Business Irish

Monday 18 December 2017

Burton to seek cuts in welfare if employers don't accept charges

Sick pay, redundancy rebates and PRSI in minister's sights

Charlie Weston, Personal Finance Editor

SOCIAL Protection Minister Joan Burton may be forced to scrap the bereavement grant and the half-carer's payment for those on social welfare if she is unable to force higher charges on employers, it has emerged.

The minister is hoping to get employers to pay for sick leave and also reduce the amount of redundancy payments picked up by the State.

These two measures could save the department €200m, but the proposals have drawn a furious response from business lobby groups.

Ms Burton is understood to be looking at bringing in legislation which would require employers, and not her department, to cover the first four weeks' pay when an employee is on sick leave.

Employers' contributions to sick pay are currently subsidised by a social insurance fund, but this allowance would be cut under the new proposals.

And her department is also looking at reducing the rebate paid to employers when they lay people off.

At present, employers get 60pc of the redundancy payments back from her department, though what is called the social insurance fund which comes from PRSI payments.

She is considering reducing the employers' rebate on redundancy payments to 30pc.

So far this year, the State has paid out €382m in redundancy claims, the Irish Independent has learned.

Last year, €469m was paid out in redundancy rebates.

These payouts have left a deficit of €1.9bn in the social insurance fund.


The fact that the State pays 60pc of a redundancy payment for someone laid off is in sharp contrast to the UK, where nothing is paid by the government.

There is concern in the department that generous redundancy rebates have encouraged profitable companies like Talk Talk to lay off people here.

In September, the British telecoms group laid off 575 people in Waterford.

And Ms Burton is concerned that PRSI (pay related social insurance) here at 9.7pc for employers is low compared with other countries.

In Finland it is 18.2pc, 16.2pc in Germany and 23pc in Belgium.

IBEC director Brendan McGinty said making employers cover social welfare costs was "simply an extra tax on employment, at a time when jobs should be the priority".

"Employees and employers already make obligatory PRSI contributions to support social welfare provision," he said.

"Any move to increase this already substantial contribution will come at a serious cost and would force all employers to reassess their sick pay policies.

The Department of Social Protection is expected to find €700m in cuts from its annual €21bn budget.

If the savings cannot be found from the social insurance fund it is understood the bereavement grant of €850 paid to those to cover funeral costs may be targeted instead.

There could also be a move to do away with the half-carers' rate. This is paid to those getting certain social welfare payments and providing full-time care to another person. They get a social welfare payment and get half-rate carer's allowance as well.

It is also expected that another cut in child benefit payments is highly likely.

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