Government Payouts

Rongil

I was made redundant last year and received the statutory payment for my 10 years of service. When I went through the documentation process I noted that the company was going to receive a 60% rebate on the cost of my redundancy pay. The question is, what possible benefit is this rebate to the taxpayer? None that I can see.

It makes it easier for the companies to make people redundant, as they will get most of the money back and so they don't have to think long and hard on their cost cutting measures. Overall, this payout must contribute to the amount of people now unemployed.

Why should taxpayers subsidize private companies? How many other payouts are there, that are hidden from the taxpayer and contribute to a bigger spending bill.

Joe1919

I suppose, the employer may argue that he has already paid 8-10% of what your gross wages is into the 'insurance' fund and this is much greater than what goes towards the redundancy payment.
(60% of 2 weeks/year = about 2.5% per annum of gross pay which is considerable less than the 8 - 10% p.a he pays in employer PRSI.)
I suppose he may also argue that he should receive some benefit from the PRSI 'insurance' fund.

The other thing I would fear is that your proposal may be a double edged sword in that it may discourage employers from furthering hiring people (if they are penalised by receiving no assistance from the PRSI fund that they have paid into) and hence, some nameless unemployed worker, who may have benefited from a potential new job, would be the loser.

Rongil

I sort of see your point, but. The PRSI is a social insurance mixed with a health fund and is there to pay for the social services. Unemployment, old age etc. The individual pays for this and the company does as well as a means of funding these services. Then when times get hard the company wants it's share back.

My case may be an oddity, but my company (after 10 years service) was bought out by another, who then made me redundant after 4 months and got paid out 60% of the cost. Who's the winner?

Also, if companies employed people on the basis that they would not get paid, if they made the employee redundant, then they would not really be serious about being a growth company.

Joe1919

I was made redundant a few years. To be honest, I was under the impression at the time that both the unions and the employers were happy about the 60% arrangement because it made it that bit easier for them to get better redundancy terms. But perhaps, they were better days ......

It also helped if your employer was totally bust and had no money to pay.

Rongil

In the grand scale of things, this rebate law has been around since 1979, by the looks of it and so it is now well embedded. However, if one considers the recent massive rise in unemployment at 200,000 and a possible average rebate cost of 4,000, then we have a total outlay from the PRSI fund of €800 million. That's quite a lot of cash and possibly why social payments have been dropped by +/- 5%.
I agree that for small firms on the bread line this payment could be quite welcome.