Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 581: To ask the Minister for Social and Family Affairs the PRSI payable by persons on community employment schemes on the A8 PRSI category where their current income is below €352 per week; the PRSI payable by the same people if they receive a pay rise bringing their income over €353 per week and if they will move to an A9 PRSI category; and if he will make a statement on the matter. [12390/08]

Martin Cullen (Waterford, Fianna Fail)
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The Community Employment, or CE, scheme is designed to assist long-term unemployed and other disadvantaged persons by offering them part-time and temporary work positions in jobs based within local communities. Following the placement, participants are actively encouraged to capitalise on the skills and experience that they have obtained through the scheme by seeking more permanent part-time and full-time opportunities within the mainstream workforce.

Participants on the CE scheme are provided with an average of 39 hours of paid employment per fortnight for a one-year period. Income from this work is assessable for tax (PAYE) and liable to PRSI Class A contributions on all earnings above the PRSI-Free Allowance of €127 per week.

The obligation to pay PRSI Class A contributions was introduced by the Social Welfare Act, 1996, in a bid to enhance the working status of CE participants and to afford them the same level of social protection as fully insured workers. This extension effectively placed these workers on an equal footing with PRSI Class A workers — both in terms of social insurance liabilities and benefits.

The level of the weekly social insurance contribution that is payable is, for the most part, determined by both the level of reckonable earnings in that week and the appropriate PRSI rate. The PRSI exemption on low earnings has now been increased to €352 per week (up from €339 in 2007) — any earnings above this level are liable to an employee PRSI contribution rate of 4%. Above this threshold point contributors are entitled to a PRSI-Free Allowance of €127 per week that reduces the 'step-effect', whereby an employee with gross weekly pay over €352 could have lower net pay that an employee earning €352 or less per week, of the threshold.

Therefore, a person insured under PRSI Class A-8 with an income up to €352 per week will have a nil liability whereas a person insured under PRSI Class A-9 with an income of more than €352 per week will have a PRSI liability of 4% on the portion of that income above the €127 PRSI-Free Allowance.

This tiered system enhances employment incentives for low-earning employees by ensuring that they do not experience any financial difficulties from the payment of social insurance contributions. It is therefore fair to say that participants in the CE scheme are not being unduly disadvantaged over other workers with similar weekly earnings. There are currently no plans to change the existing provisions.