Senior civil servants have proposed that PRSI be increased for workers and employers.
Under the proposals, the 4 per cent PRSI rate paid by most employees would increase to 4.5 per cent in 2023 and increase by a further half point in both 2025 and 2027 to reach 5.5 per cent. The charge would also kick in at lower earnings levels than at present – at weekly earnings equivalent to about €13,000 annually, compared with €18,300 now. There are 243,400 people earning between 250 and 352 euros a week. These would all come into the suggested new PRSI take.
Employers would also face higher payments. They currently pay PRSI at 8.8 per cent on earnings under €398 per week and at 11.05 per cent for amounts above that. They call for this to rise to a single rate of 12.55 per cent by 2027, again with increases starting in 2023. And right too, although this does not go far enough.
Tax and social insurance revenues in Ireland are below EU averages. The main reason for this is that employers pay PRSI at a much lower rate than their EU counterparts:
· In 2018 “Labour tax receipts” from workers were 98% of the EU average but only 49% of the EU average for employers;
· In 2019 social insurance contributions from employers were on average equivalent to 7.6% of GDP in the EU but only 4.3% here;
· The state could have collect €7b extra if employers here paid at the same rate as their EU counterparts
The reason why workers’ rights are so poor in Ireland is that employers don’t pay enough in social insurance to cover payments like sick pay and maternity pay. They now want workers to pay for the additional costs of keeping the pension age at 66.
Increase in PRSI for workers are a pay cut and should be resisted. Employers must pay more to fund a decent social wage for workers.
