TASC PRSI Step Effect for Low Income Workers
13 June 2014
A worker on €18,304 does not pay PRSI, but a worker on €18.305 pays €732 - and comes out with lower take-home pay. This 'step effect' in the social insurance system is inequitable and should be removed.
Because employer's PRSI goes up at the same time, the total cost of giving someone an extra one euro in the year could be as much as €1,680. This creates a ceiling that traps many people in low pay, makes overtime or extra hours meaningless, and acts as a barrier to moving from welfare to work.