Dáil Éireann Debate, Thursday - 18 April 2024
114. Deputy Pearse Doherty asked the Minister for Enterprise, Trade and Employment if he will consider supports for businesses facing increased labour costs through the PRSI system; and if he will make a statement on the matter. [17062/24]
View answerThe PRSI Roadmap outlines planned annual increases in Pay Related Social Insurance (PRSI) over the period 2024 to 2028, intended to increase the sustainability of the social insurance fund (SIF), given the retention of the State Pension age at 66 is government policy and the commitment to introduce ‘Pay-Related Benefit’, a social insurance benefit set to replace Jobseeker’s Benefit.
The approach follows on from the report of the Commission on Pensions and the Actuarial Review of the SIF. The commitment to consider increasing PRSI to pay for Pay-Related Benefit, among other things, was included in the Programme for Government and the Economic Recovery Plan 2021 committed to bringing forward proposals on this on foot of lessons from the pandemic.
One of the findings in the Actuarial Review of the SIF published in March 2023 was that it would be possible to address the projected funding crisis in the social insurance system in the steady-state scenario by, beginning immediately, increasing PRSI rates by 0.08 of a percentage point per annum every year up to 2076. In addition to addressing the SIF’s sustainability challenges, it was envisioned that an increase in PRSI rates was necessary to fund a Pay-Related Benefit scheme for newly unemployed jobseekers.
As of 2022, the old-age dependency ratio (the ratio of working aged people to those over the age of 64) was 22.7 percent. This is forecast to rise to 41.1 percent by 2051. This means that the ratio of working aged people compared to those over the age of 64 will almost halve compared to the current position. Absent appropriate policy changes such as the PRSI rate increases, is forecast to put substantial stress on the social welfare system.
Alongside these changes to the PRSI system, the Government has also advanced a range of measures to improve working conditions in Ireland over recent years. These improvements will bring wider societal benefits and will serve to bring Ireland in line with other advanced economies, albeit that these will inevitably give rise to additional costs for some firms.
My Department, in collaboration with the Department of Social Protection, assessed the cumulative impact of these changes to working conditions, including Auto-Enrolment Retirement Savings Scheme, Parent’s Leave and Benefit, Statutory Sick Pay, the additional Public Holiday, the Living Wage, and the Right to Request Remote Working. This report was published on the 5th March and in response to the findings, a range of measures are being brought forward to assist businesses in adjusting to these increased costs as well as more generally to improve cost competitiveness of firms.
These measures include making available up to €15 million to Local Enterprise Offices to enable a top up payment of up to €3,000 in the Energy Efficiency Grant for businesses in the hospitality and retail sectors bringing the grant up to €8,000. In addition, an options paper on the application of the lower 8.8% rate of Employer PRSI contribution is currently being prepared and we will also take steps to reduce red tape and the administrative burden on business, including: an enhanced SME Test; accelerating the roll out of a fully functioning National Enterprise Hub with staff available to provide immediate advice and support to vulnerable firms.
This is in addition to a €257 million package for the Increased Cost of Business grant. Local authorities, funded through the Department of Enterprise, Trade and Employment (DETE), are managing the rollout of the grant to qualifying businesses, and have written out to rate paying businesses with details of how to register for the scheme and it is up to businesses to verify their details through an online portal. This scheme is designed to help SME’s.
This Government has adopted an active approach in supporting Irish businesses across multiple crises over the last number of years. My Department is fully committed to supporting businesses and the measures included in Budget 2024, and more recently in the measures announced following the publication of the ‘Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions in Ireland’ reflect this.
