UK or Republic of Ireland – Whose employees cost more?
Have you ever wondered if employees in the UK cost more to employ than their comparable employees in the Republic of Ireland? Let’s break it down and find out.
Wages – How does the minimum wage stack up?
In the UK, the minimum wage for employees who are 23 years old and up is £8.91. When this is converted, it translates to €10.48 at an exchange rate of .85 (the average exchange rate as of June 2021). Compared to the €10.20 minimum wage in Ireland, this equates to an additional 3% cost for employers in the UK. But that’s not all! Let’s keep digging.
Social Benefits – PRSI Versus NIC
Another significant cost for employers in both countries is something called Employer PRSI — known as Employer’s National Insurance Contributions (NIC) in the UK. In the United Kingdom, Employer’s NIC is 13.80%. Compared to the ROI’s Employer PRSI of 11.05%, this represents an additional cost of 2.75% per employee for employers in the United Kingdom.
On that basis, you could surmise that for employers who are operating in sectors paying the minimum wage, your UK equivalent employees will cost an employer roughly 5.75% more to employ compared with their counterparts in the Republic of Ireland.
Other benefits that will cost more for employers
However, this doesn’t factor in that the UK has additional employer costs such as statutory sick pay and pension auto-enrollment. Their payroll system has far more elements and complexities to it that employers in the Republic of Ireland don’t have to navigate.
It begs the question, then, why is it that we think wages and salaries in the Republic of Ireland appear to be higher compared to those in the UK? Is this true, or perhaps this is just a myth that was created and perpetuated by ourselves?
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