Mr. Michael Taft:

I would like to come back on a couple of questions Deputy Kerrane asked. On whether it is realistic, the argument is that the fiscal urgency is so profound and potentially so dangerous to our public finances that we have to sweep aside some of the concerns over social equity. Insofar as it would not be realistic to ask somebody to work for longer in particular occupations, unfortunately, the hard realism is coming from a fiscal perspective which we believe has not been adequately justified. As long as the fiscal argument is telling us we must do this or otherwise our public finances will be in terrible shape in ten, 20 or 30 years' time, this is what will be imposed on working people. We are particularly sensitive to that in SIPTU because most of our membership comprises low and average income earners, primarily in the manual sectors, construction, mining and cleaning. We are especially sensitive to their work and the fact that when some people say we have to get realistic, it is usually sort of people I have mentioned who end up paying for that realism.

I will respond to Deputy Kerrane. She mentioned there was little or no clarity. In our earlier discussion, we talked about the distinction between the different models and why it might be helpful to the committee to investigate that. I will make a further point. The commission did not give an estimate of how much its proposal would save. Its proposal is quite distinct from the modelling of the Department of Finance and Irish Fiscal Advisory Council. Its work was based on the previous legislation. The commission's work started with 2028 and worked on the basis of phasing things out over four years etc. That is quite a bit different from what the Department and council said. It did not cost that. If you are going to argue that we need to achieve fiscal sustainability when the main proposal in that regard is not costed, that is a deficit the committee may wish to look into.

A second issue is something we recommended in our submission that the commission should investigate. We do not know what net pension expenditure is. There is gross pension expenditure and net pension expenditure, and that comes after tax. Most EU countries report gross and net expenditure. The EU ageing tables include that. Ireland is one of the few countries that does not report that. Again, this is not a game changer in terms of pensions sustainability, but in countries that report it, there is a gap of up to one to two percentage points of GDP. The implicit tax rate in the legislative estimate by the EU Commission ageing report 2021 was about 15%.

We have to speak in terms of net expenditure. If the only figures used are gross figures and revenue is ignored, which will automatically come from having made that expenditure, then the analysis may be skewed. The Revenue Commissioners could do a sample analysis of the database for the committee.

On employers' PRSI, employers' social insurance is 50% of the EU average. This is not surprising because for years we have had a beneficial age demographic. We did not have as many older people as other countries and did not have to pay out as much in pensions. Therefore, we did not have to raise as much social insurance to pay for those pensions. That is going to change in the coming years. We will have to push that up incrementally. It is too early to say how high it will go – perhaps it will double – but there will be a significant and substantial increase in employers' social insurance if our demands for resources for pensions are consistent with our move towards an EU norm in terms of the number of older people.

People get confused about employers' social insurance. This can be collectively bargained and negotiated, not in terms of the rate set but the impact of the rate on employers. When workers bargain with their employers over, for example, a 3% pot of money during a wage round, they can decide to make a demand for a 3% pay increase or they can demand a pay increase of 2.5%, but also ask for sick pay, a maternity top up, a new pension or some other social benefit. In other words, social benefits, which employers' social insurance represents, are things trade unions negotiate. If we had a proper collective bargaining coverage, we could integrate the increases in employers' social insurance with the collective bargaining framework, something that employers and employees agree, and that would minimise the impact of increasing employers' social insurance on the economy.