Belfast Telegraph

Wages stuck at decade-old levels, think tank warns

By Gavin Cordon

Workers face "dreadful" earnings growth, with wages on course to be no higher by 2020 than they were nearly a decade ago, a leading think tank has said.

But self-employed workers will continue to pay thousands of pounds less in National Insurance contributions (NICs) than their employee counterparts, despite Chancellor Philip Hammond's Budget increase, said the Institute for Fiscal Studies (IFS).

Director Paul Johnson said the 2% rise in Class 4 NICs paid by the self-employed would close a "small fraction" of the gap with the contributions paid by employees.

Mr Johnson strongly criticised David Cameron's "foolish" pledge at the 2015 General Election that there would be no increase in NICs, income tax or VAT, which left Mr Hammond facing accusations he broke a Conservative manifesto commitment in Wednesday's Budget.

"The 2% increase in NICs for the self-employed closes a small fraction of the gap between employees and the self-employed," Mr Johnson said.

"In combination with the abolition of Class 2 NICs to be introduced at the same time, it will leave any self-employed person with profits of less than about £15,570 better off.

"The maximum loss affecting those with profits over £45,000 will be £589 per year.

"The tax advantage of being self-employed will still run into the thousands of pounds.

"A tax system which charges thousands of pounds more in tax for employees doing the same job as someone else needs reform.

"It distorts decisions, creates complexity and is unfair."

Belfast Telegraph

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