Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

342. To ask the Minister for Social Protection his views on the recent changes to the community employment schemes as a result of outcomes; for example, a married man with a dependent spouse and three children qualifies for the equivalent of jobseeker's allowance of €402.20 plus €20.00 totalling €422.20 per week gross, PRSI of €16.89 deducted, resulting in net income of €405.31 per week, an increase of only €3.11 per week for 19.5 hours worked; and if he will make a statement on the matter. [15062/16]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Participants in certain employment schemes, including community employment schemes (CE), receive a weekly payment which is equal to the social welfare payment appropriate to their family size, plus a top up of €22.50. This income has been for many years treated in the same manner as earnings from employment for PRSI purposes, and accordingly is subject to Class A PRSI. Therefore participants on CE schemes, similar to other private sector employees who pay Class A, can establish entitlement to the full range of short term benefits including jobseeker’s benefit, illness benefit, and maternity benefit and to long term benefits including State pension (contributory).Budget 2016 introduced the tapered PRSI Credit to address a significant issue with the manner in which charging PRSI impacts those on lower weekly earnings.

Previously Class A employees became liable to pay PRSI on all earnings, once weekly earnings exceeded €352.01. This created a “step effect” as net income reduced immediately by the full 4% PRSI charge applied to all earnings. This meant that a €0.01 increase in weekly earnings of €352 attracted a weekly PRSI charge of €14.08.

The introduction of the PRSI Credit addressed the “step effect” by reducing the actual amount of PRSI charged, for those earning between €352.01 and €424 in a week. At weekly earnings of €352.01 the maximum PRSI Credit of €12 reduces the PRSI charge payable from €14.08 to €2.08.

As gross earnings increase, the PRSI Credit is withdrawn on a tapered basis. This ensures that the amount of PRSI actually charged will increase in a progressive manner as gross earnings increase. At gross weekly earnings of €424.00, the tapering of the Credit has exhausted and the PRSI charge at 4% applies.

It is estimated that the introduction of the PRSI Credit will benefit 88,369 employments, including those on CE schemes. The benefit for individual employees depends on the level of their weekly earnings. The following table details the extent of weekly gains, at different income bands:

The potential advantage to the CE participant outside of the financial impact as outlined above in taking up a CE place is access to funding for education and training and the opportunity to pursue a major award on the National Framework of Qualifications. This combined with the work experience will greatly enhance the opportunity to gain employment and exit the Live Register.