Family businesses ‘competing against PUP’ to get people back to work

Family-owned businesses employ twice as many as FDI and State combined – report

Family businesses say they are competing against the Covid unemployment supports to get people back working again.

A new report says the State will rely on family firms to deliver jobs growth over the coming years as changes to international corporate tax rules inevitably reduce Ireland’s attraction to foreign employers. But that will depend on more supportive and inclusive Government policy, it argues.

The National Family Business Sentiment Report 2021 is compiled by the Family Business Network and business adviser Smith & Williamson, based on survey findings and contacts with family businesses of all sizes across the State over recent months.

It states that family-owned businesses employ twice the number of people as foreign direct investment and the State combined. And the challenge of getting staff back to work is the first issue mentioned in a list of concerns of family-owned businesses in the report.


Return to work

"Faster progress is needed in incentivising return to work as the Pandemic Unemployment Payment [PUP)]has made it too easy for some former workers to prefer unemployment," the report states.

“While progress is being made, the Pandemic Unemployment Payment has remained at an unnecessarily high level for an unnecessarily long period,” the report states. “The result, which affects locally owned firms much worse than high-margin foreign-owned firms, is that many local employers have found themselves competing against the PUP and the wider welfare system to get workers back working again.”

The enhanced PUP unemployment payment of up to €350 a week was introduced as the Covid-19 pandemic took hold last year. The rate compared with the €203 maximum available under unemployment benefit.

The Government has said it is being phased out over a period of months between now and February next year. The first cutback, knocking €50 off weekly payments, took effect this week.

Figures published on Wednesday showed the numbers receiving the payment fell by over 25,000 this week to 114,612, and are more than 500,000 down on the peak in May last year.


An even bigger concern for family businesses, according to the survey, is the capital gains tax regime that forces families to sell some or all of their business to meet capital gains tax bills as ownership of the business is passed on to the next generation.

Respondents also say that, despite recent changes, family-run firms “have yet to see real reduction in the cost of insuring their business and their employees”.

Some businesses are still effectively unable to access any insurance, the report says, calling for legislation to drive through necessary changes.

Despite the concerns, the report says 60 per cent of Irish family-run businesses are feeling more optimistic about their ability to do business and hire new employees than they were three months ago.

And four in five say they are likely to create new jobs within the coming year, up from three in five in November last year.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times