5th March 2024
The Department of Enterprise, Trade and Employment, has published 'An Assessment of the Cumulative Impact of Proposed Measures to Improve Working Conditions in Ireland', a study to examine the cumulative impact of measures including auto-enrolment retirement savings, parent’s leave and benefit, statutory sick pay (SSP), additional public holiday, the transition to a living wage, and the right to request remote working.
Over the last number of years, the government have introduced or progressed several initiatives to improve working conditions in Ireland and this assessment, carried out in conjunction with the Department of Social Protection, follows on from a recommendation by the National Competitiveness and Productivity Council (NCPC).
The study provides an overarching assessment of the potential impacts – both costs and benefits – accruing to employers and employees on foot of these measures. The various improvements to working conditions have been signalled in advance, were typically subject to a public consultation process prior to being adopted as public policy and are to be implemented on an incremental basis over a number of years.
Key findings of the study include:
- For large swathes of workers across the private sector – and their employers – these measures will have little, if any, impact given that terms and conditions are already in excess of those stipulated by these changes (that is, pay levels, access to occupational pension coverage, and so on).
- The introduction of these measures would have only a modest effect on the economy as a whole (estimates to range between 1.8% and 2.2% in wage costs) but a single numeric estimate is of limited value.
- The assessment presents results using stylised examples (supported by a series of case studies and workshop findings) and in so doing underscores the sizeable gap in potential impact between different sectors of the economy.
- A broad range of benefits are associated with these measures. For employees in sectors typically characterised by low pay, these changes will lead to not only higher disposable incomes but will also extend access to entitlements such as sick pay and pension coverage.
- There are also benefits for employers. One notable example relates to the issue of staff turnover and the difficulty – and cost – faced by employers in trying to replace experienced staff.
- There are considerable societal benefits from improvements to working conditions, including improvements in terms of gender equality (parental leave), participation rates (parental leave, statutory sick pay), reductions in current in-work poverty rates (living wage), and the preservation of future living standards arising from automatic enrolment in retirement savings.
Minister for Enterprise, Trade and Employment, Simon Coveney TD said the Assessment was an important one and would enable government to provide supports to businesses where they are most needed.
The Minister said:
“This Assessment provides important evidence to us on the impact of improved working conditions for both employers and employees.
“These improvements bring wider societal benefits and will serve to bring Ireland in line with other advanced economies. However, it is recognised – as set out in the report - that businesses may face increased costs, in particular in the short term, as they adjust to these measures.
“Acknowledging that there will be a cost to certain sectors arising from these new measures I am introducing a suite of measures intended to assist businesses in adjusting to these increased costs as well as more generally to improve cost competitiveness of firms.
“This includes making available up to €15 million to Local Enterprise Offices to enable a top up payment of up to €3,000 in the Energy Efficiency Grant for businesses in the hospitality and retail sectors bringing the grant up to €8,000; preparation of an options paper on the application of the lower 8.8% rate of Employer PRSI contribution; a range of measures to reduce red tape and the administrative burden on business, including: an enhanced SME Test; accelerating the roll out of a fully functioning National Enterprise Hub with staff available to provide immediate advice and support to vulnerable firms.”
ENDS
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