Dáil Éireann debate -
Tuesday, 23 Oct 2012

Vol. 773 No. 18

Statutory Sick Pay: Motion [Private Members]

Deputy Dara Calleary

I move:

That Dáil Éireann:

recognises:

- the fact that there are 200,000 small businesses in this country that employ more than 655,000 people;

- the ongoing credit and cash flow problems being endured by small businesses;

- that in 2010, employers paid €5 billion or 75 per cent of the total contributions to the Social Insurance Fund;

- that cost competitiveness is one of the key determinants of every firm’s success; and

- that if the cost of doing business is reduced, firms in Ireland will become more competitive;

agrees that:

- the plans of the Minister for Social Protection, to impose what would amount to an additional €89 million in taxation on struggling businesses with the introduction of a new sick pay scheme, should not proceed;

- the Minister is using flawed and misleading international comparisons in justifying her plans;

- an additional taxation burden on employers will drive many small and medium enterprises out of business, damaging the economy and generating more unemployment; and

- the Government has failed to tackle rising costs for businesses; and calls on the Government not to proceed with the job-destroying statutory sick pay scheme.

I wish to share time with Deputies Ó Cuív, Michael McGrath and O'Dea.

I thank the Minister of State, Deputy Perry, for being present for the debate. I also wish to thank my colleagues in Fianna Fáil for allowing our Private Members' time for this week to be used to highlight the issue of the threat posed to small and medium enterprises, SMEs, throughout the country by the plans of the Minister for Social Protection, Deputy Burton, to introduce a very unnecessary statutory sick pay scheme. The Government's amendment to the motion refers to the fact that a consultation process is still under way and that a final decision has yet to be made. It also highlights all the Government believes it is doing in the interests of small business. As on previous occasions, I welcome the introduction - at long last - of the credit guarantee scheme. I do not doubt that the action plan on jobs will be mentioned more often during this debate than the name of Santa Claus at Christmas.

I am concerned that the Minister, Deputy Burton, has form when it comes to attacking and undermining the SME sector. Last year she reduced the redundancy rebate from 60% to 15%. The Government indicated that this measure was taken specifically so that the taxpayer would not be obliged to pay for the redundancies of large employers who were moving to lower-cost locations and that there would be minimal impact on SMEs. That is a laudable aim. However, when I tabled a parliamentary question to the Minister in respect of the breakdown of companies which employ fewer than 50 and which had received redundancy rebates in the previous 24 months, she replied that information in this regard is not available within her Department. How is it possible to state that a proposal will not impact on a sector when the most basic of information is not to hand in one's Department? We now have an idea of the impact this proposal has had.

A survey of 500 businesses carried out by Chambers Ireland and published earlier this month shows that 60.7% of respondents said the cut in redundancy rebate has had a negative impact on their business; 40.7% said it had made them less likely to employ new staff and 18.1% said it had limited their business's ability to survive. I am putting the Minister of State, who has responsibility for small business, and the Government on notice that a second "Burton burden" must not be placed on small businesses. This evening we are beginning our campaign to inform such businesses about this oncoming threat. They must be aware that "Hurricane Joan" is back in town. We encourage small businesses to act and to lobby Government Deputies, in particular, in order to protect their capacity to grow, to employ more people and, in many cases, to remain in operation. I assure those on the Government benches that this campaign will not end with tomorrow night's vote.

Nobody is denying that we need a properly thought-out debate on workplace absenteeism in Ireland and all of the causes and effects relating thereto. However, forcing businesses to pay for the lack of a proper debate is completely unacceptable. Let us reflect on the research available in respect of the current position. The 2011 IBEC guide to managing absence, which is based on data provided by 635 companies which employ in excess of 110,000 people, found that employees missed 5.98 days on average, an absence rate of 2.6%, compared to 3.4% in the last comprehensive survey in 2004; and that absence levels were higher in large organisations, 3.6% for companies with over 500 employees, versus 2.2% for companies with fewer than 50. According to the Secretary General of the Department of Public Expenditure and Reform - in evidence given to the Committee of Public accounts last December - the rate of absence in the Civil Service is 4.9%, an average of 11.3 days a year. This cost the State between €400 million and €500 million in terms of pay. Similar absence levels are reported by local authorities, the HSE and other bodies. When asked about this matter in the Dáil on 22 February last, the Taoiseach stated, "There is little absenteeism in the small and medium enterprise sector and persons who are ill are genuinely out sick". He can, therefore, vouch for the bona fides of the SME sector.

At present, there is no legal obligation on employers to pay sick pay for their employees. If someone is sick for more than three days, he or she can claim from the Department of Social Protection. However, IBEC figures suggest that 60% of employers have voluntarily put sick pay schemes into operation. The Minister for Social Protection, Deputy Burton, has claimed that the system under which the State pays for most employee sickness is different from those which obtain in the majority of other countries. She plans to make employers pay staff for the first four weeks for which they are out sick. However, she has not acknowledged that employers already pay billions in PRSI to cover the cost of many things, including sick leave. In 2010, employers paid €5 billion - or 75% of the total - in contributions to the social insurance fund. As already stated, this covers sick pay benefits. If, therefore, we proceed with the Minister's proposal, will employers be obliged to pay on the double?

The international comparisons the Minister uses in respect of this matter do not recognise that there is no cap on the employers' PRSI rate in this country - which currently stands at 10.75% - or that, unlike the United Kingdom, for example, the rate applies to all income. While some OECD countries have statutory sick pay schemes to which employers contribute, some do not. OECD countries where, in the main, statutory sick pay is not paid by employers include Canada, Greece, Portugal, Turkey, the United States and, except under certain collective agreements, Denmark. These are our competitor nations and they have markets into which we are seeking to trade. We should take note of the arrangements which exist in these countries.

As the amendment to the motion indicates, in February the Minister commenced a consultation process regarding the introduction of a statutory sick pay scheme under which employers will share the cost. She suggests that the annual saving to the Exchequer of such introducing such a scheme could be €23 million, if the employer paid for the first week, or €89 million, if the employer paid for the first four weeks. However, the Minister does not appear to be concerned with regard to from where that €23 million or €89 million will come. I can be of some assistance to her in this regard. For 40% of employers - mainly smaller employers who currently do not have formal sick pay schemes in place - what is envisaged will give rise to a new and substantial additional cost. This new cost burden will be a tax on jobs and will have most effect on smaller, more vulnerable employers who operate low-margin businesses. These employers operate in the domestic economy - in the services and retail sectors - and are among those worst affected by the crisis affecting business. The 2010 Forfás report, Costs of Doing Business in Ireland, showed that for the sectors to which I refer, labour already accounts for approximately 60% of domestic input costs, while for the services sector as a whole, labour costs account for 84% of location-sensitive costs and must be reduced. In the report to which I refer, the Government's own economic agency is telling it something.

For the majority of employers with sick pay schemes in place, the additional cost implication of each week's sick pay could be €188 - based on the current social welfare flat rate - per person. This would be on top of the current high-cost burden of existing company sick pay schemes. Many of these employers would be obliged to further realign their existing schemes in order to cover this additional cost. This will open up entire schemes to negotiation and give rise to difficulties within companies.

