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Sick Pay Scheme Reform

Dáil Éireann Debate, Wednesday - 27 November 2013

Wednesday, 27 November 2013

Ceisteanna (1)

Dara Calleary

Ceist:

1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation his views on whether budget changes to illness benefit will increase the burden on business, cost jobs and is contrary to the spirit of the Action Plan on Jobs; and if he will make a statement on the matter. [50552/13]

Amharc ar fhreagra

Freagraí ó Béal (8 píosaí cainte)

As the Deputy is aware, responsibility for the illness benefit scheme rests with the Minister for Social Protection. The benefit is paid to employees who are unable to work due to illness and who meet certain qualifying conditions.

Changes to the illness benefit scheme announced in budget 2014 mean that the number of days that a person must wait before receiving illness benefit from the Department of Social Protection is being increased from three days to six days. This change will come into effect from 6 January 2014. There will be no reduction in the basic rate of illness benefit.

It is of course open to business to offer sick pay cover which exceeds that provided by the Department of Social Protection, and some employers do. It is a matter for employers and workers in these companies as to how they will alter cover in their schemes in response to this change.

Social Protection expenditure remains the largest single area of public spending, accounting for almost 40% of gross current expenditure. As the Minister for Public Expenditure and Reform pointed out in his budget speech, this area of expenditure cannot be excluded from savings in the context of the need to balance public expenditure.

The change being introduced to the illness benefit scheme represents a small adjustment that was considered appropriate to contribute to the social welfare savings that have to be found in 2014. The change must also be seen in the context of a reforming budget that included a €500 million stimulus package to support enterprise growth and job creation. This package includes a capital stimulus plan, the retention of the 9% VAT rate for the hospitality sector, the introduction of a home renovations tax incentive, a new start your own business scheme for the unemployed, and an increase in the cash receipts threshold for VAT which will improve cashflow for businesses.

The pro-jobs measures in budget 2014 will allow us to continue to deliver the Action Plan for Jobs process. From my own Department’s perspective, Enterprise Ireland and IDA Ireland are targeting the creation of a total of 24,000 gross new jobs during 2014.

I thank the Minister for his reply. I am well aware that this scheme is the responsibility of Minister, Deputy Burton, as are small businesses throughout the country because this is the third budget in a row in which she has specifically gone after small businesses. We have had redundancy rebate changes, the change to the sick pay scheme and the increase in employer's PRSI with the so-called jobs budget rate increasing from 4.5% to 8.5%. Collectively, they have been a huge hit on small businesses. We had very successful Central Statistics Office figures published yesterday, which I acknowledged at a committee last night, but they are coming from small businesses that are creating the jobs on the ground. They are using the chances that have been given to them. The Minister, Deputy Burton, in particular, seems determined to be some sort of Dick Turpin-type character in that she keeps coming at them and imposing more charges on them. This is an additional cost to an employer. If an employee who earns €300 a week is off sick for a week, this measure alone will impose an extra €94 on the employer, without touching the employer's PRSI, which will impose a huge burden on employers, and meanwhile the Minister continues to let her do that. We need the Minister to stand up to the Minister, Deputy Burton, in the interests of small business and tell her to get her charities elsewhere.

I acknowledge the appointment of the Minister of State with responsibility for small business and all the work that has been done, but there is no sense in having a dog that does not bark. The Minister knew that the employers' PRSI rate was going to change and yet this change to sick pay was brought in. The fact that the Minister knew that rate was going to change was another excuse to postpone the change to the sick pack scheme or to find the money from somewhere else because it is a double whammy for small businesses who are still in a very fragile position and do not have the money. There needs to be a whole of Government approach. There will be two major increases on 6 January for small businesses. They are in a very fragile position but nobody seems to be alert to it within government. The Minister needs to be able to stand up to the Minister, Deputy Burton, in particular, and in cases such as this one to defend small businesses against such charges and against her using them to pay for her budget.

The Deputy is wrong about this. The increase from three to six days in this measure is an increase that affects the worker who has to wait six days before he or she can assess social protection benefit. The vast majority of small businesses do not have sick pay schemes of the sort that some larger employers provide.

The cost will fall back on them.

Therefore, they will not be affected at all by this scheme, and that should be pointed out. This is not a measure directed in any way at small businesses. It is unfortunate that we have had to reduce sick cover for workers in the way that it has occurred but, against a background of a very difficult economic situation and a need to balance to balance our public books, this is a measure that was the least bad of a range of measures.

We will move on to Question No. 2 in the name of Deputy O'Brien.

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