Employers will not face PRSI contribution increase under plan
Enterprise Minister Simon Coveney is to outline his plans to help businesses this morning. Picture: Sasko Lazarov/© RollingNews.ie
Employers will not face an increase in PRSI contributions when the minimum wage increases, under new proposals from Enterprise Minister Simon Coveney.
At Cabinet this morning, Mr Coveney is to bring forward a memo that aims to help businesses with rising costs, including additional grant payments for energy efficiency.
Mr Coveney is to outline plans where, when the minimum wage increases, employers will not face an increase in their employer PRSI contributions.
He will also provide a further €15m for Local Enterprise Offices for a €3,000 top-up payment of the Energy Efficiency Grant for businesses in both the retail and hospitality sectors. At present, businesses who employ up to 50 people are entitled to €5,000 — now to be increased to €8,000.
In a recent interview with the , Mr Coveney said that more needed to be done to deal with the rising costs for businesses under “particular pressure”.
“I think we need to do more particularly for businesses that are under particular pressure.”
He will also bring forward a report today that details the impacts of recent Government decisions on increased costs for businesses, including the rising minimum wage, statutory sick pay, and the incoming auto-enrolment pension scheme.
Mr Coveney described the report as a “significant piece of work”, which shows the main sectors impacted are in hospitality and retail due to their high reliance on minimum wage workers.
“Many sectors, by the way, aren’t impacted at all. So the tech sector, the financial services sector, construction sector, they already have conditions of work that are well above any of these changes.
“But hospitality and food retail in particular — so cafes and restaurants — and some other parts of retail that rely on a lot of people who are either on the minimum wage or people that are reasonably close to the minimum wage, you also push up wages.”
The report itself finds that small hospitality businesses could face costs increasing by 7% by this year, rising up to 19% by 2026.
It also finds that there is increased staff morale and productivity with newly provided benefits for employees.
The minister said that, while people are talking about a potential cut in the Vat rate for hospitality, it isn’t possible to do that in between budgets.
“People are talking about, you know, the need to reduce Vat rates again for the hospitality sector and so on.
“There's an argument around that that is being made, but in order to apply a 9% Vat rate to the entire hospitality sector, as was the case before, that costs about €788m a year.”
Asked if he would be in favour of reducing the rates paid by businesses to local authorities, he said that it was an “important form of revenue for the State”.
“It’s not perfect by any means, but we don’t have anything to replace it,” Mr Coveney said.
“I know that the Department of Housing is very anxious to maintain a strong rates base, and the vast majority of businesses are now back paying rates against and that’s a good thing, so we shouldn’t undermine that in my view.
“So the challenge for us is what can we do to actually tailor supports to the sectors that are under most pressure and what tools do we have available to us in between budgets to do that.”
Meanwhile, Minister Simon Coveney also received approval to progress a bill that will mean contracts of employment that set a mandatory retirement age which is below the State Pension age will not be enforceable without the consent of the employee.
If an employee provides written notice to the employer that they do not consent to the mandatory retirement age, the employer must not retire the employee before a date to which they do consent to retire or before the State Pension age, whichever is the earlier date.
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