The GFSB has noted the recent announcement of a 5% increase in the minimum and maximum social insurance contributions payable by employers, employees and self-employed individuals.

While recognising the need to sustain Gibraltar’s social insurance system, the GFSB is encouraging Government to provide clearer explanations about how these changes affect businesses in practice. With many employers already managing a range of rising costs, including an increase in the minimum wage, a better understanding of the impact on different employment scenarios would help business owners plan ahead.

“To support local employers and increase public understanding, we believe practical examples would be helpful,” said Eran Shay, Board Director at the GFSB. “This would allow businesses to better assess the impact of changes and plan accordingly.”

For example, the combined effect of recent announcements could be significant for some employers:

• For a business in the hospitality sector employing 10 staff on minimum wage and one manager, the annual impact will include:
  • £1,532 in additional employer social insurance contributions
  • £12,480 in additional wage costs due to the £0.60 minimum wage increase (assuming a 40-hour week)

The GFSB is also highlighting concerns about the minimum contribution structure, particularly for employees working limited hours. In some cases, social insurance contributions exceed the actual wages earned by part-time staff, creating a disincentive for lawful employment and limiting opportunities for individuals seeking flexible work.

For example:

• An employee working 5 hours per week at minimum wage would earn £47.50 per week.
• Under the current rules:
  • The employee pays £14.33 in social insurance (around 30% of earnings)
  • The employer contributes £31.97 (around 67% of earnings)
  • This results in:
    • A net wage of just £33.17 for the employee
    • A total cost of £79.47 for the employer

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

The GFSB recognises the complexity of social insurance policy and the need to balance contribution levels, employee protections and long-term sustainability. However, the Federation believes a targeted review of the system is now needed, particularly to ensure it supports Gibraltar’s diverse and evolving labour market.

The Federation is ready to work constructively with Government and stakeholders to explore solutions that protect social welfare, support business sustainability and promote fair, inclusive employment practices.

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