The Gibraltar Federaon of Small Businesses (GFSB) has taken note of the recent Government announcement regarding a 5% increase in the minimum and maximum social insurance contribuons payable by employers, employees, self-employed individuals and increases to the minimum wage.

While acknowledging the importance of maintaining a sustainable social insurance system in Gibraltar, the GFSB is encouraging the Government to recognise how these changes will impact businesses in pracce. With many employers already facing mounng financial pressures including a rise in the minimum wage, these increases only add to the costs of doing business.

“To support local employers, we believe increases in social insurance should be kept to a minimum,” said Eran Shay, Board Director at the GFSB. “This would make it less costly for businesses to increase employment.” 

The Combined Cost of Recent Changes: 

For example, a hospitality business employing 10 staff on minimum wage and one manager would see an annual increase of £1,532 in addional employer social insurance contribuons and £12,480 in addional wage costs due to the £0.60 hourly minimum wage increase (based on a 40-hour work week).

Concerns Around Minimum Contribuon Structure 

The GFSB is also raising concerns about how the current minimum contribuon structure affects part-me employment. In certain cases, social insurance contribuons may exceed the wages earned by employees working limited hours, thereby discouraging lawful part-me employment and restricng opportunies for individuals who seek flexible work arrangements.

For instance, an employee working 5 hours per week on a minimum wage earns £47.50. Under current rules, the employee pays £14.33 in social insurance (about 30% of their earnings). The employer pays £31.97 (around 67% of the employee’s earnings). This results in a net wage of just £33.17 for the employee, with a total cost of £79.47 for the employer.

“This scenario makes it challenging for small businesses to offer part-me or casual roles, which are essenal in sectors like retail, hospitality and seasonal tourism,” Shay added. “With the potenal for growth in these sectors, it’s important that the system encourages rather than discourages flexible work.” 

Call for a Targeted Review 

The GFSB recognises the complexity of social insurance policy and the need to strike a balance between contribuon levels, employee protecons, and long-term financial sustainability. However, the Federaon believes that a targeted review of the current system is urgently needed, parcularly to ensure that it supports Gibraltar’s diverse and evolving labour market.

The GFSB stands ready to collaborate with Government and other stakeholders to explore praccal soluons that protect social welfare, sustain business viability, and promote fair and inclusive employment pracces.