We know that a minimum of one in four companies has reduced basic pay since 2008. In the current year, some 74% of IBEC members will either freeze or reduce basic pay. As this is happening, we are imposing a statutory sick pay scheme higher PRSI charges on these employers and obliging them to pay the wages or any replacement workers. Furthermore, we must consider the high administrative costs that will arise. In its amendment, the Government praises itself on the work it is doing to reduce the administrative burden of small businesses and again commits itself to achieving the 25% target in this regard. If a statutory sick pay scheme is introduced, the Government will impose a whole new burden of administration on the businesses in question. It is acknowledged that the statutory sick pay scheme which obtains in the UK places an enormous burden on small businesses in particular.

We must consider the potential impact the introduction of a statutory sick pay scheme here could have on employment levels. We are all about the creation of new jobs and the maintenance of existing employment. A major survey carried out among over 2,000 SMEs throughout the country was published in recent days. This survey was carried out by ISME on behalf of the local business alliance, which represents 30,000 businesses that employ 400,000 people, and is composed of members of RGDATA and the Restaurants Association of Ireland, vintners, hoteliers and companies that employ people locally. Those businesses to which I refer have kept going despite the huge adversity with which they must deal.

Research by ISME and the Local Business Alliance survey show that this potential Burton burden will have a disastrous impact on competitiveness and jobs and that it will lead to an increase in absenteeism levels in the small and medium business sector. The survey confirms that if the proposals are introduced, 96% of companies surveyed anticipate job losses; 94% of companies outlined that their cost base would increase; 94% feel that absenteeism levels will increase with only 1% expecting a reduction. Another group which has done research in this area is Early Childhood Ireland which represents 3,330 child care professionals supporting more than 100,000 children. Its survey found that almost four out of ten child care providers would have to cut staff numbers if the sick pay proposal was introduced while 42% said they would increase their fees. Therefore, those on the lowest incomes who depend on child care will be faced with a cost increase or a reduction in service and this will present difficulties and challenges for small employers and for the social welfare budget. This is the word from the coalface if the Minister proceeds with her plan. That is why we cannot allow the plan to proceed.

I expect to hear a lot about the action plan for jobs. I will begin the process. One of the comments in the jobs plan is:

Cost competitiveness is one of the key determinants of every firm's success. Notwithstanding the cost competitiveness gains made since 2008, a range of business inputs remain relatively expensive compared to other jurisdictions.

Referring to manufacturing the plan states: "Specific challenges facing manufacturing in Ireland include: reducing costs of production in Ireland including costs of labour." With reference to the tourism industry the plan states: "Costs remain high relative to competitors - a structural change to the costs of doing business in Ireland is essential - of particular concern are labour, waste and energy costs and local authority charges."

The Government amendment to the motion refers to those cost reductions in those sectors. However, the Minister of State will know that such reductions are not happening. As we continue to cosset our energy sector and the State-controlled energy sector, we are not seeing cost reductions. This is another cost completely outside of the control of employers. Our labour costs are too high relative to our competitors yet the Minister proposes to increase those costs.

I note some voices of reason within the Government. The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, has said that "proposals for a statutory sick pay scheme would impact on competitiveness and employment. The evidence of this impact will need to be weighed against the potential for savings in terms of reduced absence due to sickness". We have provided evidence from more than 2,000 employers of increased absence, increased costs and very little savings. I call on the Ministers to publish the Forfás report which the Minister, Deputy Richard Bruton, commissioned on the matter in November of last year. I understand it details the potential impact on jobs and competitiveness in the economy and the direct impact on companies to proposals on sick pay from the Minister for Social Protection, Deputy Burton.

The Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, is of a similar view. He heads another Department in a very job-sensitive area. He said on Newstalk radio on 22 February that:

Many small businesses across the country would struggle to afford to be able to pay a significant sick pay bill. Before we would agree to make any changes in this area we would want to think about it very carefully in terms of its impact on employment. That is why it wasn't introduced in the last budget even though some people were strongly arguing for it, including Joan Burton.

This is a Cabinet colleague of the Minister's saying she is committed to the introduction of the scheme. This makes a mockery of the consultation process.

I suggest the Minister, Deputy Burton, should listen to voices within her own party. Senator John Whelan warned that such measures could push many small and medium enterprises "over the edge". He cited Deputy Burton's recent comments to the effect that middle Ireland could not take more financial pain and said: "I do hope that Joan Burton keeps her comments in mind when it comes to any changes within the whole area of employers' PRSI or within the whole area of sick leave in the private sector."

I do not doubt that any Member will break ranks on the vote tomorrow night. However, from reading regional newspapers and Fine Gael press office statements I know that many Members will echo the views of the Ministers, Deputies Bruton and Coveney, and Senator Whelan. The Minister, Deputy Burton, however, does not have a good record and she is not a good listener when it comes to the pressures facing small business employers and their businesses.

Fianna Fáil will not give up on this issue. Tonight is merely the start of a concerted campaign on this issue to show the damage it will do to our economy, to employment and to an already fragile SME sector.

Deputy Éamon Ó Cuív

I am delighted to have an opportunity to say a few words on this subject and I am delighted that the Minister of State, Deputy Perry, is here this evening because I am sure that in his heart and soul, he knows that this is completely misguided. Having worked for years creating employment, I always argue that reduction in costs done in a painless, non-bureaucratic way, is more important than getting grants. The awarding of a grant involves applications and delays. However, if some initiative was able to cut the basic cost of employing people, there was an immediate saving with no added bureaucracy.

When this Government came into office it was going to have a great jobs budget. Of course, it turned out to be a damp squib of a jobs initiative. Since then, when the unemployment figures and the outward migration figures are factored in, this Government has failed abysmally to create jobs.

I do not believe that governments directly create jobs because in the reality of private sector employment, one is dependent on people to come up with the ideas and to create the jobs. We do not have a command economy, thanks be to God. However, governments can make circumstances that are either conducive to job creation or not. This is one plan that if carried through would put an extra burden of €89 million on employers.

The Taoiseach is the leader of the Minister of State's party and I hope he will speak to the Minister and the Tánaiste. With regard to absenteeism in small private sector businesses, I define absenteeism as an employee not turning up for work because he or she does not feel like working. The rate of absenteeism is very low, as is Monday morning sickness, in small enterprises. In most small enterprises where there is a good relationship between the employer and the employees, all of them know that their future survival depends on them all making a contribution. In most such cases, it is more of a team than a boss-worker relationship.

I ask what is the Minister trying to stop. Is it the case she has no other way of making the cuts and this looks like a handy way? I suspect it is the latter. There is no social gain out of this proposal. I refer to the very low rate of absenteeism - at 2.6% - in small private sector employment, against 3.6% for companies employing more than 500. It is understandable why the figure is higher. The public service has even higher levels of absenteeism. Where abnormally high levels of absenteeism exist, then I agree action should be taken and there should be an examination of the reasons for that absenteeism in order to eliminate it. However, there should not be a burden placed on the employer because this will inhibit the creation of employment which is also urgently needed for the physical as well as the financial well-being of our people.

I wish to deal with two specific actions which could be considered as a means of saving money.

The first is to make individuals responsible for the first five days of sick leave. It could be argued that, under this proposal, the current period would be extended by only two days and this would be of little gain. We all know that if someone visits his or her general practitioner with a cold on a Thursday, the automatic reaction is to write a medical or sick certificate for an entire week. In many cases, the period from Thursday to Monday morning is more than sufficient to allow people to recover and to return to work on Monday. In smaller, private sector workplaces, people would return to work in such circumstances without any long-term effect on their health because they feel obliged to try to return to their employment as soon as possible.

