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Firms say sick pay rule to cut 3,5k jobs

Wednesday, September 19 13:02:39

Business groups today said that the government statutory sick pay proposals would bring hundreds of firms already suffering to the brink and would cost 3,500 jobs.

Employers group, IBEC said that the new rules would put struggling firms out of business and force many companies to reduce pay and benefits.

The group said today's disappointing CSO unemployment figures further highlight the need to keep employment costs down and prioritise job creation.

IBEC said any increase in the cost of employment would reduce Ireland's attractiveness as an investment location and undermine hard won competitiveness gains of recent years. Research from the OECD shows that an increase in taxes on labour of 1pc reduces an economy's employment rate by about 0.4pc. The Government's proposal for an extra tax on jobs through a statutory sick pay scheme would cost at least 3,500 jobs both directly and indirectly in the economy.

"Putting additional social welfare costs onto employers is simply an extra tax on employment at a time when jobs should be the priority. Employers already pay E5 billion a year into the Social Insurance Fund, which is used to pay sick pay benefits. The introduction of statutory sick pay will particularly hit smaller, more vulnerable employers, operating in low-margin businesses," IBEC Director Brendan McGinty said.

The Director of the Small Firms Association, Patricia Callan informed the Oireachtas at a special briefing on the Sick Pay Proposals today that placing additional sick leave pay costs on small firms will add further pressure and cost jobs.

"Small businesses are struggling to maintain jobs, and any measures that add directly to the cost of employment will result in job losses; will act as a strong disincentive to job creation and may force employers to revisit any sick pay policies which they offer," she said.

"Employers and their employees already contribute significantly to the social welfare bill through the PRSI system, and placing social welfare costs onto business is simply an additional cost on employment and is completely unacceptable."

In 2010, employers paid E5bn or 75pc of the total contributions to the Social Insurance Fund.

A survey carried out in early September 2012 shows the impact that the possible introduction of mandatory sick pay would have on the small business sector:

It found that 88pc would be affected by cashflow; 69pc stated it would restrict their future recruitment and 61pc indicated that it may lead to job losses.

"One of the arguments for the introduction of the scheme is to reduce sick leave. The SFA do not believe that the proposed sick pay would reduce sick leave or absenteeism as these levels are at their lowest in small companies. In 2010 an SFA survey showed that absence in small firms was 2.6pc or 5 days, compared to 4.9pc or 11.3 days in the public sector, which costs the state between E400-500mn," said Ms Callan.