Proposed Changes in PRSI and Sick Pay | Collins McNicholas

Proposed Changes in PRSI and Sick Pay

As MD of one of the leading recruitment agencies in the country I am completely opposed to the comments of the Minister for Social Protection Joan Burton where she advocated the idea of increasing the rates of PRSI and where she proposed to make private sector employers responsible for paying the first four weeks of sick leave of any employee who is absent from work due to certified illness.

  1. Proposed Increase in PRSI rates

It flies completely in the face of the government jobs and competitiveness strategies to advocate an increase in PRSI costs at the present time.  The Minister should consult with her cabinet colleagues and particularly with her colleague Minister Richard Bruton Minister for Jobs, Enterprise and Innovation before advocating such an ill-advised proposal.

I suggest that the Minister should also speak with Barry O’Leary CEO IDA as to the likely effect of her proposals in assisting the IDA to attract FDI projects into Ireland.

Finally I think she should also consult with Mark Fielding CEO ISME who has gone public on the effect of such a proposal would have on member companies of ISME many of whom are struggling to stay in business and who can ill afford any additional costs after four years of recession.

From my own point of view as MD of a recruitment agency which has been assisting FDI companies to set up here over the past twenty years I believe that PRSI rates much like Corporation Profits Tax is an issue where companies proposing to set up in Ireland want certainty as to their cost base for at least ten years. Any proposals to increase costs can undermine the efforts of the IDA and scare prospective employers away from Ireland and in the direction of other countries who will guarantee them continuity in such matters. After the bailout the government and the IDA had to work hard to re-assure prospective FDI companies that Ireland’s Corporation Tax Rate was not going to change – similar certainty is needed in relation to PRSI rates.

  1. Proposal to Make Private Sector Employers Responsible for paying the first four weeks of Sick Pay.

I would offer the same advice as above to the Minister as to who she should consult in relation to this particularly ill-advised proposal. Additionally my respectful advice in this case would be to also suggest to the Minister that she would be better advised in tightening up the overly generous arrangements relating to the payment of sick pay to public sector employees rather than initiate a move towards similar arrangements in the private sector. In fairness to the Minister I note she has advocated some tightening up in the public sector from 2014 but these restrictions do not go nearly far enough and should be implemented from the beginning of next year. The present sick pay practices in the public sector are a source of scandal and these should be tightened up dramatically in line with best practice in the private sector.

One relevant point on this issue which the Minister might consider – many private sector employers do pay sick pay in cases of genuine illness but they do not want to see a system being made compulsory payment irrespective of whether a person is genuinely ill or not.

As a former HR Manager the idea of a designated number of sick days is something I would not agree to on the basis that they would effectively become de facto additional holidays. This is what has happened in the public sector and also in some private sector companies who mistakenly implemented such ill-advised sick procedures.

I note that in the last couple of weeks the Minister is proposing that her proposals to sick pay would be limited to employers with more than one hundred employees. While this is welcome I would suggest the proposal remains flawed and if implemented will deter some FDI from locating here and will also result in increased absenteeism and reduced competitiveness in companies who have to implement the Ministers proposals.

In summary I think we need joined up thinking at government level to see that any proposals implemented in the coming budget and in future budgets should be pro jobs and pro competitiveness – as a country and as a people we can afford nothing less.

Colman Collins 28th August 2012