People have a tendency to choose round numbers and one week is a round number in this case. I suspect that if we made individuals responsible for the first five days of sick leave, they would ensure any medical certificate provided by a general practitioner would be for two days in circumstances where the weekend was approaching. They would not miss work on the following Monday and Tuesday if it were clear they would have recovered by the end of the weekend. Frequently, people need two days off before returning to work, whereas the norm for doctors is to provide a medical certificate for an entire week. Most people would testify that this is the case. However, many doctors do not consider the consequences of this practice.

Departmental records show that a significant number of sick leave claims are for two days. A great deal of public service time is required to deal with these claims. While I was Minister, I had available to me a figure on the savings that would be achieved by extending the current period of two days to five days. The Minister of State may ask the reason I did not make the necessary change. I was informed by officials at the time that an EU regulation prevented me from making such a change. Unfortunately, I was not in the Department for long enough to ascertain whether, in circumstances such as those prevailing at present, the regulation in question could be changed on the basis that it does not take account of human behaviour such as the tendency of doctors to provide medical certificates for one week. It is possible to make this change and it would not impose an unwarranted burden on employees. In many cases, the two days normally taken at the end of a five-day medical certificate would not be taken.

I used to be annoyed by another practice that is common in the public service. If a person has a medical certificate for one month and feels well enough to return to work after three weeks, he or she is precluded from doing so on the basis that liability issues would arise if he or she were to become sick again. I assure Deputies that a person in the private sector with a medical certificate for a month who felt well after two weeks would ignore such issues and return to work. Some of the absenteeism in the public service is caused by current rules, including those pertaining to the number of sick days that can be taken without a medical certificate. Steps must be taken to address this problem because it is not fair that people can take sick leave willy-nilly, leaving those who work hard and always turn up for work to carry the can. The majority of public servants do not abuse the system.

As I stated, certain changes could be made and we have provided the Minister with an appropriate vehicle for doing so, namely, the Croke Park agreement. A number of simple changes could generate savings. As our spokesperson, Deputy Calleary, pointed out, the kite flown by the Minister is deterring employers from employing people. I am aware of the Minister of State's commitment to and involvement in small business. As someone with experience in this area, I ask him to inform the Minister that her proposal to add €89 million per annum to the cost of employing people is exactly the opposite of what she should be doing. What we need to do, as the Fine Gael Party consistently preached while in opposition, is to make the country more competitive. If the systems in place in other countries are not as competitive as our system, so be it. What we need is a margin of competitiveness that places us ahead of the competition, rather than taking steps to make it harder and more expensive to employ people.

Deputy Michael McGrath

I compliment Deputy Calleary on moving this important motion and welcome the opportunity to make a contribution to this debate. If we take as our starting point that the Government's top priority must be job creation and retention must, this should guide the rest of the debate on this motion and the proposal the Minister appears to be intent on pursuing. We must also accept that economic recovery and job creation will be led by the private sector. While the public sector can enable and facilitate job creation, the private sector will continue to be the driver of job creation.

We should not do anything that damages the creation of jobs. The first point anyone in business will make when discussing the role of government in the economy and job creation efforts is that Government should avoid doing any damage. That is the context in which this debate is taking place. It is indisputable that the Minister's proposal to require businesses to pay the first four weeks of illness benefits to their employees will cost jobs and its impact will be most acutely felt by small and medium-sized businesses. Faced with such a scenario, many companies would have no option other than to pay another employee to do additional hours or bring someone else into the company to cover for the person on sick leave. This is a burden many employers would be unable to sustain in the current economic environment. Thousands of businesses are hanging on by their finger tips and a single policy decision such as the Minister's proposal would be sufficient to push them over the edge. The proposal would also affect large companies and make Ireland less attractive as a location for foreign direct investment. It would be unjustifiable to impose such a burden on the owners of small businesses who must watch every euro their companies spend.

I ask the Minister of State to clarify a matter. At a recent briefing, the representatives of the various business bodies informed us that the Minister had indicated to them that her proposed statutory sick pay scheme would only affect businesses with more than 100 employees. However, the relevant officials subsequently informed the same bodies that this was not the case. I ask the Minister of State to clarify whether the proposal on the table is comprehensive and includes an assessment of the impact of the measure on small, medium and larger businesses. It would be helpful to know what the Minister is thinking in this regard.

Deputy Calleary provided a comprehensive statement on the context in which this proposal must be considered. The number of people at work has fallen by more than 30,000 in the past 18 months, while the Central Statistics Office quarterly national household survey shows that the number of people out of work has increased. If one adds to the level of net emigration the number of people who have moved onto activation schemes, the real picture is much worse than indicated by the official measure.

It is necessary to tackle the cost base faced by businesses. Some progress has been made and the country's competitiveness has improved by 14% or 15% in recent years. While this is a welcome development, more needs to be done to address the costs incurred by businesses, for example, in the area of energy. The semi-State sector is still sheltered and exposed to limited competition.

When the cost base that semi-State companies have to live with increases the first thing they will do is pass that on to households and businesses. Time and again we have seen the cost of utility bills increase significantly which had a huge impact on businesses already struggling.

Deputy Calleary referred to the employer PRSI rate of 10.75%, which is high. That is a cost on employment and it would be insane to do anything at this juncture in our economic development that would increase the cost on employment. It will be counterproductive, cost jobs and a decision we will come to regret.

The issue of absenteeism and the difference between absenteeism in the public sector and the private sector is something to which we will have to face up. Everybody gets sick at some point but why is the level of absenteeism in the public sector so much higher than in the private sector? The reality is that the public sector has a much more generous arrangement in place for people who become sick. We know that employees in a small businesses in particular are acutely conscious of the impact on the business and on their employer if they are out of work sick for a period. They know the business will suffer significantly if they are out work and that it will push additional costs onto the employer. They know also that if they want to protect their jobs, going out of work sick is not a choice they want to make and they will avoid it at all costs. We will have to get to grips with that problem. Why is the level of sick leave in the health service and in the Civil Service so high? It is because it is seen as an entitlement and almost as an extension of annual leave. They believe they are entitled to so many days a year and they will take those days. The Minister will have to grasp that nettle and bring in the unions if necessary to address the issue because it is not sustainable.

It is clear that a battle is going on within Government. Although he cannot admit it the Minister of State's personal views would concur to a large extent with what he is hearing from Fianna Fáil Deputies tonight. I am aware his colleague, the Minister, Deputy Richard Bruton, has put his views on the record. The Minister, Deputy Joan Burton, has to make savings in her Department. There is no easy way of doing that but it would be shortsighted if she were to choose this particular option because the deficit in the Social Insurance Fund, which is referred to in the Government's amendment and dealt with by KPMG in its actuarial review, will get worse if she makes this change as it will result in many businesses closing and their contributions to the fund will be affected as a result.

I raise the issue of sick notes from general practitioners which must be faced up to. How many GPs throughout the country are refusing to give sick notes to employees when they ask for them? That is something the Government will have to examine in terms of the control measures that are in place to ensure that people who are claiming illness benefit for a short period are genuinely sick, and that that has been correctly verified.

