The Taoiseach is planning a major overhaul of the social welfare system.

The Sunday Independent reports that Enda Kenny is planning to make a pledge to young parents that they will earn at least €11.75 per hour, no matter where they are working, if the party is returned to power.

The radical shake-up could see low-paid mothers and fathers receive the €2.60 top-up per hour from the State - to encourage them to stay off the dole.

This would mean that a parent working a 40-hour week could receive an additional €104 a week - amounting to almost €5,000 a year - under the reform package.

The statutory minimum wage is already set to increase to €9.15 from €8.65 per hour from January 1st next year.

Minister for Jobs Richard Bruton, says it is part of the plan to release people from the so-called 'social welfare trap.'

However there are warnings that the latest social welfare proposals could see Fine Gael clash with the Labour Party, who are said to have received a yet to be published report claiming so-called 'welfare traps' - discouraging people from returning to work - have been overstated.

Junior Finance Minister Simon Harris has been asked to finalise the plans in the coming weeks.

Speaking on The Sunday Show this morning, the Fine Gael TD said "there is a lot of debate about a living wage. We believe passionately that if you were to heap the full cost of that on employers, particularly small businesses, they wouldn't be able to afford it and it could actually stall job creation.

"What we're going to do instead - between the minimum wage, USC reductions and a new working family payment - we will guarantee every worker in this country an hourly rate of €11.75," Deputy Harris added.