The Gibraltar Federation of Small Businesses (GFSB) says it has taken note of the recent Government announcement regarding a 5% increase in the minimum and maximum social insurance contributions 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 says it is encouraging the Government to recognise how these changes will impact businesses in practice. With many employers already facing mounting financial pressures including a rise in the minimum wage, the GFSB says 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." 

A statement continued:

“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 additional employer social insurance contributions and £12,480 in additional wage costs due to the £0.60 hourly minimum wage increase (based on a 40-hour work week). 

“Concerns Around Minimum Contribution Structure 

“The GFSB is also raising concerns about how the current minimum contribution structure affects part-time employment. In certain cases, social insurance contributions may exceed the wages earned by employees working limited hours, thereby discouraging lawful part-time employment and restricting opportunities 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-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.” 

Call for a Targeted Review 

“The GFSB recognises the complexity of social insurance policy and the need to strike a balance between contribution levels, employee protections, and long-term financial sustainability. However, the Federation believes that a targeted review of the current system is urgently needed, particularly 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 practical solutions that protect social welfare, sustain business viability, and promote fair and inclusive employment practices.”