June 1, 2009

Redundancy Offset Programme for Enterprises (ROPE)

Posted in Your Ideas ·

The loss of a job has several financial impacts for the person and Ireland as a whole, namely:

- Reduced spending power for the individual/family
- Lowered income tax (and indirect tax) for Revenue
- Increased Social Welfare costs

Besides these, there are also the ‘soft’ issues relating to job loss including:

- A loss of honour/pride
- The worry of never working again (especially if over 50)
- The general lowering of public morale

In the current economic climate many Irish small and medium enterprises struggle because of:

- Cashflow problems
- Delays in receiving payments
- Diminished ability to fulfil orders
- Difficulties in seeking finance

For many such businesses, serious decisions are faced daily such as:

- Reduce head count to survive
- Shorten working hours to manage staff costs
- Wind up the business to protect shareholders

My proposition is for the creation of a Government fund to assist in reducing the numbers of people becoming redundant. A set of criteria would be defined to ensure control in the issuing of the fund to appropriate companies. Suggested criteria would include:

- Number of employees between 2 and 30
- Demonstrable recurring order/revenue stream(min 1 year)
- A reasonable Cashflow situation (i.e. business is viable)
- Quantified cost savings to maintain business operation
- Identified redundancies to ensure survival (e.g. min 20%)

The fund would provide for 75% of the cost of keeping the jobs identified above, the company covering the remainder.

The benefits of the ROPE would be to address not only the financial but also the ‘soft’ impacts of making one redundant as described above. Keeping people in jobs, and thus minimising increases in the rate of unemployment would also create the secondary effect of improving our competitive position abroad, improving our ability to attract inward investment and tourism.

In summary a true win-win for the working public and country as a whole.