THE GOVERNMENT has defended its support for small businesses following the suspension of a €250 million employment scheme announced last year, after just €135 million was spent on it.
Minister for Labour Affairs Dara Calleary yesterday admitted the Employment Subsidy Scheme, announced last August to protect jobs in vulnerable businesses, had been “suspended”.
He said that when the first call for submissions for funding from the temporary scheme was made at this time last year, some 450 companies took part.
The Government later widened the criteria for inclusion in the scheme, and a further 1,200 firms benefited. In total, €135 million had been invested and the scheme was supporting 100,000 jobs, the Minister said.
He acknowledged the scheme had been for exporters only, but he said this sector was “leading the economy to recovery” and was the sector that had taken the greatest hit at the outset of the downturn.
He said the Government had to see if the jobs being supported were maintained once the subsidy was removed.
The scheme was therefore suspended until the Government had seen how effective it had been. “No decision on cancellation” had been made.
“There’s no sense in us supporting a job, then when the subsidy is removed for that job to go,” he said.
“This subsidy was to allow people to get through the difficult economic time in order to maintain the job when recovery happened. As we move into a recovery phase, that’s when we can make that call.”
Mr Calleary was responding to criticism from small business representative body Isme.
The organisation’s chief executive, Mark Fielding, said that when the scheme was announced in June of last year, the Government said it would probably spend “about €1 billion eventually”, but that initially €250 million would be available.
Mr Fielding said the scheme was also only for exporters, so other companies could not avail of it. It also excluded companies with fewer than 10 employees.
He acknowledged the existence of the Employer PRSI Exemption Scheme which he said was a “small help”. But Mr Fielding said employers could only avail of this scheme for new employees who had been unemployed for more than six months, and it was set to close at the end of this year.
For too long the small and medium business sector had been the “Cinderella sector”, he said, and the Government had seemed to ignore it while bringing in schemes for exporters and multinationals.
Mr Fielding said it seemed the Government was “tinkering around at the edges” in terms of protecting jobs.
Noting this week’s figures showing unemployment had reached a 16-year high of 13.7 per cent, Mr Fielding said the economy was “in danger of slipping down into a black hole at the moment if the Government didn’t do something about it”.
Mr Calleary said the Government was “very concerned” about the unemployment figures and had “quite a considerable investment in time and in policy under way to address those figures”.
He said that between now and 2015, the Government would create 273,000 jobs with investment of about €3.6 billion. Of this, some €1.2 billion would be invested specifically in enterprise supports, and €589 million would go to companies in the domestic economy.
He was confident that with growth beginning to take hold, the State would move into net employment growth next year.
Main support schemes what is on offer
Employment Subsidy Scheme
Scheme announced last year for eligible enterprises employing 10 or more full-time staff and that can identify a number of full-time and part-time jobs at risk as a result of the downturn.
The maximum full-time subsidy is €9,100.
The maximum part-time subsidy is €6,370.
The “cash-limited” scheme was to run for 52 weeks from November 2nd, 2009, to October 31st, 2010.
Employer PRSI Incentive Scheme
Announced in Budget 2010, aimed at supporting job creation and countering unemployment and welfare dependency by exempting employers from liability for their share of PRSI contributions – 8.5 per cent or 10.75 per cent of gross pay.
Exemption lasts for a maximum of two years. Now closed to new entrants.
Enterprise Stabilisation Fund
The €100 million fund was announced in the emergency budget in April last year to help firms sustain and develop their businesses over a two-year period. It has been cut by €22 million.
It is estimated the cut will affect 40-50 companies.
In 2009, €58 million was paid to about 140 companies.