Written answers

Tuesday, 26 April 2016

Department of Jobs, Enterprise and Innovation

Low Pay

Photo of Finian McGrathFinian McGrath (Dublin Bay North, Independent)
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135. To ask the Minister for Jobs, Enterprise and Innovation his views on correspondence (details supplied) concerning small and medium enterprises and the minimum wage; and if he will make a statement on the matter. [8303/16]

Photo of Gerald NashGerald Nash (Louth, Labour)
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The Low Pay Commission was established last year through the National Minimum Wage (Low Pay Commission) Act 2015 and was one of the key commitments in the Statement of Government Priorities agreed in July 2014. The Low Pay Commission’s main function is to, on an annual basis, examine and make recommendations on the national minimum wage, with a view to securing that the national minimum wage, where adjusted, is adjusted incrementally over time having had regard to changes in earnings, productivity, overall competitiveness and the likely impact any adjustment will have on employment and unemployment levels. The national minimum hourly rate of pay increased to €9.15 per hour on January 1st this year following Government acceptance of the Low Pay Commission recommendation of July 2015 to increase the rate from €8.65 per hour.

In Budget 2016, when the increase in the National Minimum Wage to €9.15 per hour was announced, a number of related measures were introduced in order to ensure that the benefit of this increase was not lost to taxation for the employee and that the effect of the increase in the National Minimum Wage to €9.25 per hour on employer’s liability to PRSI was mitigated.

The employer’s PRSI threshold, where an employer’s liability to PRSI on all of the employee’s income increases from 8.5% to 10.75%, was increased by €20 from €356 to €376 in order to keep this threshold above the weekly wage for a full-time worker on the increased minimum wage, thereby mitigating the cost to employers of that increase. Due to the budget changes introduced the employer will pay PRSI at 8.5% and not move to the previously higher rate of 10.75% when paying the additional €1,014 per annum. This reduces the additional PRSI paid by an employer to €86.19 per annum.

The Low Pay Commission is an independent body and it seeks submissions from interested parties in relation to the National Minimum Wage. A public consultation process requesting submissions on the National Minimum Wage recently closed on the 11th of March 2016. However, I will forward the points made in relation to the NMW to the Commission Secretariat.

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