UP to 5,000 jobs in small firms may remain unfilled because the social welfare system and "mixers" offer a better return than genuine employment, the Small Firms Association (SFA) has claimed.

SFA director Mr Brendan Butler said many small firms are finding it increasingly difficult to fill vacancies in labour intensive sectors of the economy because of the high level of taxation and "the availability of alternative employment in the black economy".

Mr Butler said that, in certain circumstances, social welfare payments offered a greater return than taking up permanent employment. However, introducing higher rates of pay in labour intensive industries would make such enterprises uneconomical. He called on the Government to further reduce the tax wedge and encourage people to take up legitimate work.