Paul Murphy condemns PRSI hike, calls bill regressive
Paul Murphy spoke on the bill introducing pay-related jobseekers' benefit, welcoming the benefit but opposing its funding method. He warned he and People Before Profit will vote against the bill because it raises employees' PRSI and hits ordinary workers.
Stance on the pay-related jobseekers' benefit
The speaker welcomed the introduction of pay-related jobseekers' benefit as long overdue, saying it will prevent workers from being pushed below the poverty line. However, he criticised the design as minimal and intentionally exclusionary, arguing it will not reach many workers or provide full replacement levels.
PRSI increases and direct impact on workers
He criticised section 3 of the bill which raises employees' PRSI from 4% to 4.7%, a rise that will affect every full-time worker and part-time workers earning over 424 euros. He gave concrete figures: a full-time worker on the minimum wage would pay an extra €178.55 in PRSI, a worker on the average wage would pay almost an additional €350, and self-employed workers would see an increase of about €150 to their minimum annual payment.
Alternative funding options put forward
The speaker argued the measure could be funded by higher employers' PRSI rather than increasing employees' contributions. He noted the recent employer PRSI threshold change from 441 to 494 euros costs the Social Insurance Fund €60 million a year—exactly the amount a 0.1% rise in combined PRSI would raise in October. He cited comparative rates, saying the 11.05% employers' PRSI rate is well below the EU average of 22.62% and far below France's 45%.
Proposed employer PRSI increases and revenue estimates
Referencing an alternative budget calculation, he said a 2% increase in the 11% employers' PRSI rate plus a new 19.75% rate on salaries over 90,000 euros could raise more than €2.5 billion a year—many times the revenue expected from the government's proposed employee PRSI rise. He urged that any PRSI increase should fall on employers rather than on employees.
Benefit levels, exclusions and cost-of-living context
He criticised the benefit cap of €450 a week as too low and highlighted that only workers earning €750 a week or more would receive the full €450; others would get 60% of their wages, meaning a full-time minimum-wage worker on €508 a week would receive €304.80. He also warned the PRSI increase comes amid a severe cost-of-living crisis, citing Barnardos' finding that nearly half of families have had to cut back on essentials, and decried planned excise and carbon tax increases in August and October as part of three tax increases in three months.
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Thanks a lot, last Ken Corlea, just for the benefit of other people who may be later on the speakers list, I'll take about 10 minutes or so. Excuse me, I welcome the introduction of pay-related job seekers' benefit in this bill. It is long overdue that workers aren't plunged way below the poverty line as soon as they lose their jobs. But, I do have a real problem with how the government is proposing to pay for it. This bill, which we are being asked to vote on today, is going to hit all full-time workers with a PRSI increase, every year for the next five years, one increase building upon the other. So people before profit will vote against this tax increase on ordinary workers. There is absolutely no need to increase employees' PRSI to fund pay-related job seekers' benefit. It could easily be funded by simply a larger increase in employers' PRSI. Section 3 of the bill provides that the rate of PRSI all full-time workers' pay will go up from 4% to 4.7%. That is a significant increase that every full-time worker in this country, and any part-time worker who earns over 424 euros, will feel in their pockets. Unlike other kinds of income tax, which you pay a higher rate as you earn more, all full-time workers pay PRSI at the same rate. So it is a flat, regressive form of income tax. In concrete terms, this bill means that a full-time worker on the minimum wage will have to pay an extra €178.55 in PRSI. A worker on the average wage will have to pay almost an additional €350. Self-employed workers are also being hit with an increase of €150 in their minimum annual self-employment payment. Instead of hitting workers, the government could increase employers' PRSI by a lot more than the 0.7% that they are planning at the moment. It could start by rolling back the employers' PRSI tax break it gave bosses just last week as part of its business support package. IC2 have calculated that by increasing the threshold for the lower employer PRSI rate from 441 to 494 euros, the government is costing the Social Insurance Fund 60 million euros a year. Coincidentally, that is the exact same amount that will be raised with a 0.1% increase in all, both employee and employer, PRSI rates in October. So the government is acting like a reverse Robin Hood, taking money out of workers' pockets in order to stuff it in the pockets of the bosses. Let's not forget that employers' PRSI in this country is one of the lowest in Europe. The government's own tax strategy group found that even the higher employers' PRSI rate of 11.05% is less than half the EU average rate of 22.62%. It is less than a quarter what employers pay in France, where employers' PRSI is 45%. In People Before Profits' latest alternative budget, we calculated that more than an additional 2.5 billion euros a year could be raised from a relatively small 2% increase in the 11% rate of employers' PRSI, combined with a new employer PRSI rate of 19.75% on salaries over 90,000 euros. This is many times more what the government is planning to raise from increasing PRSI on everyone. If the government wants to increase PRSI, then that's what it should do. It should increase PRSI for employers by several percent, and not increase it for all employees. It is a false idea of equality, that we're going to increase it like this for employers, and then we're also going to increase it like this for