Brian Ó Domhnaill (Fianna Fail)

It is good to see the Aire Stáit in the House to take this Adjournment matter. The Minister is here as a business person as well as the Minister responsible for businesses. This Adjournment matter is to do with the transfer of responsibility for sick pay from the Department of Social Protection to employers generally. The proposals mooted by the Department to transfer the costs of the first two to four weeks of sick leave to employers is concerning employers up and down the country.

As the Minister of State is aware, businesses are under severe financial pressure due to a lack of confidence among consumers about spending money. The domestic economy is in decline and for that reason many jobs in businesses are being lost, and the businesses already in operation and trying to develop are finding it extremely difficult to survive and obtain credit from financial institutions. Having spoken to a number of chambers of commerce in the north west region, particularly in Donegal, I believe the course of action being proposed by the Department of Social Protection is flawed, principally because it would place an additional and unjust burden on businesses at a time when many of them are struggling to stay afloat.

The Department's justification for the proposal, as I understand it, is that it would merely bring Ireland into line with other European jurisdictions. However, the argument fails to take into account the cost of doing business in Ireland. The argument that Ireland is unique and not making employers responsible for sick pay is spurious when one takes into consideration the massive impositions this would place on companies and on employers within the country. Data published by the National Competitiveness Council shows that the cost of doing business in Ireland remains higher than that in the eurozone area and the EU 27 averages. For that reason, there is no doubt that the rationale that the cost of sick leave should be transferred to employers to bring Ireland into line with those countries is technically flawed.

The range of costs in the report include the figure that Ireland has the second highest minimum wage in the EU. Many Irish small and medium businesses are bound by agreements that oblige them to make payments above the minimum wage. Due to the Organisation of Working Time Act 1997, Ireland is one of the few European countries where additional Sunday premium payments are mandatory. No such premium exists in major competitor countries such as Germany, the United Kingdom and France.

Businesses in Ireland have to deal with an array of different items of legislation and regulatory bodies. Those include the Labour Relations Commission, the Labour Court, the joint labour committees, the Organisation of Working Time Act, and the National Employment Rights Authority. Further costs are then placed upon businesses and many employers through unjust and unnecessary employment regulation orders and registered employment agreements. One only has to talk to those in the restaurant sector to hear about the pressures they are under from environmental health officers, EHOs, up and down the country. As someone who has a professional background in the food safety sector, I am aware of that from speaking to hotel owners. I was doing a clinic in a hotel over the weekend when an EHO came in and listed an array of changes that would cost €15,000, even though the hotel never had a complaint about a food poisoning instance. Those are the regulatory burdens that are targeting businesses.

The cost of business and professional services are generally higher in Ireland. The service producer price index shows that the cost of selected services in Ireland are now 0.7% above 2006 levels. While that increase is less than in some EU countries, Ireland's figures started from a very high base. Budget 2012 introduced a 2% increase in Ireland's VAT rate, giving it the joint sixth highest in the EU. That has had a considerable impact on the profitability and competitiveness of Irish small and medium businesses. The consumer sentiment index produced by the ERSI and KBC Bank shows considerable decline in consumer confidence in the wake of the VAT rise.

At a time when businesses are under increasing pressure it would be the last straw for many businesses if they were forced to take on the responsibility of the Department of Social Protection and pay sick pay to employees for the first two to four weeks. I am not arguing that employees should not get their sick pay. I am saying that the sick pay responsibility should rest with the Department of Social Protection because at a time when we need jobs to be created and people to spend money in the economy to get it going again, this would be the wrong way to proceed. I am aware that business owners up and down the country who are creating jobs are very concerned by this move. I hope the Minister of State has some good news to give reassurance to the sector.