The Government is likely to increase the threshold for employers’ PRSI payments in the budget in a bid to soften the blow of expected minimum wage hikes.
The move is a repeat of steps taken earlier this year to offset the impact of last year’s increase in the minimum wage, which Ministers said at the time were key to easing the burden of increased business costs arising from changes brought in by the Government.
It is understood that the measure is now likely for inclusion on budget day following discussions between Minister for Enterprise Peter Burke and his Fine Gael colleague Minister for Social Protection Heather Humphreys.
Sources said there is a push under way to make the measure a regularly recurring feature when there are increases to the minimum wage.
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The changes made in reaction to last year’s minimum wage increase meant the threshold for the higher rate of employer PRSI will go from €441 to €496. This means that employers pay the lower rate of PRSI – 8.8 per cent – up to that level.
It is not clear what the new, higher threshold will be, but it will be linked to whatever the new higher minimum wage is. Following a recommendation by the Low Pay Commission, the Government is expected to increase the minimum wage.
An increase of about 80 cent per hour to the national minimum wage, rising from €12.70 to €13.50 per hour, is anticipated. Ministers are also pushing for grant supports for businesses. A Fine Gael source characterised the move as “critical to lowering costs on family business”.
Sinn Féin is expected to make a play for small business votes in its alternative budget, being published on Wednesday. The party is proposing an employer PRSI rebate scheme which would support firms impacted by its plans to implement a living wage over the coming years.
[ Proposed PRSI increases ‘progressive’ but further hikes needed after 2028Opens in new window ]
The credit would reduce the PRSI liability of the employer and be issued to firms for each employee within a specified wage range up to a limit of €651.
The party says it would allow companies most impacted the highest level of support without incentivising lower pay. The credit an employer would receive would be approximately 2 per cent of the gross weekly wage. It has been costed by the Department of Social Protection at €250 million annually.
The credit would be put in on a tapered basis to avoid incentivising to pay minimum wage in order to secure the credit.
The Green Party has already made a play for small business votes with a pitch for a €175 million rates rebate spread across 100,000 small firms in a bid to help them meet their costs and boost footfall in town centres.
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