In this week’s public policy bulletin, we take a look at the record Exchequer receipts for 2022 reported by the Department of Finance. We also examine the commencement of the new statutory sick pay rules and increase in the national minimum wage that took effect this week. Additionally, we review the NTMA’s launch of its latest 20-year green bond as well as the 30th anniversary of the European Single Market.
Department of Finance reports record Exchequer returns for 2022
According to figures published by the Department of Finance this week, the Exchequer collected a record tax take of €83.1 billion during 2022. Resulting in an overall budget surplus of €5 billion (compared to the deficit of €4.7 billion seen in 2021) the buoyant figures reflected a strong growth in tax revenue together with a decline in COVID-related public expenditure. However, excluding estimates of windfall corporation tax receipts, the figures reported are consistent with an underlying general government deficit in the region of €5.25 billion. In addressing these windfall tax receipts, the Department of Finance estimates that approximately half of these receipts are potentially at risk in coming years with the Government therefore transferring a significant portion of the windfall tax collected to its National Reserve Fund.
Statutory entitlement to employer-paid sick leave takes effect alongside increase in national minimum wage
Following the enactment of the Sick Leave Act last year, new provisions entitling employees to up to 3 days of employer-paid sick leave in a year (paid at 70 percent of gross salary up to a cap of €110 per day,) have formally taken effect this month. Where an employee has an extended period of illness, the scheme will operate alongside the existing illness benefit system which kicks in on day four of an absence. Once the employee has exhausted their entitlement to employer-paid sick leave, they will move onto illness benefit, if eligible.
In addition, the National Minimum Wage this week increased from €10.50 to €11.30 per hour. This 7.6 percent increase will see employees on the National Minimum Wage, who work a 39-hour week, receiving a pay increase of €31.20 per week or more than €120 per month. The increases mark a further step toward the Government’s ambition to introduce a National Living Wage which will be set at 60 percent of hourly median wages in line with the recommendations of the Low Pay Commission. It will be introduced over a four-year period and will be in place by 2026, at which point it will replace the National Minimum Wage.
NTMA raises €3.5 billion from the sale of a new 20-year green bond
The National Treasury Management Agency (NTMA) has this week raised €3.5 billion through the syndicated sale of a new 20-year Irish Sovereign Green Bond (ISGB) maturing in October 2043. The funds were raised at a yield of 3.106 percent and generated a total order book of €35 billion from just under 300 investors.
Green bonds, an increasingly popular form of sustainable finance, are a type of fixed-income instrument, the proceeds from which must be used for environmental and sustainable development projects. This is Ireland's second sovereign green bond, following the inaugural issue in October 2018.
European single market marks 30th anniversary
This year sees the EU celebrating a significant milestone – the 30th anniversary of the Single Market. Established on 1 January 1993, the European Single Market allows goods, services, people and capital to move around the EU freely facilitating greater market integration between Member States' economies. Having recently published an analytical paper on the state of the Single Market 30 years after its establishment, this year the EU Commission plans to host numerous debates, exhibitions and campaigns co-organised with stakeholders across the EU to promote the successes of the Single Market and engage citizens in discussing its future.
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