Mr. Gerard Brady:

The advantage of a share option scheme is that where a company cannot pay more but does have some idea what the future growth of the company, the employee can buy into it. It is common in the tech sector, in particular, but it could probably be more common across many different areas. It is a problem in Ireland in particular because we have this huge sector - it is like the problem the League of Ireland faces keeping good footballers. There is a huge, very profitable and productive sector in Ireland and it is very difficult to keep good staff even if a company has them and trains them. Being able to give them shares in the company will help retain management talent and also overcome some of those issues around not being able to pay the same wages.

The London School of Economics has done comparative work on management skills in Irish indigenous companies versus companies elsewhere. We are down with Greece and Portugal in a European context and near India and Brazil in a global context. We are probably the third lowest in the EU in respect of management skills available. Our multinationals have really good skills. We are producing many skilled people but they are not going into the indigenous sector. That remains a major problem.

Profitability was also spoken about and Irish indigenous firms have very low margins in the grand scheme of things. They have a high labour share, about the second highest in the EU, and very low margins at the same time, so they pay quite a bit in wages compared to their profitability. Then they do not have room to invest after that.

The role of the State to step in there is help them to invest them by giving them some kind of incentive to invest thorough the tax system or them direct grants in research and development where if one has low margins, it is very difficult to justify investment in areas like robotics that might be risky that might not work. They are also heavily reliant on short-term financing from banks and are different from other European firms. I mentioned Sweden where there is much greater access to equity investment. The schemes that we have helped traditionally in the past and equity investors get involved in companies.

Our stamp duty is twice that of the UK, which is second in the world and ten times the European average, which has a massive impact on mid-caps. The employment incentive and investment scheme, EIIS, was a good scheme for smaller companies a number of years ago, but state aid changes that had to be made in last year's Finance Bill resulted in a 50% drop-off in the take-up of the scheme in the first quarter of this year compared to the first quarter of last year, which is a disaster for small companies, which are high potential and which could grow if they got that equity financing into them.