I have dealt with the issue of small businesses which have to bring in additional help and pay for substitute work. That is key. When one talks to Enterprise Ireland, and IDA Ireland in particular, it is clear that when it comes to inward investment the client companies they are trying to attract into Ireland look at the overall package. They look at the skills available in the labour force, the quality of the education system and the infrastructure but they are also looking at the cost of employing people. There is no doubt that if this change is made it will make Ireland less attractive. We can argue by how much but it will certainly make Ireland less attractive, and that will become a factor for such companies making decisions in that regard.

I am glad the Minister, Deputy Burton, has joined us. The Minister has a difficult job in the coming weeks to come up with an adjustment of €3.5 billion. It will not be easy to find that but in making those decisions she must ensure she does not damage any prospect of an economic recovery here because as the Labour Party rightly pointed out time and again from the Opposition benches, the cost of having somebody unemployed is approximately €20,000 a year when taxation revenue lost and the cost of paying social welfare is taken into account. That is the way we will bring about a recovery. We must do everything to support the people who are creating and maintaining jobs and when they speak with one voice and are tell us unanimously that this proposal will cost jobs, we must sit up and take notice and not proceed with it.

Deputy Willie O'Dea

In congratulating Deputy Calleary on bringing forward the motion, I am bound to say that given the circumstances the country is in where we are ravaged by unemployment and drained by emigration it is surreal that the Opposition has to come into this House and use Private Members' time to plead with the Government not to engage in yet another act of wanton job destruction.

I picked out at random a question I put down to the Minister, Deputy Bruton, last year dated 19 July in which I asked him if he was satisfied with the efforts being made by Government to fulfil its election promises and to tackle unemployment. That reply given 15 months ago states:

The Government is acutely aware of the scale of the challenge that we face in combating unemployment, with nearly 440,000 people on the live register. This new Government is committed to getting people back to work.

That reply was given 15 months ago and 15 months later the position has not improved. In fact, it has got worse. As Deputy Michael McGrath said, the official figure is still approximately 440,000 but up to 60% of that represents people who are now long-term unemployed. Another figure we cannot quantify is the number of people who are hiding in the education system or in the various schemes, which I welcome in so far as they go but they mask the true rate of unemployment in this country.

Even more tragically, in the 15 months since the Minister uttered those words across the floor of this House, and these are the Government's figures, 100,000 people have left this country not, as the Minister for Finance would have us believe, to study the seven wonders of the world but because they had no jobs. They had to go abroad to get employment. One hundred thousand people, 2.5% in a population of approximately 4 million, left the country in the past 15 months. That is over 200 a day, and many of those carry with them the skills they acquired here at great expense to the taxpayer. They are the skills necessary for this country to have if we are to trigger an economic recovery.

Last year I recall pleading with the Government not to change the redundancy scheme. It was proposing that employers who were carrying 40% of redundancy payments would have that increased to 85% but the Government went ahead anyway and laid a burden of approximately €0.25 billion a year on the backs of business, particularly small businesses which are the main job creators in this country. That has cost jobs. If time permitted I could give the Minister instances of employers who found it easier to close rather than involve themselves in a partial shutdown because the partial shutdown would cost them so much they would not be able to continue in business. That is a reality.

We now have further kites about increasing PRSI on employers. That is directly taxing work again at a time when unemployment is raging, and now we have this scheme. Deputy Calleary pointed out that we are not comparing like with like but that we are comparing like with different. The fact is if it was four weeks across the 27 member states and if everything was equal, even costs, which are much higher here in many instances, can anybody imagine a worse time to introduce a proposal such as this? What is the grand strategy? I wish I could see it because viewed in isolation it makes no sense to me to continue to load burden after burden on the backs of the people who are creating employment at a time when the country is racked by unemployment. That is the reality.

The Taoiseach told us as late as yesterday that 58 out of 67 of the boxes in the jobs activation programme or the programme for jobs, whatever it is called, have been ticked in the last quarter yet the situation continues to get worse.

As he understands the problems facing small businesses, many of which are hanging on by their fingertips, I wish the Minister of State, Deputy John Perry, had the authority to reassure them that this further imposition in charges will not go ahead. In doing so, the Government would do more for job creation and to instil confidence than what is in all of the boxes it has ticked and will tick.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy John Perry)

I move amendment No.1 :

To delete all words after “Dáil Éireann” and substitute the following:

“recognises the fact that there are 200,000 small businesses in this country, and acknowledges the vital role they play in the economy and the fact that they employ 655,000 people;

notes the range of measures in place to support business, in particular the small and medium business sector, including the seed capital scheme, the three year corporate tax exemption for new start-ups, the back to work enterprise allowance scheme, self-employed, the employment and investment incentives scheme, the research and development tax credit scheme, the accelerated capital allowance scheme, the Revenue job assist scheme and the employer job, PRSI, incentive scheme;

notes the Government’s actions to improve access to finance for small and medium enterprises, including through the temporary partial loan guarantee scheme and the microfinance scheme;

notes the commitment to reducing the administrative burden on business across seven key Departments and the Revenue Commissioners, with a view to achieving a 25% reduction by the end of the year, and that administrative burdens within the responsibility of the Department of Jobs, Enterprise and Innovation have been reduced by over 24% so far, yielding potential savings of €206 million per annum for business;

notes the Government’s continued commitment to reducing the cost of Government-imposed red tape on business, including through the audit of business licence requirements which is currently under way;

notes the Government’s actions in improving competitiveness, and creating and maintaining jobs by reforming the statutory wage setting mechanism and making it more appropriate to our modern economy through the Industrial Relations (Amendment) Act 2012;

welcomes the fact that all but one local authority have frozen or reduced their annual rate of valuation for commercial rates this year;

notes that the Government has simplified and extended the employer’s job PRSI incentive scheme, making it easier for employers to hire someone from the live register and reduce their payroll costs, and that the Government is actively promoting this, and other schemes, that provide financial supports for business;

notes the Government’s progress in improving Ireland’s competitiveness, which is reflected in the International Institute for Management Development’s World Competitiveness Yearbook 2012, which was published last May, and saw Ireland improving four places in the overall rankings to 20th place;

notes that expenditure on illness benefit in 2012 will be an estimated €847 million and that overall expenditure on disability related schemes by the Department of Social Protection will be in excess of €3 billion;

notes that over the last ten years, the number of people in receipt of a disability-related payment has increased by over 100,000 to just under 300,000, representing 16% of the working age population, and that expenditure on disability-related payments has increased by €2.2 billion to €3.4 billion;

recognises that the deficit in the Social Insurance Fund (from which illness benefit is paid) is projected to be €1.82 billion in 2012;

recognises that in the current economic circumstances, the Department is required to secure further savings on its programmes of expenditure in budget 2013 and subsequent budgets; and conscious of the Government’s wish to maintain, as far as possible, vital income supports to the most vulnerable sectors in society, it is necessary for the Government to examine all aspects of departmental expenditure;

notes that the Minister for Social Protection has been engaged in a consultation process with key stakeholders to examine the issues arising from the potential introduction of a statutory sick pay scheme in Ireland; and

notes that this process of consultation and consideration is not yet complete and that no formal proposals in this regard have yet been brought to the Government."

