Ibec not opposed to levy raising extra €150m for student education

Employers’ group Ibec does not object to increasing a levy on business to train people for work once the extra €150m a year is properly spent.

However, it says a student- loan scheme is the only sustainable way of bridging a higher education shortfall heading for €1bn a year.

The National Training Fund levy raises €340m a year by ringfencing amounts worth 0.7% of employees’ earnings, from PRSI contributions by employers.

The Cassells group recommends an extra €150m a year be contributed by employers paying 0.3% extra into the fund, regardless of which option is chosen to fund higher education. The amount could increase if employment continues to rise and businesses would be given greater leverage on the type of third-level courses being offered in return.

While it is presently taken from employers’ PRSI, the money would represent an additional cost to business, but one which the report says would be justified given the high proportion of graduates in the workforce.

“It is acknowledged that employers already contribute financially to higher education institutions by paying tuition fees for employees, contributing to research projects and through donations or sponsorships,” the Cassells group said.

“However, the scale of benefits accruing and the principles of fairness and balance suggest employers should contribute more.”

The additional money raised would be used to support programmes that target skills gaps in the economy and public services, as well as supporting part-time, distance, and online courses.

Report to recommend increase in fees paid by third-level students https://t.co/gmuTwsnUqc pic.twitter.com/K7HUpvPCOk

— Irish Examiner (@irishexaminer) July 11, 2016

Ibec said it needs to consult with members about the levels of increased contribution suggested but head of education policy Tony Donohoe said the organisation does not oppose the broad idea, as long as there is transparency on how additional money would be spent.

“If we have targeted areas of skills demanding being supported by the fund, we don’t object in principle. Employers already contribute directly to higher education in various ways,” he said.

Mr Donohoe said the projected €150m a year that would be raised would be a relatively small portion of the anticipated €1bn shortfall. He said there has been no change to the basis of the OECD recommendation 12 years ago for an income-contingent student-loan system because of its advice that a high-quality higher education system was impossible based predominantly on state funding.