Dáil Éireann Debate, Tuesday - 9 July 2013
56. Deputy Aengus Ó Snodaigh asked the Minister for Social Protection her proposals to subsidise employers who take on persons who are long-term unemployed; and if her attention has been drawn to the dangers of subsidising private businesses to this extent. [33543/13]
Amharc ar fhreagraI was delighted to launch JobsPlus yesterday in Waterford with the Taoiseach, the Tánaiste and the Minister for Jobs, Enterprise and Innovation, Deputy Bruton. The new scheme, JobsPlus, is a simplified scheme. It is as easy as I could make it for employers and applications are made online. The scheme replaces the employer job PRSI exemption scheme, which started in June 2010, and the Revenue job assist scheme which began in 1998. Employers had said to me that while these schemes were very good, they were very clunky and the numbers of people applying for them were very small. I went around the country and talked to employers and the result is that this new scheme is as simple as I can make it.
There is an immediate financial incentive to employers. The incentive is payable on a monthly cash-back basis over a two-year period while the employee is retained in full-time employment of over 30 hours per week. In respect of recruits who are more than 12 months unemployed, but less than 24 months, the incentive is €7,500. This amounts to over €300 per month. For somebody who has been unemployed for two years or more, the incentive is €10,000 over two years. This is worth approximately €400 per month. This is a cash-back or wage subsidy scheme paid directly to the employer in respect of a qualifying employee taken on.
I travelled around the country and listened to employers in this regard. Approximately 2,500 employers attended the nine or ten road shows I conducted around the country.
Most people said they had never heard of the schemes or that they were very awkward to implement. This one is simple and, hopefully, it will be a help to the long-term unemployed, who now constitute a significant number of those unemployed in this country, and will also be a cash-back wage subsidy to employers who take on people.
Additional information not given on the floor of the House
While conducting employer road shows throughout the country last year, I listened to the views of employers who perceived the old schemes as being complicated and burdensome. The low take-up of the old schemes endorses these views, and that is why I have introduced a simple, easily understood and attractive scheme to encourage employers to recruit from the longer-term unemployed.
The State offers supports to private business through a number of Departments and agencies, the objective being to attract and retain investment and nurture indigenous industries to create employment and contribute to the Irish economy. JobsPlus aims to alert employers to the talented pool of workers on the live register and encourage them to offer this group an employment opportunity. The structure of JobsPlus, which biases the incentive in favour of employers who recruit long-term unemployed people, lessens the likelihood of economic deadweight associated with interventions of this nature. While unemployment has stabilised recently, persons on the live register for a year or more now account for about 45.5% of all persons on the live register and this rate has been increasing slowly in recent months.
Every new full-time job supported under JobsPlus not only reduces social welfare payments made by the State but, critically, reduces the payments made to longer-term unemployed people, who evidence suggests are more likely to become long-term dependants of welfare. In addition, these new full-time workers will now contribute to the Exchequer by paying tax and PRSI.
The introduction of JobsPlus is closely aligned with Government policy on job creation, which is central to overall Government policy, particularly in times of high unemployment. The Government’s activation strategy as presented in Pathways to Work outlines the overarching objective of the strategy, which is to maximise the number of new jobs to be filled by the unemployed. This investment in jobs creates an additional stimulus, having a multiplier effect on the domestic economy and domestic demand which, as the Deputy knows, is crucial to our recovery.
I welcome JobsPlus. The question is not meant as a criticism but simply as an expression of concern. We must ensure that, as in other schemes, we do not end up with job displacement and abuse by employers. The question focuses on what type of monitoring will be put in place to ensure there is no displacement and that it is not an incentive to employers to lay off a person and take on somebody who is long-term unemployed, which would defeat the purpose. What steps will be taken to ensure businesses do not become dependent on this scheme? Obviously, they will employ somebody for the two years and will receive a benefit, but they may then employ somebody else. While this is obviously an emergency measure to reduce the number of long-term unemployed, which is welcome, there are concerns. I ask what steps will be taken to deal with these issues.
I welcome Deputy Ó Snodaigh's support for JobsPlus as well as Deputy O'Dea's support for JobBridge. With these schemes we are following Lord Keynes' advice that, at a time of depression and recession, the critical thing is to get more money circulating in the economy, and one of the best ways of doing that is to get as many of our people as possible back to work.
Deputy Ó Snodaigh knows as well as I do the number of people who used to be up at 6 a.m. on a lovely day like today, out working on construction sites and finishing only when the light went down. In the period after the Anglo Irish Bank bailout and the bank guarantee, this country lost 250,000 jobs. We fell off a cliff as regards employment. Quite a number of those people are still out of employment because they were in construction. They need to transfer, so this is an opportunity for them.
One of my concerns is that when an employer looks at somebody's CV, if the person has been out of work for one, two or three years, the employer will wonder about the gap. We try to fill that gap through education, training, community employment, job placement and JobBridge. As service under any of those schemes is included in the calculation of one or two years out of employment, employers will be getting people who will potentially have a lot of experience in different areas.
We will monitor the scheme by having employers apply online. Obviously, if an employer has just had redundancies and reductions in its labour force, this is the kind of development that would perhaps indicate an attempt at displacement, and we would seek to exclude such employers.
As I said, I wish the scheme well. I am interested in the uptake because I believe some businesses are in a position to employ additional people. It will be interesting to see how the Minister's budget will cope if there is an intake, because I presume money has to be set aside to pay the approximately €300 or €400 a month the businesses will receive. I have a concern in that, while we understand the benefits to the local economy and to the people who will take up positions, we do not want to end up with a tier of businesses that are dependent on a subsidy from the State to employ people on a continuous basis. At some stage, somebody will have to make an assessment that such businesses need to break that dependency. While they are not dependent as yet, it is something to watch for in the future.
I thank the Deputy. As I said, this is a type of wage subsidy. Many economists who believe in expansion and a Keynesian stimulus would agree with this, and both major parties in Germany agree with the use of wage subsidies. Whether positions are taken up depends to some degree on the calibre of the people who apply, because an employer is not going to make a hiring decision based only on the wage subsidy element.
Nevertheless, the scheme does offer a good cash-back incentive for employers. If they take on a person who has been on the register for one year or more, that subsidy will be €312 per month. Where the individual has been out of work for two years or more, the subsidy payable is more than €400 per month. Employers, for their part, must offer the employee at least 30 hours work per week and must abide by the minimum wage requirement and other aspects of labour relations law.
The two existing schemes were very well intentioned but did not have a very good take-up. If we succeed in getting, say, 2,500 people off the live register and into employment under the scheme, the cost will be more than €20 million. At the same time, however, we will save on social welfare payments, which are a minimum of €188 per week per individual. If we do the maths we see that everybody can be a winner, including the individual who has not been in work, the employer who receives a wage subsidy, and the Department of Social Protection. I will be much better thought of by the Minister for Finance as a consequence.
