Government Proposal No Cure For The Real Sick Pay Problem

Sick worker at desk

The Covid-19 crisis exposed the absence of a right to statutory sick pay for Irish workers.  The lack of a decent sick pay scheme meant many workers continued to work when they shouldn’t have.  In meat plants nine out of ten do not have sick pay and employers refused to negotiate a scheme with SIPTU to cover the period of the pandemic.  25% of meat plant workers have been infected. In all, over 50% of private sector Irish workers do not have sick pay.

In general terms Ireland compares very poorly with other EU countries. A major review of sick pay in 2016 found that:

  • Ireland was one of five  EU countries where sick pay is not “state-mandated”. In most states, employers continue to pay a salary for a period.
  • In some of the countries where there is no state mandate, rates of sick pay are determined through collective bargaining. But in Ireland  payment is at the discretion of the employer in accordance with the employee’s contract.
  • Only Ireland, Malta, and the United Kingdom applied a flat rate amount in state benefit. Replacement levels (the amount of your earnings covered) in Ireland were estimated at around 36%. That’s the third lowest in the EU.

Further, in 2015, the Illness Benefit payment waiting period was changed from three days to six. That meant you had to be off work for six days to be eligible for payment. This was changed back to 3 days in March 2021 as a result of the Covid-19 Pandemic. Additionally this was not available at all to most low-wage or precarious workers: to get full benefit of €203 per week you must have paid PRSI for two years and be earning over €300 per week.

So the entitlements of Irish workers have been far behind those of workers in other countries. It has taken a global pandemic for the state to move on providing a right to sick pay. But it is a weak and half-hearted effort.

What is being proposed is that workers who have worked for six months, will get 3 days paid sick leave in 2022, 5 days in 2023, 7 days in 2024 and 10 days from 2025. They will get 70% of their normal pay up to limit of €110 per day. They will need a medical cert for each day of sick leave.

While this can be seen as some progress and the result of the pressure that been put on the government arising from Covid-19 this is quite an inadequate response to the demand for paid sick leave. 

  • What’s provided for compares poorly with what workers get through mandatory sick pay in other EU countries. In most EU countries, employers are required to pay an employee their illness over the short-term. In most countries with statutory sick pay workers are paid for more than two weeks.  Examples are:
    Netherlands – 2 years @ 70% of worker’s wage;
    France – 90% for first 30 days;
    Austria –100% for the first 6-12 weeks;
    Germany – 6 weeks @ 100%; 
    Belgium – 30 days @ 100%;
    Sweden – 2 weeks @ 80%;
    Finland – 9 days @ 100%.
    In Denmark workers get 22 weeks at 100% of their wages.
  • In most EU countries workers get a high level of Illness Benefit after their sick pay runs out. In 16 of 27 EU countries benefits replace over 70% of income. Here, after 10 days, workers who have sufficient PRSI contributions, will have to revert to the flat rate €203 a week illness benefit. This is far below the Irish single person poverty line of €286/week. Two adults get €337. Again this is far below the poverty line in Ireland for couples: €475/week. The inadequacy of the current Illness Benefit was illustrated during the Pandemic when payments were raised to €350. At a minimum Illness Benefit should €350/week.
  • It falls far short of what public sector workers get: three months on full-pay, followed by three months on half-pay.
  • It does not provide equal access for all workers. Those with less than six months’ service get no pay. Precarious workers will therefore be less likely to benefit.  The requirement for a medical cert means many low paid workers face a charge of around €60 to get a cert eating into their sick pay for the first day. This will act as a disincentive for many leading to sick presenteeism.
  • This scheme has been designed to ensure employers don’t face “excessive additional costs”. But many workers earning above average wages will face a significant drop in their income, over 30%, when they are sick regardless of family circumstances.
  • It’s not yet clear how the new scheme will interact with the system of Illness Benefit. At the moment companies with sick pay schemes make workers claim the benefit and pay it back to the company. The taxpayer is, in effect, subsidising the employer. In 2019, €603 million was spent on Illness Benefit from the Social Insurance Fund some of which went back to employers.

The key reason why Illness Benefit and other benefits are so poor in Ireland is this: Irish employers pay very, very low levels of PRSI.

Ireland’s level of employer PRSI contribution is less than half of the average in high income EU countries. 

By increasing employers PRSI we could fund real decent benefits for all workers.

Consider this: A one percentage point increase in employer PRSI would have raised €850 million in 2019.

The government is presenting the introduction of sick pay as part of a Covid dividend for workers. Given the sacrifices workers have made they deserve a lot better. Granting a right to a low level of sick pay for only certain workers is insufficient and doesn’t constitute significant change. We need full pay for all sick workers from Day One of sickness. Those who are ill for long period need access to benefits which protect their incomes. We need urgent reform of the social fund to ensure employers pay more to fund decent benefits for workers.

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