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Changes to subsidy scheme: State will now pay up to 85% of wages for lower income workers

The Finance Minister today announced a number of changes to the subsidy scheme to address gaps that left some workers worse off.

Image: Leon Farrell

FINANCE MINISTER PASCHAL Donohoe announced a set of changes to the wage subsidy scheme today. 

Changes to the scheme will mean that those earning less than €24,400 per year (€412 per week) will see the subsidy paid by the State rise from 70% to 85% of their previous net weekly pay.

For employees with a previous net pay between €412 and €500 per week (up to €31,000 per year), the subsidy is up to €350 per week. 

Last week, the minister admitted there was a “gap” in the temporary wage subsidy scheme that sees some workers worse off if they are kept on by their employers.

Today he said the scheme had been designed and introduced with great speed and it “stood to reason” that there were anomalies that needed to be ironed out to ensure greater fairness. 

The changes today are designed to address those issues, he said. 

“The whole world is facing a time of unprecedented difficulty. Here in Ireland we are working hard to ensure the impact and fallout from what is happening is minimised for our people to the greatest extent possible,” Donohoe said.

Today’s measures serve to reinforce that message and to offer additional comfort to employer and employees in the period ahead.”

More than 43,000 employers have registered for the scheme and over 26,000 of these have already received a refund. The minister said he has been advised by Revenue that over 255,000 workers have already received at least one payment under the scheme and 84% of employees have also received a top-up payment from their employer. 

In addition to the increase in the percentage paid by the government for low-income workers, there has been a change to the tapering applied to the subsidy if employers wished to top-up their wage.

Previously, if an employer topped up payments by more than the permitted amount the subsidy would be tapered – for every €1 extra paid, €1 would be taken from the subsidy. 

Now, where an employer wishes to pay a greater level of top-up in order to bring them to €350 per week, tapering will not be applied. 

Minister Donohoe has also determined that the wage subsidy is now available to support employees where the average net pre-Covid salary was greater than €76,000, and their gross post-Covid salary has fallen below €76,000. 

A tiered arrangement, which also now applies to those earning in excess of €38,000 will apply.

Speaking to RTÉ earlier, Donohoe said today that the changes to the scheme being made today aim to keep people on in their workplace. 

He said the changes will pose additional costs for the Exchequer, and depending on how many employers avail of it, it could increase the cost from €100-€140 million.

However, Donohoe said he hopes that the change would mean fewer people having to access the pandemic payment.

“It does increase cost in one area but creates saving in another,” he said.

Currently, 533,000 people are on the pandemic payment. The minister hopes this number might fall when these changes come into effect.

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