James Leonard
Question:35 Mr. Leonard asked the Minister for Enterprise and Employment if he has examined the complaint from employers in County Monaghan regarding the difficulties they are experiencing in recruiting staff. [16822/95]
Written Answers. - Staff Recruitment Difficulties.
I have recently received representations from the Deputy on behalf of a manufacturer in County Monaghan outlining difficulties he is experiencing in recruiting staff. I take it this is the complaint the Deputy is referring to and I have based my answer on the representations expressed in that submission which I have examined.
The correspondence outlines a situation which, given our real unemployment problem, must be considered as perverse. A manufacturer whose output is almost entirely exported has created real jobs but finds it very difficult to fill them. It is of real concern to me that the company has such difficulty in filling these jobs. Clearly we must find ways of incentivising people to take-up such employment.
There are four specific areas of policy which Government is addressing to help further incentivise the uptake of employment.
First, we are improving the after-tax income for workers, and in particular, workers on low income. In this context the general tax and PRSI position of the low paid has been improved in the last two budgets. Provisions introduced in the '94 and '95 budgets:
(a) exempted low incomes from health and employment levies;
(b) increased standard rate income tax bands;
(c) increased personal income tax allowances;
(d) introduced a PRSI allowance of £50 per week for full rate contributors so as to focus relief on low income earners.
These measures were introduced to increase the net take home pay of workers, particularly targeting the low paid.
Second, along with seeking to improve the after tax income of low paid workers, the Government has made considerable progress in reducing the cost of employing people through the introduction of a new lower contribution rate for employers PRSI in 1994, as amended in 1995. These measures were specifically introduced to reduce the costs of employing staff and consequently ease the competitive difficulties of business.
Third, the expert working group on the integration of tax and social welfare systems, which is considering the interaction of the tax and welfare systems, is due to report soon to the Minister for Social Welfare. The interaction of these systems can produce serious unemployment and poverty traps and as Minister for Enterprise and Employment I will clearly be very interested in both their analysis and policy prescriptions on this important issue.
Fourth, the welfare system comprising of direct payments and secondary benefits, can blunt the incentive for certain groups to take up employment. The measures taken to alleviate poverty can perversely contribute to unemployment which is in itself the greatest single cause of poverty. This problem is most severe for those with families.
In the context of the above, a number of the measures announced in the 1995 budget improved the take home pay position of workers generally. Furthermore, the income of families with dependent children have also improved irrespective of whether the parents are employed or unemployed, through the increase in child benefit of £7 per month per child as announced in the 1995 budget.
A back to work scheme introduced in 1993 by the Department of Social Welfare provides a tax free income support for lone parents and those unemployed for more than 12 months to re-enter employment or become self-employed through a business start up. Participants under the scheme are allowed to retain a certain percentage of relevant social welfare payments for three years. They also retain secondary benefits, such as medical cards, rent allowance etc. where total of income from employment and the back to work allowance is less than £250 per week. Certain conditions are attached to this scheme by the Department of Social Welfare including the condition that the employment proposal involved creates a new job either in paid or self employment. This scheme is focused on reducing the participant's exposure to loss of social welfare income on changing employment status. As such, this scheme provides an incentive to avail of employment opportunities where additional staff are being taken on by employers.
Clearly, given the existence of both considerable unemployment and disincentives to accept employment when offered, there are serious problems with the operation of the labour market. My Department is currently reviewing policy in relation to the operation of the labour market in the context of a wider pro-employment policy review. In addition my Department is also, along with other relevant Government Departments, overseeing the preparation of a comprehensive strategy to deal with unemployment for Government to implement over the coming months. The four specific areas I have referred to above will be considered in that context and I and my Department will examine any reasonable proposals to encourage the unemployed to seek and accept employment.