NEWSFLASH: JOBS INITATIVE SCHEME

On 10th May 2011, The Irish government announced a jobs initiative scheme which has been developed in a bid to boost employment and improve Ireland’s economic competitiveness. The jobs initiative has not been widely welcomed due to the government’s method of funding the initiative by introducing a 0.6% levy on the capital value of pensions for the next four years.

We have reviewed the initiative and have outlined the below highlights for your information:

1. Cut rate of employers PRSI for salaries of up to €356 a week.
2. National Minimum Wage to be reversed to €8.65 from 1^st July 2011.
3. VAT rate on tourism-related goods and services cut from 13.5% to 9%.
4. 21,000 training, education and intern places for unemployed to be created.
5. Those in receipt of unemployment to receive an additional €50 per week if they avail of the 5,000 internship placements.
6. Air travel tax to be suspended temporarily to provide an increase in travel numbers.
7. €60 million earmarked for road improvements which will create 3,500 jobs.
8. €30 million set aside for improving schools.

The government believe that the 0.6% pension levy will generate €470 million a year to fund the jobs initiative. Their decision to implement the levy has been heavily criticised especially as the government have not indicated how many jobs will be created and whether these jobs will be long term prospects for graduates and those on the live register. The government have confirmed that this levy will be temporary and expect it will last for a period of four years although many have expressed concerns about its “temporary” nature.

It was expected that the government would also announce the long awaited changes to the Employment Regulation Order System yesterday, however no changes were announced. When probed, the government indicated that they could not confirm a date for when the sectoral agreements would be changed. It is believed that rather than dissolve the agreements, the governments will be reviewing aspects of the agreements such as overtime rates, unsocial hours and travel to work pay. We are monitoring the situation and will keep you informed and updated of any changes that are announced.

A key aspect of the initiative which will be of benefit to employers is the reduction in employer’s PRSI for those employees earning up to €356 per week that takes effect on 1^st July 2011. It has also been confirmed that the existing Employer Job (PRSI) Incentive Scheme will remain in place until the end of 2011. The Scheme exempts employers from liability to pay their share of PRSI for 12 months for employing persons who had been on the live register. Further details of this scheme are available on www.welfare.ie.


A further factor which will assist employers in small business is the introduction of the National Internship Scheme which offers up to 5,000 places for individuals currently on the live register. The internships will be in the public, private and community sectors and are open to both graduates and non-graduates, with a view to enhancing their employability. The interns will receive an additional €50 per week on top of their unemployment benefit in recognition of additional costs incurred such as travel expenses. The internships will be advertised on a website administered by FAS and those interested will apply directly to the employer after the July launch of the scheme. The government are also proposing an additional 21,000 places in training, education and work experience. However a key factor which will impact on many employers is the reinstatement of the minimum wage rate of €8.65 from 1^st July 2011 which may increase wage costs for employers.


The government has admitted it is the first step in getting people back to work. It will remain to be seen whether the proposed initiatives will achieve the desired outcomes.

Contact Details
Please contact our Client Support Line on 086 775 2064 or at info@hrbusinesssolutions.ie for all your HR & Business queries.

Or contact Caroline directly on 087 9694837 or at caroline@hrbusinesssolutions.ie

As this release is intended as a general guide to the subject matter, it should not be used as a basis for decisions. For this purpose advice should be obtained which takes into account all the clients circumstances. Every effort has been made to ensure the accuracy of the information in the release. In view of its purpose the reader will appreciate that we are unable to accept liability for any errors or omissions which may arise.