Joan Burton (Dublin West, Labour)

We heard a number of important contributions from Deputies this morning airing concerns that the reduction in an employer's PRSI to half of what it is currently would lead to employers reducing employment or wages. I stated this morning there are two balancing measures in this legislation; one is the restoration of the minimum wage which, in effect, raises it by €1 per hour to €8.65, and the second is the reduction of 50% in an employer's PRSI for the period to the end of 2013.

The purpose of these is not simply to offer a significant financial incentive to employers to expand employment. It is also to encourage employers to retain existing jobs. A number of Deputies were concerned that there is no evidence concerning job creation or were sceptical about jobs growth. The incentive for an employer to reduce earnings to avail of the reduced PRSI rate would not be as great as Deputy Ó Snodaigh suggested. In the example he gave the incentive would be slightly over €2 per week rather than €27 per week, as he suggested.

In my experience of employers, the vast majority are very decent and anxious to retain staff. They would show much loyalty to staff and although they may face very difficult financial conditions, that would not mean they are unmindful of the equally difficult financial positions of employees. Some employers may be unscrupulous but the majority are very decent and aware of their committed employees' financial position.

The evidence internationally suggests that in the tourism sector Ireland has lost ground in traditional markets such as the UK, partly because of currency differentials. The number of UK visitors is substantially lower than was the case several years ago. Offering employers an incentive by reducing PRSI costs for a limited period is not a guarantee that the industry will be turned around but it is potentially an important element in making the product more competitive to tourists, particularly those coming from the UK.

Similarly, the reduction in VAT levels for products related to the tourism and hairdressing sectors is an important incentive which will help to retain employment in areas where employers are operating on a knife-edge because of other cost issues. Many of the new jobs in international technology companies are highly skilled and the reduction in employer's PRSI does not apply to them. This initiative is focused on employers who are struggling to maintain jobs and the incentives will help to ensure existing jobs are retained and expand employment levels. We will be monitoring what happens as a result of the incentive, which is due to end at the end of 2013. I am optimistic that we will see improvements in the attractiveness and competitiveness of Ireland from a tourism perspective.

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