Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)

Earlier I spoke about the gap in terms of encouraging employers. I agree with the Minister that not all employers are greedy or disrespect their workers. Many employers have built up loyalty to their staff by taking account of their interests but I refer to those who pay rates that are at or around the minimum wage. There is a strong incentive to reduce wages or maintain them at low levels given that the difference between the two rates of PRSI, which was previously 2.3%, is now 6.5%. In the past, the paperwork alone might not have justified changing pay rates but the gap is now substantial. As I compiled these figures myself, they may not be completely accurate but I assure the Minister the difference is greater than €2 per week.

If this measure was intended to give a once-off stimulus to employers over a period of six months, a graduated change in the rates beginning at the level proposed by the Government could have been justified. Instead, however, a rate of 3.9% will be applied for a period of three years, unless the Government offers a further extension of the lower rate. I guarantee that the business class will be pressuring the Government to retain the rate beyond 2013 and they will use the same excuse that changes could lead to job losses. Everybody is always under pressure and people must cut their cloth to measure. The costs that could more effectively be addressed in order to assist small businesses include fuel, electricity and production. Employers' PRSI contributions are not as large as they should be at a time when high unemployment levels are creating a strain on the public purse. The Exchequer is being further strained by reductions in the contributions expected from employers. A substantial number of people who are on low wages will be affected by this measure. Perhaps the Minister can provide figures for the precise number but I would estimate that approximately 200,000 people would fall into this category. The effect on the public purse of the decrease in employer contribution will be significant.

See this speech in context