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Dáil Éireann debate -
Tuesday, 22 Nov 1988

Vol. 384 No. 5

Written Answers. - Social Security Financing.

30.

asked the Minister for Social Welfare the steps he is taking to ensure that the structure of social security financing which varies greatly within member states of the EC is brought into some degree of harmony in order to ensure an equality of competition and competitive costs between member states within the framework of 1992; and if he will make a statement on the matter.

The EC Commission are currently studying the structure of social security financing in the various member states. The aim is to establish what measures can be taken at national level and whether it is necessary to take measures at Community level to ensure that methods of financing social security do not give some member states a competitive advantage over others. Consideration is also being given to the overall competitiveness of the Community in this regard vis-á-vis third countries. Officials of my Department are keeping in touch with these developments and over the past few months have attended a number of meetings organised by the EC Commission at which the structure of social security financing in the various member states has been examined.

Recent international comparisons show that, Ireland is one of the countries in the EC and in the OECD that has a competitive advantage in this area. The employers element of the PRSI contribution, currently 12.4 per cent, is the second lowest in the EC. For example the rates of employer's contribution are much higher in France (34.07 per cent), West Germany (17.75 per cent), Greece (17.0 per cent) and the Netherlands (15.48 per cent). The UK rate is 10.45 per cent but with no upper earnings ceiling. The most recently published OECD comparisons indicate that employers social security contributions as a percentage of GDP is 3.7 per cent for Ireland compared with an EC average of 6.5 per cent and an OECD average of 6 per cent.

The extension of social insurance pension cover to the self-employed who comprise 20 per cent of the workforce will in the years ahead ease considerably the burden on employers and employees of financing the system.

One of the major problems facing all countries with well developed social security systems in the coming years is the financing of pensions as a result of the ageing of the population which will result in an increasing proportion of the population drawing pensions. One of the major tasks which the National Pensions Board has set itself is to examine in detail the overall financing of pensions in this country and in particular how our system compares with other countries. The board's conclusions in this area will be considered fully in the context of further changes in the social insurance system.

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