Benefit Health & Safety Benefit Redundancy & Insolvency Payments Treatment Benefits Pandemic Unemployment Payment JB or JBSE pre-August 2020 PUP entitlement Working Age - Employment Supports Partial Capacity Benefit Illness, Disability and Carers Illness Benefit Injury Benefit Invalidity Pension Disablement Benefit Medical Care Carer's Benefit Covid 19 Illness Benefit Children Child Related Payments 267,196 193,356 270,130 151 13,486 55 377 81 9,302 3,581 90 15,140 22,000 262 350 32,635 101,081 24,991 57,552 79,890 102,950 0 0 493,804 1,957,600 1,817,500 Subtotal: 832,794 1,152,051 4,768,610 Subtotal: 21,110 21,110 17,702 17,702 24,740 24,740 605,552 444,399 611,480 13,600 8,647 12,620 728,091 565,031 753,070 72,659 52,604 72,920 205 43,294 0 131 36,065 38,737 220 44,090 74,000 Subtotal: 1,463,401 1,145,615 1,568,400 21,266 16,010 22,140 Subtotal: 21,266 16,010 22,140 Supplementary Payments, Agencies & Miscellaneous Services Free Fuel Allowance Household Budget Package Telephone Support Allowance 87,633 73,744 178,262 139,077 9,107 7,103 111,865 188,983 9,278 Subtotal: 275,002 219,923 310,126 TOTAL SCHEMES AND SERVICES 9,785,833 8,133,638 14,218,776 2 R0193(viii) PAC33 A Payments to National Training Fund 712,000 530,000 ** TOTAL EXPENDITURE 10,727,847 8,825,726 14,433,734 Excess of Receipts over Payments 1,564,582 -678,117 -3,981,874 Decrease/(Increase) in balances due to National Training Fund Surplus 4,159 28,666 0 1,568,741 -649,451 -3,981,874 *September figures are provisional and subject to audit by C&AG **Figures for National Training Fund are not included in the 2020 Estimates figures.
*** FREV not voted on 3 R0193(viii) PAC33 A