I wish to share time with the Minister for Social Protection, Deputy Joan Burton.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy John Perry

As the Minister of State with responsibility for small business, I am keenly aware of the challenges businesses face in the current economic climate to keep their overheads down. Small businesses are the lifeblood of the country. Over 90% of companies are small businesses which employ 655,000 people and contribute €10 billion to the Exchequer each year.

While statutory sick pay has been the subject of a consultation process initiated by the Minister for Social Protection, this is a very complex issue that calls for a whole of government discussion. To date, no formal proposals have been put to the Government on the matter. The Government is absolutely focused on ensuring Irish companies are supported in every way to develop their business, increase exports, create jobs and rebuild the economy. The ability of small and medium-sized enterprises, SMEs, to succeed and grow underpins our future potential for job creation, growth and prosperity. The challenge of regaining competitiveness has been tackled head on by the Government and recent international league tables are testament to our achievements to date in this regard. All of the actions we have taken since taking office have focused on developing the conditions which will support the creation of jobs across all regions. More needs to be done and we will continue as we have started.

I will remind the House of some of the most notable steps we have taken in support of enterprises since entering office. For several years, owing to the collapse of the banking system, accessing credit has been particularly difficult for SMEs. The Government has shown a determination to improve the position. We have recapitalised the banks. The economic management council meets them on a regular basis and has emphasised the need to provide additional lending to allow businesses to grow.

Notwithstanding this, through the Action Plan for Jobs, we are delivering several measures to fill gaps where market failures continue. These include establishing a temporary partial credit guarantee scheme, setting up a microfinance loan fund and supporting the development of a dynamic venture capital industry. The partial credit guarantee scheme which was launched last week by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, will benefit innovative, job-creating businesses that face obstacles in accessing credit because they do not have conventional collateral, or because they operate in sectors with which the banks are not familiar. The scheme will facilitate up to €150 million of additional lending per annum to SMEs. The benefits forecast to arise from this intervention in each year of operation include the creation of over 1,000 jobs and a contribution of over €25 million to the Exchequer through tax revenues and welfare cost savings.

The microfinance loan fund has been open for applications since 1 October. It will support commercially viable microenterprises that do not meet the conventional risk criteria applied by banks. The scheme will initially facilitate €40 million in additional lending in the next five years to businesses employing ten people or fewer, with provision for the scheme to be extended to provide an additional €50 million of lending over a further five years at that point. The scheme has the potential to help create over 7,700 jobs in the next ten years. Loans of up to €25,000 will be available to those microenterprises that have been declined credit by a bank.

These are just two examples of the practical actions the Government has taken under the Action Plan for Jobs to help businesses and support employment. The action plan contains over 270 measures to transform the economy and get people back to work. Other measures the Government is taking to support business competitiveness include reforming the statutory wage setting mechanisms to make it more appropriate to our modern economy, while reducing the administrative burden on business through a project across seven Departments and the Revenue Commissioners. My Department has achieved a 24.5% reduction in administrative burdens in the areas of company law, employment law and health and safety law, yielding potential savings of €206 million per annum for business.

The Minister for the Environment, Community and Local Government, Deputy Phil Hogan, has encouraged local authorities to exercise restraint in the setting of commercial rates. All but one local authority have frozen or reduced their annual rate of valuation this year. That one local authority increased its annual rate of valuation owing to a legal requirement following the extension of a town boundary.

The Minister for Social Protection, Deputy Joan Burton, has made it easier for employers to recruit a person off the live register through the simplification and extension of the employers PRSI exemption scheme. The Government is actively promoting this through its engagement with companies and business representative bodies, as well as through other financial supports to business. Recently in Sligo we launched a one-stop shop in mentoring and training for the unemployed.

Ensuring more micro and small businesses can start up, expand and export is a key part of our plans for job creation and growth. That is why the Government has decided to implement an ambitious reform in the delivery of services to small and microbusinesses. This will include the development of a new small and microbusiness division within Enterprise Ireland as a centre of excellence in the provision of supports for the small and microenterprise sectors. It has also seen the dissolution of the county and city enterprise boards and the transfer of their functions, assets and liabilities to Enterprise Ireland and the establishment of local enterprise offices to provide a high quality, innovative, one-stop shop support service for small businesses within local authorities, while providing early access to the services of national bodies. The new structures will be benchmarked against best practice, will be open to all businesses, whether they are trading locally or getting ready to export, and be measured against clear and ambitious targets.

A high level implementation working group chaired by my Department is progressing the range of issues involved. It is intended the process will be completed as rapidly as possible. My Department is engaged with the Office of the Attorney General regarding detailed primary legislation that will be necessary to implement the new arrangements. These will obviously come before the House in the normal legislative manner. In the interim, as much as possible will be achieved on an administrative basis to get the local enterprise offices up and running as quickly as possible, well in advance of having the legislation in place.

The actions we are pursuing through the Action Plan for Jobs are aimed at improving Ireland's overall competitiveness, reducing costs and ensuring the enterprise environment is supportive of companies which can sustain and create jobs. I am often amazed at how competent and creative many of the small enterprises are that I encounter around the country. Our efforts are being reflected in improved international competitiveness ratings. Ireland is ranked 20th in this year's International Institute for Management Development world competitiveness yearbook. It is ranked 27th in the latest World Economic Forum global competitiveness index. Ireland's position in both indices has improved this year after several years of slipping downwards.

There are several key areas in which Ireland tops the global list, including the business impact of rules on foreign direct investment, inflation, foreign direct investment and technology transfer, skilled labour, flexibility and adaptability of the labour force, and investment incentives. The progress the Government has made in its first 18 months in office is encouraging. Employment in export-oriented companies supported by my Department's agencies has increased by a net 10,000 in the past 18 months. This is in sharp contrast to losses of 45,000 jobs among such companies in the previous three years.

In spite of job losses in more traditional sectors such as construction and domestic financial services, we are seeing an increase in the numbers of jobs in emerging areas targeted by the Action Plan for Jobs such as tourism and information and communications technology. There have been several significant job announcements in the past few weeks in the case of indigenous companies, as well as foreign investment.

It is particularly encouraging that exports from indigenous companies have been growing even faster than foreign direct investment, reaching €15.2 billion in 2011, the highest level ever and a remarkable achievement.

The action plan for jobs shows our commitment to implement change and reform on a step-by-step basis, to re-energise the economy and address a failed economic model too reliant on unsustainable sectors. That is the backdrop. More than 90% of all measures for delivery under the action plan in the first three quarters of this year have been completed on time. We must continue to work across Government to ensure that we have a balanced approach to fiscal consolidation while being supportive of enterprise. The Cabinet committee system provides a mechanism to ensure co-operation and collaboration across Government.

My Department works bilaterally with the Department of Social Protection on a range of issues that cut across both Departments. With regard to statutory sick pay, the Minister for Social Protection, Deputy Burton, has been engaged in a consultation process with key stakeholders to examine the issues arising from the potential introduction of such a scheme in Ireland. However, this process is not yet complete and no formal proposals have been brought to Government. Any consideration of such an issue must be examined in great detail and in particular must be scrutinised through the lens of small business, taking all factors into account. The Minister, Deputy Burton, will elaborate on the factors underpinning her consultation process.

