A NEW €36 million scheme announced by the Government yesterday will give employers PRSI exemptions for taking on new workers who have been unemployed for six months or more.
Taoiseach Brian Cowen and Minister for Social Protection Eamon Ó Cuív announced details of the scheme at a press conference in Government Buildings yesterday.
The measure is specifically targeted at those who have been out of work for at least six months. Any employer creating a new job for a person who has been unemployed for six months will save about €3,000 over a year, because of reduced employer contributions for pay-related social insurance.
Mr Ó Cuív said the concession, which was announced in last December’s Budget, would be backdated until January 1st. In effect, any employer who has taken on a qualifying unemployed person this year will benefit from the concession.
The Minister said that while €36 million had been earmarked for the scheme, his department would not know the extent of take-up until it was under way.
He also said it would ultimately be cost neutral because of the commensurate reduction in social welfare payments.
“It is going to be self-financing because people will be taken off the social welfare register,” said Mr Ó Cuív.
Mr Cowen said the scheme would make it easier for employers to make the decision in favour of creating new jobs and play a significant role in re-establishing people in the workforce.
Outlining the rationale for it only applying to those unemployed for six months or more, he said: “After six months on the Live Register there is a danger that people will drift into long-term unemployment and welfare dependency. For this reason, the scheme is open only to those unemployed for six months or more.”
Asked about the delay in implementing a Budget-day measure, Mr Ó Cuív said issues relating to drawing up regulations arose.
There are a number of rules underlying the new scheme. The job must be full-time and must be an additional not a replacement job.
The scheme is limited to an existing 5 per cent of the workforce, or five new jobs for smaller companies.
The new job must last for at least six months.
Employers’ group IBEC welcomed the announcement. IBEC director general Danny McCoy said: “Getting people back to work in sustainable enterprises is the key to recovery. The new scheme will help reduce the relatively high costs to employers of taking on new staff, but more work is needed to reduce the cost of doing business.
“Addressing the growing problem of long-term unemployment is one of the most important challenges facing the country. This measure is a step in the right director, but a range of more innovative initiatives and further labour market reform is also required,” he added.