Burton: Employers should pay for sick leave

Social Protection Minister Joan Burton has defended moves to force employers to pay for workers’ sick leave, saying they stand to gain most from the new measures.

Burton: Employers should pay for sick leave

Social Protection Minister Joan Burton has defended moves to force employers to pay for workers’ sick leave, saying they stand to gain most from the new measures.

The Minister wants to introduce a statutory sick pay scheme for companies, meaning they will be responsible for footing the bill instead of the Government.

And she said while she understands some employers might be apprehensive about the cost burden, it will ultimately lead to happier and more hardworking staff.

“I think the ultimate beneficiaries of this approach will be the employers who will have a more productive workforce,” said Ms Burton.

“We want people in their most productive years and if they do have intervals of illness, our systems will help them get back to work and be able to resume earning.”

Unlike many other Organisation for Economic Co-operation and Development (OECD) countries including the UK, Australia, France, Germany, Norway and Poland, Irish employers are not obliged to make any contributions.

The State currently pays an illness benefit to employees who are unable to work due to illness.

Workers are entitled to about €188 per week for up to two years, provided they have made sufficient PRSI contributions.

But Minister Burton said she hopes to introduce statutory sick pay by the end of 2012, which would see the complete abolition of the illness benefit and responsibility being transferred to employers.

“I can understand that employers might be apprehensive about changes, but the purpose of today’s discussion is to have a debate and focus on the whole issue,” Ms Burton went on.

The scheme, if rolled out in time for the next Budget, could save the Department for Social Protection up to €89m a year.

Ms Burton said it was a significant saving, which would go towards plugging the €1.5bn deficit in the department’s Social Insurance Fund.

“We are in a programme with the Troika and we are required to find significant savings and improvements in Social Protection,” the Minister added.

“The Government and, specifically, the Department of Social Protection committed to undertaking a consultation period with employers. This is the start of that process.”

Ms Burton invited a number of international medical and employment experts to Dublin to take part in a conference on the issue.

Among them was Director for Employment, Labour and Social Affairs at the OECD John Martin, who said employees’ health was a much lower priority in Ireland than in other OECD countries.

He said there was also a danger of more people in Ireland drifting from receiving temporary illness benefit to long-term disability benefits.

Exchequer spending on illness benefit more than doubled in the 10 years leading up to 2011, from €330m to €876m. The number of people claiming the benefit and other disability payments from the Government increased 40% from around 173,000 to 242,000.

However Chambers Ireland described the proposals as "unwise".

“Employers are already required to manage sick leave closely as it presents such a disruption to the operation of any business. This measure, if enacted, will only serve to increase costs for business and should not be dressed up as anything else.”

“It would be much better for the Department of Social Protection to concentrate on making work pay and developing better labour force activation strategies rather than hammering employers with a fresh round of additional costs at this time," said Chambers Ireland Deputy Chief Executive Seán Murphy.

The proposals were also criticised by Patricia Callan, director of the Small Firms Association (SFA).

“This amounts to an additional flat tax on employment, which all businesses will have to pay regardless of their profitability, and is completely unacceptable," Ms Callan said.

Employers' group IBEC said the plan was "at odds with" the Government's strategy on creating jobs.

"Putting additional social welfare costs onto employers is simply an extra tax on employment, at a time when jobs should be the priority," IBEC Director Brendan McGinty said.

"The Government needs to start coming up with sensible and economically sound ways of reducing employment costs, instead of just shifting costs onto employers."

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