Joan Burton (Dublin West, Labour)

To set the question of statutory sick pay in context, the total expenditure by my Department in 2010 on payments in respect of illness and disability to almost 250,000 beneficiaries amounted to more than €2.8 billion. In 2001 the number of beneficiaries was less than 174,000 and expenditure was some €1.1 billion. A table setting out these figures in detail follows.

The total amount in illness benefit paid in each of the years specified by the Deputy is: 2006, €627.6 million; 2007, €755.1 million; 2008, €852.3 million; 2009, €919.8 million; and 2010, €942.8 million. Expenditure on illness benefit in that five year period amounted to more than €4 billion, while annual expenditure on the scheme has almost trebled in the past ten years. Expenditure in the current year will be at broadly the same level as 2010, when some 330,000 illness benefit claims were awarded.

Introducing a scheme of statutory sick pay is one of a range of options being examined with a view to reforming the social welfare system to bring it into line with practices in other countries, addressing the deficit in the social insurance fund and meeting the commitments which the previous Government entered into with the European Union, the IMF and the ECB to achieve substantial reductions in current spending.

Depending on how it is structured, a statutory sick pay scheme has the potential to achieve considerable savings. I am conscious of the pressures many employers face, particularly in the SME sector, and any statutory sick pay scheme will seek to take account of these concerns to the greatest extent possible. Some of the employers' concerns were outlined to me during a meeting I held with IBEC last week. However, such a scheme is the norm among most EU member states. The extent to which employers are liable varies significantly, with a figure of two years in the Netherlands, 28 weeks in Britain and north of the Border and nine days in Finland.

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The specific manner in which such schemes operate varies considerably in terms of coverage, payment rates and compensation for certain employers. It is also the case that statutory sick pay will tend to stimulate and incentivise employers, both in the private and public sectors, to take a more active role in managing absenteeism. In the Netherlands, for example, rates of absenteeism fell from 10% to 4% following the introduction of a statutory sick pay scheme.

The House will be aware also that the rate of social insurance paid by employers is low in Ireland when compared to most other EU member states, with the result that the social insurance fund is now in deficit. In order to address that deficit, the choices we face are to increase social insurance rates, including for employers, reduce benefit rates and coverage or adjust the payment model in a manner which would require employers to share the costs associated with short-term sickness but which would also give them a greatly enhanced role in the management of that cost.

The House will be aware also that the rate of social insurance paid by employers is low in Ireland when compared to most other EU member states, with the result that the social insurance fund is now in deficit. In order to address that deficit, the choices we face are to increase social insurance rates, including for employers, reduce benefit rates and coverage or adjust the payment model in a manner which would require employers to share the costs associated with short-term sickness but which would also give them a greatly enhanced role in the management of that cost.

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