PRSI holiday for employers finally gets green light
A PRSI holiday for employers who hire new workers has finally been launched -- six months after it was first announced.
Taoiseach Brian Cowen and Social Protection Minister Eamon O Cuiv announced the scheme yesterday, and said it will come into force from today.
The scheme was first flagged by Finance Minister Brian Lenihan in his Budget last December.
But Mr Cowen and Mr O Cuiv said problems with its introduction had to be ironed out before it could be put in place.
Mr Cowen said it is designed to help the long-term unemployed, or those out or work for more than six months. There are currently 440,000 people on the Live Register.
The Taoiseach said one of the reasons for the delay in implementing the programme was to avoid issues such as 'deadweight' -- where a PRSI holiday is given for a job that would have been created anyway.
Other issues include 'displacement' -- where the Government subsidises one job only to put somebody else out of work.
It will now be backdated until the start of the year, and any employer who created a job from the start of 2010 can also apply for the year-long PRSI holiday.
In such cases, the exemption will kick in from this morning and will last through to next June. From jobs created from today onwards, the exemption will kick in from when the job starts.
However, the scheme will only apply to full-time jobs and not to seasonal or part-time posts. The job must last for six months, or more, and if it does not, the PRSI exemption given will have to be repaid.
Mr Cowen said it will save an employer around €3,000 per worker each year and it is expected to cost the taxpayer €36m.
The Government claims the scheme will be cost-neutral since the new jobs will take people off the dole queues.
Smaller companies of less that 100 workers will be allowed an exemption for a maximum of five employees. Larger companies are allowed claim the exemption for 5pc of their existing workforce.
"The proportion of people who return to employment after a short period out of work remains relatively high," Mr Cowen said.
"However, 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 will only be available for new employees who have been unemployed for six months or more."
People who have been in FAS training schemes for more than six months will also be eligible.
Fine Gael's Leo Varadkar had previously criticised the Government for the delay in implementing the scheme, and said issues such as deadweight and displacement could have been ironed out quickly and easily.
Employer's group IBEC last night welcomed the scheme and said it will reduce the cost "to employers taking on new staff".
"But more work is needed to reduce the cost of doing business," director general Danny McCoy said.