Brian Ó Domhnaill (Fianna Fail)
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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.

John Perry (Sligo-North Leitrim, Fine Gael)
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I would like to apologise at the outset that my colleague, the Minister for Social Protection, Deputy Joan Burton, is unable to be here to respond to this debate. On her behalf, I thank the Senator for raising this important issue.

The question of introducing a scheme of statutory sick pay, whereby employers would directly meet the costs of sick absence for an initial period of illness, is being considered in the context of the need to reform the social welfare system to bring it into line with practices in other countries in this area; the need to address the deficit in the Social Insurance Fund; the need to limit progression from short-term illness to long-term illness or disability; and in the wider context of enhancing the health of the workforce and addressing levels of absenteeism.

A range of complex issues must be addressed before any decision could be taken by Government on the possible introduction of a statutory sick pay scheme. These include the extent of coverage; the duration of payment; the rate of payment; compensation mechanisms for employers where appropriate; and how to ensure that a scheme of statutory sick pay would be enforced and policed.

The impact of introducing a statutory sick pay scheme would be contingent on the way all of these issues are addressed and how, ultimately, such a scheme would be structured. The Minister is acutely conscious of the pressures facing employers in the current economic climate and, in particular, the pressures facing small and medium sized enterprises. A preliminary analysis based on estimates of absenteeism in the private sector indicates that if a sick pay scheme with a duration of four weeks were to be introduced, it would add about €1 per week per employee to the costs of employment. In the event that a scheme were to be introduced, the Social Insurance Fund would continue to provide supports for extended periods of illness.

The Minister for Social Protection hosted a consultative seminar on the feasibility and implications of introducing a scheme of statutory sick pay in February of this year. That seminar was attended by a broad range of key stakeholders who were afforded an opportunity to discuss the complex issues involved. A report of that seminar was published on the Department of Social Protection website recently and provides the basis for further consultations with key stakeholders. All of the issues around statutory sick pay will be discussed in the course of the wider process associated with the preparation of budget 2013 and any decisions which might be taken by Government on the possible introduction of such a scheme will be considered in that context.

I thank the Senator again for raising the issue and assure him that the concerns he has raised will be brought to the attention of the Minister for Social Protection.

Brian Ó Domhnaill (Fianna Fail)
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I thank the Minister of State. I know he is responding on behalf of the Minister for Social Protection and that his Department has responsibility for employment but I am not sure what planet the Minister for Social Protection is living on if she believes that a preliminary analysis based on estimates of absenteeism in the private sector indicates that if a sick pay scheme with a duration of four weeks were to be introduced it would add about €1 per week per employee to the costs of employment. That is off the wall and does not seem to make any sense. If, for example, a small shop owner in west Donegal or Cavan has three employees and one of them is, through no fault of his or her own, off sick for three weeks, how will charging the employees an additional €1 a week over the year cover the costs of that sick leave? Who has the Minister consulted on this? She has not consulted the chambers of commerce or the business sector. I urge the Minister of State, whom I respect, and his senior Minister, Deputy Richard Bruton, to do their utmost at Cabinet level not to accept the arguments being put forward. There are other ways of dealing with this issue. When something is not broken, an attempt should not be made to fix it. The current scheme works and protects employers and employees. Transferring the burden will ensure we drive another wedge between those who create jobs and provide services in the economy. This is wrong and I hope that in the lead up to the budget, the Minister of State will do his utmost to fight against these proposals.

John Perry (Sligo-North Leitrim, Fine Gael)
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The number of people claiming illness benefit and other disability payments has increased greatly in the past 11 years. There has been a 40% increase, from 173,000 to 242,000 between 2001 and 2011. During that period, Exchequer spending on illness benefit alone has risen from €330 million to €876 million. Transferring responsibility for some element of sick pay would generate administrative savings for the Department and would enable a greater level of resources to be employed in addressing the wider controls, management and activation agendas and would bring Ireland into line with other peer countries.

In Australia, employers pay ten days per annum and employees receive from six to 12 weeks on full pay and four weeks at half pay. In Belgium, employees get four weeks on full pay. In the Czech Republic, employees get two weeks on 60% of average pay. In Denmark employers provide from the top rate of illness benefit to normal pay. In Finland employees get nine days. In France employees are paid from top of the illness benefit to normal pay. Germany pays six weeks on normal pay. Hungary provides 15 days at 80% of salary. Iceland provides one month at normal pay. Italy pays 180 days, six months per year. Luxembourg pays 13 weeks. New Zealand pays five days for each year of service. Norway pays 16 days of full pay. Poland pays 33 days at 80% of pay, based on the previous 12 months. Spain pays 15 days, with the first and fourth unpaid. Sweden pays 14 days at 80%. Switzerland pays three weeks at full pay, then 80% for up to two years. The UK pays 28 weeks at the sickness benefit rate.

As indicated in the table, Ireland is an outlier when it comes to employers being obliged to fund some element of sick pay. Most other European countries, including all of our major competitors oblige employers to pay for some sick pay costs and the extent of this obligation varies considerably. For example, it is two years in the Netherlands, 28 weeks in the UK, six weeks in Germany and nine days in Finland. That is the background to the approach we now propose.