Minister for Social Protection (Deputy Joan Burton)

Before I refer to the issues directly associated with statutory sick pay, I am keen to emphasise in the clearest possible terms that the Government is totally committed to the role the 200,000 small and medium sized enterprises play in the Irish economy, employing more than 650,000 people. This point was also outlined by the Minister of State, Deputy Perry. These enterprises contribute some €10 billion to the Exchequer each year. In many ways they are the backbone of our economy and our communities and they are central to our economic recovery. Precisely because of our commitment to the SME sector the Government's action plan for jobs 2012 contains more than 270 measures to transform the economy, including many initiatives to improve supports for business. The Government also provides a range of measures to support employers which place people in employment. These include the JobBridge national internship scheme, which I launched, the employer job (PRSI) incentive scheme, also an initiative from my Department since I became Minister, the revenue job assistance scheme, also from my Department, and several workplace supports specifically for people with disabilities.

I need not remind Deputies that our social welfare system is the product of an evolutionary process dating back at least 100 years. Welfare states have evolved in Europe and elsewhere as a combination of the social welfare system, what the State provides; the fiscal welfare system, benefits provided through the tax system; and the occupational welfare system, social benefits provided by employers or employees through their contributions. Other countries, including Sweden, for example, which has an open trading economy like ours, have undertaken welfare reform in the area of disability and illness. They have placed certain obligations on employers, including paying for an initial period of absence through illness. This formed a key element of the reform process of social welfare.

My Department will spend an estimated €847 million on illness benefit payments in 2012. The Department will spend some €3.4 billion this year on the range of illness and disability payments to provide income supports to almost 300,000 people, adults of working age, and their families. These figures are somewhat incredible and the figure of 300,000 people indicates that almost one in six people of working age, or 16% of our working age population, is in receipt of an illness or disability-related payment. The figures are truly astonishing. During the past ten years, especially when the economy was going so well, the number of people in receipt of an illness or disability-related payment from the Department of Social Protection has risen by more than 100,000 and expenditure on disability payments has increased by more than €2 billion. I listened carefully to the contributions of the two spokespeople from Fianna Fáil but how or why did Fianna Fáil let this occur at the most prosperous time in the history of the country? How did Fianna Fáil manage to put an extra 100,000 people on some form of illness or disability payment? We must reflect on that question as part of the discussion under way tonight. These are staggering figures and Members will be aware that the social insurance fund, from which illness benefit payments are made, is seriously in deficit. The deficit is expected to be €1.82 billion in 2012.

While consideration of all the issues is not yet complete and, as the Minister of State, Deputy Perry, noted, no final proposals are under consideration by the Government, this is the background against which the question of introducing a scheme of statutory sick pay, SPP, for the public and private sectors is being considered. Anyway, it is part of my role as Minister for Social Protection to provide for the long-term sustainability of the social insurance system for our pensioners and those who become unemployed or fall ill. This is the essence of the social insurance scheme, an insurance scheme into which one pays when one is earning such that one can draw benefits at another stage. Like all insurance schemes, if one has far more people claiming than the scheme was designed for, then one must question how to keep vital supports for people who have fallen ill and as a result can no longer work. Both Fianna Fáil Deputies across the floor have been involved in business and they know perfectly well what I am referring to, as does the Minister of State, Deputy Perry. This is an important issue, one that we must reflect on as a country in terms of how we best direct resources to the people who require this support.

The least I can do is to ask my officials to examine where the boundaries between the State and the private sector lie in the area of protection of people from loss of income from employment through illness. This aspect is vital. An earlier Fianna Fáil from the time of Lemass would have recognised the importance of doing this and of carrying out an honest examination of these matters. This is difficult for all parties throughout the House because during the boom years, Fianna Fáil had no problem raising the numbers claiming by the astonishing figure of 100,000. Will the Fianna Fáil Deputies present go back to some of the people who were in government at the time - I realise Deputy Calleary held a Minister of State position for some time - to ask how this occurred? I have received no explanation for it yet.

I wish to refer to some of the specific issues associated with the question of statutory sick pay. Consideration of the merits of introducing such a scheme revolves around two separate but related strategic issues, the need to secure Exchequer savings on one hand - let us not forget that Fianna Fáil bequeathed us a very tough programme that it signed up to with the IMF - and the need to drive positive policy reforms on the other.

The question of introducing statutory sick pay was advanced in the context of the comprehensive review of expenditure undertaken in 2011. It was also considered on several occasions by Fianna Fáil in Government, for instance, in 2009, as part of the an bord snip nua process. Such a scheme undoubtedly has the potential to deliver savings to the Exchequer, in terms of reduced expenditure on illness benefit. It is estimated that savings of €23 million would result if statutory sick pay were payable for one week and €89 million if it were payable for four weeks.

The House will be aware that I recently published the 2010 actuarial review of the Social Insurance Fund. Among the key findings of the review was that the fund currently has a significant shortfall of expenditure over income with, for instance, estimated expenditure of €9 billion set against income of €7.5 billion in 2011. In the absence of any action to tackle the shortfall, the 2011 deficit of €1.5 billion will double to €3.0 billion by 2019 or, expressed as a percentage of GNP, the shortfall will increase from 1.1% of GNP in 2011 to 2% in 2019 and unless PRSI income increases and-or expenditure levels are reduced, the Exchequer subvention will need to more than treble, from 2011 levels, by 2030 and increase by a factor of almost eight by 2040.

It needs to be said also that we still have one of the lowest average rates of employer PRSI as measured by the OECD. Many of our European competitor countries devote more of the total contribution by employees, in particular, in terms of tax and PRSI-like payments, to funding their social insurance system. At an average employer contribution of 9.7%, Ireland is well below, for example, 18.2% in Finland, 16.2% in Germany, 23% in Belgium, and 12.9% in Poland. That, of course, is one of the reasons that the Social Insurance Fund is running a substantial and growing deficit.

I need to stress another important point, one which has been lost in some of the more strident responses to the possibility of the introducing a statutory sick pay scheme. Under the illness benefit scheme, there is a waiting period of three days where, subject to any arrangements within the company or the employment, the employee bears the cost. This waiting period would be carried through into any scheme of statutory sick pay, and any notion that statutory sick pay would create an incentive to take extra days off is, therefore, wrong.

Ireland is an outlier when it comes to employers being obliged to fund some element of sick absence pay. Most other European countries, including all of our major competitors, oblige employers to pay for some sick pay costs. The reason for that is it helps to manage the sick pay and places a focus in the company on wellness so that the employer and the employee take responsibility for an employee who becomes ill for whatever reason being assisted to get back to work as quickly as possible. By contrast, in some instances, unfortunately, our arrangements almost end up encouraging employees to stay out longer and longer and then miss their connection with the labour force. That is something of which Members on all sides of the House will be aware. Across the Border, the extent of the obligation is 28 weeks for employers in the North. It is two years in the Netherlands; six weeks in Germany; and nine days in Finland. Those are our competitor countries and Ireland is an outlier.

The 2008 OECD report, Sickness, Disability and Work - Breaking the Barriers, was explicit on this point, noting that in Ireland "the potential of employers being part of the solution for raising labour market participation of people with health problems or disability is largely untapped". The report went on to recommend that Ireland should "investigate the potential of strengthening the financial incentives for employers e.g. by introducing a mandatory period of employer-provided sick-pay".

