Budget: No sick benefit for first six days

The Government will announce in today’s budget that eligibility for illness benefit will be increased from three days to six days, placing further pressure on companies that are set to face a raft of other employment cost rises.

At present, an employee has to be out of work for three days before an application can be made for illness benefit. This will now be changed to six days, and could affect up to 1.8m workers.

While there is no legal obligation for employers to cover sick pay, they usually cover the first three days. This cut will put pressure on firms to cover the first six days of illness. However, there will be will be no changes to sick pay rates paid out by the Department of Social Protection.

The move, which will save €20m, is designed to ease pressure on the social insurance fund, which needed a €2.1bn subvention from Government in 2012.

Michael Noonan and Brendan Howlin will this afternoon announce details of the country’s seventh austerity budget which will result in tax hikes of €900m, and expenditure cutbacks of €1.6bn. Since 2008, almost €27bn has been taken out of the economy.

While half of Finance Minister Michael Noonan’s €900m requirement has been met by measures such as the property tax, Public Expenditure Minister Brendan Howlin still has to implement most of the €1.6bn in cutbacks, with the big spending departments of social protection, health, and education expected to suffer the most.

It is anticipated there will be a series of cuts across the board, with the Department of Social Protection set to introduce up to 10 savings measures, the largest saving up to €30m. This will include cuts to household support allowances, such as gas, electricity, and possibly phone costs.

With Enda Kenny telling Fine Gael delegates at the weekend that the unemployed could expect “nothing for nothing” if they did not engage in various back to work schemes, dole payments for young people under the age of 25 joining the Live Register are expected to be cut by €44 a week.

Government sources also confirmed last night that the Vat rate in the hospitality sector would be increased from 9%, but not returned to the full 13.5%. Finance had pencilled in €350m next year with the full return of the rate, so a partial adjustment will lead to the minister looking to make up the amount elsewhere.

The final measures were agreed at the four-man Economic Management Council meeting yesterday ahead of a final full Cabinet meeting this morning.

Following the property tax and other once-off payments, Mr Noonan is looking for about €450m in new tax measures, with €150m of this set to come from a new bank levy.

Government sources said capping tax relief for pension contributions for incomes over €65,000, set to begin next year, could raise several hundred million euro.

There is also expected to be a sizeable rise in the Dirt tax on savings.

Meanwhile, security barriers were last night being put in place outside Leinster House and its environs, where thousands of anti-austerity protesters are expected to gather, determined to make their voices heard when at 2.30pm, Mr Noonan takes to his feet in the Dáil and delivers his third budget.