Clothing sector calls for PRSI changes

RADICAL steps should be taken to reduce PRSI and boost lower-paid workers' take-home pay, in the forthcoming Budget, the Irish Clothing Manufacturers' Federation (ICMF) has said.

A similar call has been made by SIPTU, which represents most workers in the clothing trade. SITPU and ICMF representatives met Department of Finance officials yesterday to argue their case for special Budget measures to help maintain jobs in the clothing sector.

SIPTU has also urged the Minister for Finance, Mr Quinn, to reduce the 21 per cent VAT rate on clothes, which it claims has cost hundreds of jobs. It says lowering the rate will help protect jobs and deal with the threat of cheap imports.

The ICMF's submission says the Minister for Finance should reduce employers' PRSI from 9 to 5 per cent the equivalent rate for clothing workers in Britain. Such a step would lead to an immediate boost in competitiveness, it says.

The ICMF says that given the pound's strength against sterling reducing employers' PRSI would be a lifeline to companies in traditional areas of the economy including clothing.

In its pre-Budget submission, published yesterday the ICMF calls for the introduction of a £3 million special training fund to help alleviate the problems caused by the level of the pound against sterling.

It says this would be similar to the £5 million scheme which was launched in 1993, following the increase in VAT on adult clothing and footwear.

The ICMF says the current focus on improving take-home pay for lower paid workers should be maintained. It says single clothing workers still pay between 17.5 per cent and 25 per cent of their income in tax.

The lobby group argues that the situation becomes more complex for married workers, where it often does not pay to work. "In particular, many companies would like to attract older, skilled workers back into the workforce, who may have stopped working for a number of years due to family commitments." it says.

The ICMF says the PAYE allowance should be increased to £1,800 in real terms and an allowance of £1,000 for workers aged 16-19, should be introduced, but phased out after two years.

It also calls for the 27 per cent tax band to be widened by £2.000 for single people, or £4,000 for married people, over five years.