We are living through an intensely difficult economic period. Deputy Perry and I have spoken of the commitment of everybody in the House to small employers being encouraged and supported. As Minister, I have launched several schemes to support them because they are the backbone. However, we need open minds. How can we, as a first-world country, have 16% of those of working age on some kind of illness or disability benefit? I do not know how Fianna Fáil added on an extra 100,000 people in the good years when there was a great deal of money in the economy. All I will say is that for employees who become ill when they are in work, who maybe develop a serious condition or a mobility problem, a good structure of support on illness is central to the concept of the welfare state, which is what earlier members of Fianna Fáil such as the late Taoiseach, Seán Lemass, always stood for. Equally, we must have a system that encourages people to get back to work so that a couple of days' illness that becomes repeated does not end up in that individual, unfortunately, losing all connection with the labour force. That is a social loss to us as a society but it is also as great a loss to the individual and his or her family. We need a detailed debate on the issue of how we built up the level of problems that have become evident in terms of the numbers of people affected and how we help them to get back to work so that they become, once again, financially independent for themselves and their families. Equally, for those who develop a serious illness, our system needs to be able to recognise that even more rapidly, and then give them the very careful consideration and support of which, in terms of a welfare state, they need.

Deputy Michael McCarthy

I will outline the context of this debate. In the three years up to March 2011 when the Government took office, the retail jobs sector was in free-fall and 250,000 jobs were lost in that area. From the point of view of small businesses and what Government has done to support them, let me remind the House that the action plan for jobs has four critical areas, namely, starting a business, growing a business, recruitment and, in particular, access to credit. Both the Minister and the Minister of State touched on this in their contributions. The microfinance scheme is a fund set up to assist small businesses with ten employees or less to get loans of up to €25,000. That fund, in the region of a number of million euro in total, will be used to create 7,700 jobs over the next three years. The credit guarantee scheme, an innovative way to provide much needed lending to small and medium-sized enterprise, is a fund of €450 million. That scheme will provide additional lending of €150 million per year for three years. That is a significant issue because we will all be aware of the difficulties that SMEs encountered in terms of accessing finance.

That brings us to the motion before the House. The social welfare spend is approximately €20 billion. One would not need to be an economist to know that it is entirely unsustainable. This Administration, in the last budget, did something that many of the commentators stated was not possible, namely, it maintained basic rates of social welfare. One must bear in mind that as an economic generator, the social welfare spend is vital to the economy, in particular the rural economy. These are the people who go into towns and villages around the country and spend the payment that they receive every week. There is a connection. These measures are not isolated. The dynamic that is necessary to support businesses is as much about the person spending as it is about the person providing that service.

The Netherlands, for example, had a rate of absenteeism of 8% until it introduced a scheme similar to the one proposed here and that rate is now only 4%. Absenteeism is costing Ireland over €800 million per annum, which is an enormous amount. How did we allow that to develop to the point that it did during the boom years? It does not say much for us now, in recessionary times, if we do not try to address it.

Managing sick leave is also an issue in this debate. At the moment there is no incentive for employers to manage sick leave because the State is carrying the can and providing the cash. There is a vicious circle in operation. I acknowledge the efforts of the Minister is setting up a forum through which all stakeholders can come to table, debate the issue, exchange views and formulate opinions. That process is very important in terms of reaching a decision. We must look at this not from the perspective of moaning and groaning about businesses here and there - although there are genuine issues and we are required to raise them on the floor of the House - but from the perspective of the public purse and obtaining value for money for the taxpayer.

Deputy Aengus Ó Snodaigh

Some months ago the Minister for Social Protection indicated that she intended to introduce statutory sick pay and that she was considering making employers pay the first four weeks of illness benefit which is currently paid from the PRSI fund, and Exchequer transfers when that fund is low, as it is currently. The PRSI fund and its associate schemes are like one big community-rated insurance policy which protects both employers and workers when they fall on hard times. The references that were made to the introduction of statutory sick pay made it sound like a positive development but in reality what is proposed is essentially a cut of €89 million in the illness benefit scheme into which employers and employees pay. Employers and workers have a reasonable expectation that the Social Insurance Fund into which they pay will also pay out when needed. This particular proposal, or more correctly, cut, which passes on an €89 million burden to employers, with no regard to their ability to pay, will result in some employers being forced to close their businesses. It will also lead to redundancies and wage cuts. Sick workers will see their pay packets reduced. One of the worst elements of this proposal is that it may lead to discrimination against those with disabilities or recurring illnesses.

I caution the Minister against proceeding with her proposal, especially since there are alternatives, and I will come to my party's alternatives later. The Government has proposed cutting illness benefit because there is not enough money in the PRSI fund, which we accept as true. However, to some extent, that problem is not just the fault of Fianna Fáil, as some have tried to claim here, but is also of the current Government's making, when it cut the amount that employers had to pay into the fund from what was already a very low base by international standards. From 1 July 2011, the lower rate of employer PRSI was halved to 4.25% for all jobs that pay up to €356 per week. The rate is due to be restored to 8.5% from 1 January 2014. Far from stemming job losses, as was claimed at the time, some 33,000 additional jobs have been lost in that period. The lower rate of PRSI also incentivised unscrupulous employers to cut wages and reduce workers' hours. We warned the Government and the Minister for Social Protection at the time that the cut would make the deficit in the PRSI fund even worse but they chose not to listen.

This Government has already cut the redundancy rebate. Now it is proposing to cut the illness benefit scheme. What is next? Will the maternity benefit scheme be next? What is the next cut to workers' protection that the Minister will propose? The Government's proposals will possibly force small employers to close down their businesses. If one takes the example of a garage with one employee who keeps the garage open, if that person is on sick leave, the employer not only has to provide illness benefit, but also has to pay another person to keep the garage open and keep the business going. Small operations potentially could be wiped out by such additional costs and jobs could be lost.

Sick workers will suffer because many employers will abandon their more generous sick pay arrangements and offer only the statutory minimum. One of the employers' organisations has suggested that up to 60% of employers include some type of sick pay provision, over and above the illness benefit, in contracts of employment. That extra element will be the first thing to go. We must not forget that a householder's outgoings do not reduce just because he or she is sick. In fact, in most cases, they increase and the maximum rate of illness benefit, at €188 per week, is well below what most people would earn.

The move would prompt an increase in discrimination against people with disabilities and those who suffer ill health. When employers are hiring people, they look at the potential future cost of employees. This is a small country and potential employers could know, for example, that candidate X suffered from cancer or candidate Y has had a relapse of a serious illness. That could become a disincentive to employing that person and cause him or her to suffer discrimination. While there are laws to protect workers against discrimination, it is very difficult to prove and very hard to win such a case. All that will happen is a further clogging up of the industrial relations mechanisms. The Minister can prevent that by not proceeding with her proposal.

The motion before us rightly calls on the Government not to proceed with the proposal but it does not offer an alternative. To be credible in opposition, one cannot just say "No" to everything. One must put forward realistic alternatives. Hopefully, I have done so with the proposals I have put forward today. Sinn Féin is opposed to the cut to the illness benefit scheme and will vote against it. The Minister's proposal to hike employers' costs in an indiscriminate way, without heed to ability to pay, could not come at a worse time. It will undoubtedly cost jobs and cause hardship. If the Minister really believes that employers should be contributing more in terms of illness support for workers, she should raise money from those employers who can afford it, with PRSI contributions set at rates that are progressive and reflective of ability to pay. My party suggests that the Minister raise the employer's PRSI contribution made on pay exceeding €100,000 to 15.75%, which would raise €91.5 million, a figure very close to the Minister's-----

Deputy Joan Burton

That represents an increase of one third. That is very harsh.

