Targeted supports should be provided by the Government to small business facing particular challenges at present but there should be no pause on legislative changes with regard to sick pay or pensions and no blanket cuts to the VAT rates, according to the Irish Congress of Trade Unions.
Reacting to suggestions that planned increases to sick pay entitlements could be paused as part of a package of supports for businesses, the Ictu general secretary Owen Reidy said that while he accepted a minority of those trading in sectors like hospitality and retail might be struggling, many more were doing well.
He said the 7 per cent growth in employment in the hospitality sector last year was twice that in the wider economy but that a certain level of closures was inevitable.
It was perfectly reasonable to seek to support those most affected, he continued, but he dismissed the idea of returning to the 9 per cent VAT for hospitality, saying it would benefit large chains and many businesses who had “trousered” the previous cut which cost the exchequer an estimated €3.6 billion over a combined 10-year period.
[ State’s ‘experience economy’ accounts for 9% of total employment, says IbecOpens in new window ]
“I don’t think the Government got too much bang for its buck with that 3½ billion and I don’t think people saw much benefit as customers,” he said.
“They [the business community in general] had supports quite legitimately with Brexit, with Covid, with the Ukraine-related cost of energy prices, but it seems some of them just can’t wean themselves off. I find it incredible and kind of ironic,” he said.
“They got a quarter of a billion in supports in the last budget and no doubt they’ll get more, that’s fine, but you’ve got to target these things. Don’t do it for everybody.
“A lot of the narrative of this has gone unchallenged in the last few months. What the employers’ bodies have been saying about all of this happening so suddenly has been taken as gospel. But auto-enrolment [for pensions] is due to happen over a decade while sick pay and some of the other things are over three to four years.
[ Buoyant VAT receipts not necessarily a sign of economic healthOpens in new window ]
“I think people need to remember that these are modest and moderate but necessary reforms, which were to bring us into line with Europe,” he said.
He was speaking after The Irish Times reported on Monday that plans to increase sick leave days could be paused and businesses could be in line for a €70 million tax boost as part of a package of supports promised by taoiseach-designate Simon Harris.
Speaking on RTÉ Radio’s Claire Byrne Show on Monday, Ibec’s executive director of employer relations, Maeve McElwee, said some of the supports being sought by the business lobby should be targeted and suggested the PRSI system could provide an appropriate mechanism.
[ Employers’ group urges national minimum wage to be frozen for at least two yearsOpens in new window ]
She said, however, that the scale of the cost increases made some form of government action necessary.
Referencing a government report on the likely impact on business of the various changes and its specific assessment of the hospitality sector, she said it had been projected there would be a “nearly 20 per cent rise in labour costs over the next two years and that’s before factoring in any of the subsequent wage pressures or standard wage growth that’s coming through. You can’t say that’s modest.
“There does need to be a pause while we absorb the costs that have already been put in place. We’re certainly not looking to row back on anything that has already been agreed and implemented.” As for the provision of financial supports, she suggests, “PRSI is the most targeted and simple way to do that”.
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