Government will today (Tuesday) table an amendment to social welfare legislation that will increase the point at which an employer has to pay a full social insurance contribution on their employee’s wage.
Irish Congress of Trade Unions general secretary Owen Reidy said:
"Government’s amendment to social welfare legislation will result in millions of euro being denied to the Social Insurance Fund each year – the main source of funding for workers’ contributory pension and other welfare payments during gaps in employment such as when they have a baby or are injured at work. Instead this much needed investment in the future sustainability of the Fund will go towards reducing labour costs for employers.
“Government say that this is being done to support small businesses struggling with rising costs, including the increased minimum wage. The truth is, this amendment will benefit all employers - big and small, profitable and struggling - employing workers on less than €496 a week and regardless of whether those workers are working a full 39 hour week on the €12.70 hourly minimum wage rate or working a part-time 19 hour week on €25.40 an hour, twice the minimum wage rate and over €50,000 a year FTE.
"Government know this to be the case. In bringing forward this amendment they are flying in the face of advice from their own advisory body – the Tax Strategy Group – and the Commission on Taxation and Welfare to phase out the lower 8.8% rate of employer PRSI.
“Having initially acted on this advice by not increasing the threshold for the reduced rate of employer PRSI in Budget 2024 in line with the increase in the minimum wage, the amendment rows back following months of lobbying by business representatives.
“Adding insult to injury, Government will raise workers’ PRSI contribution by 0.1% at the very same time as the increased threshold for employer PRSI kicks in – from October 01st. The estimated €62 million yield to the Social Insurance Fund in 2024 from the raised PRSI contributions will be all but cancelled out by the increased cut-off point for the lower rate of employer PRSI.
“This costly and badly targeted amendment is a bad deal for workers and for struggling small businesses. It does untold damage to support for Government’s own PRSI roadmap to a sustainable Social Insurance Fund. Its only function is to buy the silence of lobbyists ahead of a general election.”