Deputy Aengus Ó Snodaigh

It would be based on the ability to pay, which the Minister's proposal is not. It would target businesses which can afford to pay some workers €100,000 or sums in excess of that. At 10.5%, the standard employer PRSI rate is very low by international standards. Our proposal is in line with international standards and takes account of employers' ability to pay.

Many businesses are struggling but some are not. There is an alternative to proceeding with the Minister's proposals.

Deputy Peadar Tóibín

In the midst of the greatest jobs crisis in generations, Fine Gael and the Labour Party have managed to devise a proposal that will cost jobs and erode the conditions of workers. Over the past four years, more jobs were lost in this State on a per capita basis than in any other western country since the Great Depression. All we see from the Government, however, are policies that will further depress the economy and make it more difficult for small businesses. The Taoiseach promised 100,000 new jobs, although his tally currently stands at minus 33,000, and promised that the all-consuming obsession of every Minister would be the creation of jobs, but the Minister for Social Protection must have missed that day's memorandum. While the Minister for Jobs, Enterprise and Innovation trumpets the strategy of reducing PRSI contributions for small businesses, the Minister for Social Protection plans to do the opposite by shifting €89 million from her budget onto the small and medium-sized enterprises sector. We are told this must be done because of the pressures that bear down on the PRSI system. The primary pressure on the PRSI system at present is the burgeoning unemployment figure. Putting the cost of sick pay onto businesses will add further pressure to the system. In an environment where more than 200 businesses collapse every week, the Minister is looking to that sector to achieve her adjustment of €89 million.

The PRSI fund should have grown during the Celtic tiger but the necessary reserves were not created during the good times. Fianna Fáil, the party which proposed this motion, is directly responsible for the failure to build reserves. The Members of that party have again fallen short by failing to offer a solution to the problems in the PRSI fund. Sinn Féin has proposed an amendment which will contribute to the fund without harming job creation or business viability.

Deputy Michael McCarthy

Can we have a copy of the Deputy's paper?

Deputy Peadar Tóibín

The Government's remaining cohesiveness is rapidly evaporating. We are seeing two parties working against each other. On a regular basis the Minister for Social Protection, Deputy Burton, and the Minister of State at the Department of Finance, Deputy Brian Hayes, are happy to fly their ideological flags to the advantage of their own parties-----

Deputy Michael McCarthy

What about the ideology of the DUP?

Deputy Peadar Tóibín

-----and to position themselves when their respective old guards cash in their political pensions. The work of the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, is being neutralised by these additional costs, but the bulk of the cost will be met by the State through unemployment. The Government has failed to tackle upward-only rents or energy and insurance costs. It changed procurement guidelines to make it more difficult for small businesses to tender for contracts. This is being done in the context of the Government's pursuit of the troika programme despite the damage it is inflicting on the economy. The absence of a comprehensive and co-ordinated strategy across Government has resulted in 33,000 fewer jobs since it came to power. Emigration is at levels not seen since the 1800s. Approximately 87,000 people emigrated last year, on top of 80,000 in the previous year. This is 20,000 more than the number of students sitting the leaving certificate in either year.

If job creation is this Government's obsession, it must stop exporting Irish wealth to cover unsustainable debts. It must also stop exporting our youth, who are our energy and future potential, and get its act together instead of working at cross-purposes.

Deputy Mattie McGrath

I am delighted to speak on this motion. I cannot believe the Minister for Social Protection or the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry, could stand over these policies. As a businessman, the Minister of State, Deputy Perry, should know better. He stated the Government is profoundly aware of the role that small and medium-sized enterprises play in terms of employing more than 650,000 people and contributing €10 billion to the Exchequer annually. These businesses are tired of all this back slapping and the Government's empty promises. Small business people are on their knees. Deputies from rural constituencies see this every day of the week in their clinics. Business people cannot get finance or support from anyone. Local authority rates and the other costs associated with businesses are too high.

The Minister, Deputy Burton, cited international figures but other countries know how to support employers. Businesses have received no support from recent Governments. The Minister admitted privately to me in the restaurant one evening during an event with the Irish contractors association that the real problem is in the public service. We are afraid to tackle the public service, however.

I have been a small employer for more than 30 years. I know my business intimately and I have the best of employees. Most small employers have excellent relationships with their staff. Big companies which are supported by IDA Ireland and Enterprise Ireland can afford sick payment schemes. They are cushioned, but the man in the middle is the backbone of rural Ireland. The Minister did not mention the 20,000 to 30,000 farmers who employ their wives or two or three farm workers.

I beg the Minister to listen before she puts the final nail in the coffin for small businesses. I admire what she is trying to do at Cabinet and I recognise the difficulties she faces in dealing with right-wing Ministers. I respect that she must try to protect her own budget but this is not the way to do it. I recently held a public meeting on this subject in my constituency and I received a very large number of e-mails and messages of support. People have told me that they have faced repeated knocks. Their overdrafts are being removed and they are made to take out term loans if banks are even prepared to give them a penny. Banks are choking small businesses. Tax officials, who I respect in the main, have pursued aggressive policies over the past two years to balance their books. The officials who work in the tax offices, local authority rates departments or health and safety agencies should be put behind the counter of a small business for at least one week every year to learn how difficult it is to earn the money to pay wages, overheads and PRSI. In many cases employers pay the first three days of sick leave because they have an exceptional relationship with their employees. The employee may return from sick leave after one or two days because of this good relationship. That relationship will be destroyed by the Minister's proposals.

I received an e-mail today from a hotelier in my constituency who employed two workers, who were, unfortunately, non-nationals, but that does not matter because it applies across the scheme. Six weeks ago he put them on a three day week but he wanted them to return on a full-time basis this week because he was busy again. They told him they would lose too many benefits if they did so. I have been there myself. Employees have told me they have too many benefits. We have to change that system. It has to be rewarding to go to work. There are certain costs associated with work but we cannot permit such a system to continue. People might have been working with an employer for years, as they were in my case, and it hurts to put them on a three day week, but that may be all the employer can afford. The benefits take over and the employers are doing better with three days of work and two days of social welfare. They do not want to come back. There is evidence that such problems have arisen.

If this new sick pay system is introduced, certain people will take advantage of it. If it is not available, they will not abuse it. The low hanging fruit will be taken. I plead with the Minister and her officials to visit small business people. The troika should be made aware of what is happening to the backbone of our country. They do not get any grants and they set up enterprises with their own savings. They were supported by the banks for a number of years but now they are left high and dry. Make haste slowly. If there is a problem in the public service, it should be addressed. The Minister for Public Expenditure and Reform announced he would save €75 million but all he achieved was €3 million. We have to deal with the elephant in the room. I do not want to criticise ordinary public servants but the problem with sick play does not lie with private employers. Why use a sledgehammer to crack a chestnut? Deal with the problem fairly and honestly and consult widely before acting.

Debate adjourned.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 24 October 2012.