I propose to take Questions Nos. 8 and 108 together.
A detailed study of the impact of employers' PRSI on low-paid labour intensive sectors of manufacturing industry was undertaken by an inter-departmental group in late 1993 which concluded that a reduction in the overall burden of PRSI would help maintain existing employment and also assist in the creation of new jobs.
Arising out of the recommendations of this group, the Government decided to introduce a tiered system of employers' PRSI with a reduced rate of 9 per cent applying to incomes up to £173 per week equivalent to £9,000 per annum. The cost impact of this adjustment will be very favourable in the case of firms employing significant numbers of employees in that income category. Such firms will benefit from a 26 per cent reduction in employers' PRSI for all workers earning less than £173 per week. In the case of low-paid labour intensive industries such as clothing, footwear and leather, textiles, timber and furniture, this reduced rate will provide a significant boost to the competitiveness of these sectors, particularly vis-á-vis the UK.
To help fund this concessionary rate and the normal indexation of payments from the social insurance fund, the budgetary adjustment to PRSI also involved an increase in the ceiling from £21,200 per annum to the equivalent of £25,800 per annum.
It is the view of my Department that the reduction in employers' PRSI will have a positive impact on job maintenance in the low-paid labour intensive sectors. It will also act as a means of encouraging employment opportunities for the young and low-paid.