The Government has defended its support for small businesses following the suspension of a €250 million employment support scheme after just €135 million had been spent.
Minister for Labour Affairs Dara Calleary today admitted the employment subsidy scheme announced last August to protect jobs in vulnerable businesses had been “suspended”.
He said when the first call for submissions for funding from the temporary scheme was made at this time last year, some 450 companies participated in it.
The Government later widened the criteria for inclusion in the scheme and a further 1,200 companies benefited. In total, €135 million had been invested and the scheme was supporting 100,000 jobs, he 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 current economic difficulties.
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 and “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.”
At the time of the announcement, the Government said the ESS was "a cash limited scheme". The maximum funding available per company was €500,000. The maximum subsidy was €9,100 per full time employee or €6,370 per part time employee.
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 was made 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.
Mr Fielding said for too long the small and medium business sector had been the “Cinderella sector” and the Government had seemed to ignore it while bringing in schemes for exporters and multinationals.
He said small businesses, employing fewer than 10 people, were the “seed-bed” of the economy and the ones that actually needed assistance.
“This is where the economy is going to grow and this Government are doing very little in that respect because they don’t seem to have a coordinated policy.”
Mr Fielding said it seemed the Government was “tinkering around at the edges” in terms of protecting jobs, with just “small bits and pieces” here and there.
“What we are seeing are piecemeal efforts to actually do something rather than a national employment strategy. And that should be included in an overall national economic plan. And that’s what’s leading to economic uncertainty out there. Businesses are not investing. The consumer is not spending.”
Nothing yesterday’s figures which show unemployment has reached a 16-year high, Mr Fielding said the economy was “in danger of slipping down into a black hole at the moment if the Government don’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 underway to address those figures”.
The core policy was to stabilise public finances, to stabilise the banking system and to increase the competetiveness of the economy.
“That strategy will lead to growth in the economy – that has been proven. We had the highest first quarter growth in the OECD this year. With growth in the economy, we will move into employment growth and that was our core objective.”
The Minister said it was difficult to make a long-term assessment based on summer figures and he believed September and October’s figures would show a “return to stabilisation”.
The Government was committed to reducing the unemployment figures and the PRSI exemption scheme was one way of doing that.
In addition, he said the Government had identified 75,000 people who are signing on the Live Register on a part-time basis and would next month introduce an initiative aimed at that group.
Mr Calleary said between now and 2015, the Government would create 273,000 new 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 that are in the domestic economy.
He said he was confident that with growth beginning to take hold, the State would move into net employment growth next year.