Government launches €250m job subsidy scheme

A €250m employment subsidy scheme was announced by the Government today in a bid to support up to 27,400 jobs.

Vulnerable but viable manufacturing firms who are struggling to make ends meet during the recession can apply for the funding.

Tánaiste Mary Coughlan said the temporary measure will provide €9,100 per employee over 15 months to qualifying firms in the export business.

The minister said Enterprise Ireland will assess if qualifying companies are vulnerable in the current economic climate but viable in the medium to long term.

"Not only will the scheme support the maintenance of vulnerable jobs, but it will help our economy retain its productive capacity and assist employers retain their labour, knowledge and skills-base, thereby supporting a faster return to sustainable growth," said Ms Coughlan, Minister for Enterprise, Trade and Employment.

The scheme is being introduced to help retain jobs as unemployment soars and secure the economy's export potential during the economic downturn.

To qualify, firms must not have been in difficulty before July 1 last year but are struggling as a result of the global and financial economic crisis.

They should also be currently exporting, are likely to have to consider redundancies within 12 months, employ at least 10 people and must have already taken significant restructuring measures to improve their competitive position.

The Tánaiste said challenging times demand innovative responses from Government, stressing the new scheme was in addition to the €100m Enterprise Stabilisation Fund put in place by the Government earlier this year.

"Many of our exporting firms are experiencing great challenges in the current economic environment and the Government believes that unless additional innovative forms of support are provided, more jobs may be lost," continued Ms Coughlan.

"In providing this support, the Government is optimistic that jobs will be saved and that vulnerable enterprises will benefit and will survive through the current challenging economic period.

"These firms will then be able to grow and develop and to provide essential jobs and investment in the recovery phase."

Over 15 months, the employment subsidy scheme will provide a maximum subsidy of €200 per full-time employee per week for the first 26 weeks, reducing to €150, €100 and €50 respectively for each of the subsequent 13 week periods.

The move follows figures released yesterday by the Department of Enterprise, Trade and Employment which show there were over 49,000 redundancies since January.

It was broadly welcomed by business representatives.

"This is a positive response from Government to the predicament that faced viable companies attempting to trade their way through the global downturn," IBEC Director Pat Delaney said:

"The scheme also recognises the great competitive difficulties companies have faced in recent months because of the strong euro."

Patricia Callan of the Small Firms' Association (SFA) said it was "heartening" to see action being taken on job protection, but added that it was simply putting Irish exporters back on a level playing field compared to their international competitors.

"These supports are desperately needed in order to allow our exporting companies to maintain their position in the international marketplace, where most other EU member states have already rolled out vast enterprise support packages," Callan said.

However, she noted with concern that whilst multinational businesses are included in the scheme, micro enterprises (those employing less than 10 employees) are excluded.

Meanwhile the move only received a 'guarded' welcome from ISME, the Irish Small & Medium Enterprises Association

In a statement, ISME said that the initiative, while worthwhile, should form but one part of an overall strategy for employment maintenance.

"This initiative will benefit a number of exporting companies who have suffered due to the international downturn, exchange rate differentials and a deterioration in cost competitiveness," ISME Chief Executive Mark Fielding said.

"While it will not be the cure-all for their concerns it should help in addressing short-term employment issues."

Fine Gael however claimed the jobs plan was ineffective, expensive and riddled with holes.

The party's innovation spokeswoman Deirdre Clune said the unemployment crisis goes right across the economy, with every sector affected.

"But the Tánaiste's new scheme will have a limited impact on just one sector," said Ms Clune.

"I believe it's a deadweight proposal from a lightweight Tánaiste.

"The Government would do far better to adopt Fine Gael's far-reaching policies, including a PRSI waiver for new employees taken on over the next two years.

"Fine Gael is also proposing an €11bn stimulus plan for energy, broadband and water, and reductions in spending to allow cuts in VAT."