employees. Maybe the Minister hasn't noticed, maybe the government hasn't noticed, but workers are still in the midst of a terrible cost-of-living crisis, and now you're asking them to pay more tax on their income. Barnardos told us yesterday that nearly half of families in this country have had to go without or cut back on essentials like food or heating in the last six months. It beggars belief that in the midst of that kind of deprivation, the government is going to hammer people with a PRSI increase, on top of the increases in excise and carbon tax on petrol and diesel that it's planning in August and October. Three tax increases in three months from this government. And, of course, they're increasing the most regressive kinds of taxes that hit low-paid workers the hardest, not progressive taxes on bosses and on genuinely high earners. As I said at the outset, I do welcome the introduction of pay-related jobseekers' benefit. It will make a real difference for workers who qualify for it if they lose their jobs, that they won't be pushed below the poverty line. However, the government is doing it in the most minimal way possible, and it's designed it to exclude as many workers as is possible. The minister earlier kind of referenced this in her opening statement by saying that, well, if we tried to do a perfect one, we wouldn't be here. It would take the same amount of time to write legislation that actually applies to a greater number of workers, gives them a greater level of protection as it would to write what the government has brought before us. Yes, it may create more opposition from the bosses in IBEC, I guess that's what you're getting at. No? Okay. Well, it won't take any more time to write the legislation. It will take the same amount of time. It is designed to exclude as many workers as possible. Many won't qualify for the payment at all or will not get the full rate. A maximum payment of 450 euros a week is the least a government with a 65 billion euros surplus thought that they could get away with. ICTU have said that they're glad that the principle of pay-related unemployment benefits, the norm across Europe for generations, is being adopted. But they are very unhappy with the stingy level of benefit, which was nowhere near replacement level. The maximum level is only 450 euros a week, but many workers won't even get that. Only workers that earn 750 euros a week and up will get the 450. The rest will get 60% of their wages. So a full-time worker on the minimum wage of 508 euros a week will only get 304.80 in this new benefit. It seems the government thinks that low-paid workers need less income when they lose their jobs than high-paid workers. Is 304 euros and 80 cents a week enough for workers who lose their jobs to continue to pay their rent or their mortgage, their groceries, their energy bills, their transport costs, without going into debt? Could you, the other ministers, manage all of your bills on 304 euros and 80 cents a week? Less even than the pandemic unemployment payment before the inflation that we've seen over the last number of years. The new pay-related job seekers benefit is also only to last for three months at the full rate. After that, it's cut to a maximum of 375 a week for the next three months, and after that to 300 a week for the next three months. So workers who can't find a job will be pushed deeper and deeper into grinding poverty. On top of all of that, the new pay-related benefit is to be taxed. So workers won't even get that full amount into their pocket. Big business in this country gets tax break after tax break, writing off billions in profits through various loopholes every year. But workers will have to pay tax on their dole. This bill, unfortunately, also continues Fianna Fáil and Fine Gael's policy of systematic discrimination against young workers. Not satisfied with paying young people those under 25, 90 euros less job seekers a week than older workers. They're also excluding the vast majority of them from the new pay-related job seekers benefit. They'll have to pay the extra tax if they're in work, but most of them won't qualify for it. Because to qualify for the maximum rate of 450 or 60% of your wages, you have to have paid five full years of PRSI. Even to qualify for the reduced rate at a maximum of 300 euros, you have to have paid two full years of PRSI. So two workers with the same job, with the same pay, who get laid off on the same day and go down to the same social welfare office, will come out with differing levels of support. The older worker will get 450 euros a week, and the young worker will get 141.70. Could you give young people a stronger signal to continue to emigrate out of this country than if you tried? I'm sure that your department has run the numbers about what age workers will on average qualify for the full rate of pay-related job seekers benefit. I presume that is factored into how much you think it is going to cost. I'd be interested in hearing those figures today. What is the average age that people will qualify for the full rate of pay-related job seekers benefit? I would suspect that it's a lot older than 25, which is the cut-off point for the disgraceful age-based discrimination for job seekers allowance. I also want to know if young people will get any credit for years spent working abroad because they can't afford to live in this country because of the housing and cost-of-living crisis. Or will they be starting from scratch when they finally return home here after maybe spending their 20s working abroad in countries that they find less hostile to young people? It seems it's not enough for this government that young people are stuck living at home with their parents into their 20s and into their 30s. Now the discrimination against them in terms of social welfare is going to go on and on as well. For those reasons, while again we welcome the principle, we welcome the introduction of pay-related job seekers benefit, we are going to oppose the bill at this stage.
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