BUSINESS:The programme for government has drawn a mixed reaction from business and unions

IT’S FAIR to say that most people in Irish business wish the Fine Gael-Labour Government well as it seeks to rebuild the shattered Irish economy.

A key plank of the strategy is to get people back to work, and the Government has committed itself to “resource” a jobs fund within its first 100 days.

This is to provide an additional 15,000 places in training, work experience and educational opportunities for those out of employment.

It will also cut the lower 13.5 per cent Vat rate to 12 per cent until the end of 2013 and halve the lower 8.5 per cent rate of PRSI for two years on jobs paying up to €356 a week.

In addition, it will abolish the €1-an-hour cut in the national minimum wage introduced in the last budget and scrap the €3 travel tax if airlines restore closed routes.

But there is no mention of how much this will cost the exchequer. The Department of Enterprise, Jobs and Innovation was unable to provide details yesterday of how the fund will operate.

Jack O’Connor, Siptu’s general president, welcomed the programme for government. “The emphasis on jobs and the emphasis on investment is to be welcomed,” he said.

He said the stimulus measures included in the programme don’t “go far enough” but “we recognise that their space for manoeuvre was very limited”.

The decision to reverse the national minimum wage cut is not supported by Mark Fielding, chief executive of ISME, the lobby group for small and medium sized businesses.

“We didn’t agree with it being cut initially as it only affects 3½ per cent of the population . . . [but] changing it now sends out the wrong signal,” he said.

Fielding said the “big issue” for his members was the decision not to cut social welfare rates as it acted as a disincentive for people to return to work.

A commitment to reform the Joint Labour Committee structure, which oversees the implementation of labour agreements in many sectors, was welcomed by ISME.

But Fielding is sceptical on whether this will deliver meaningful reform on the ground.

“This plan has all the signs of being stitched together very fast,” he said.

He also questioned if the Government would be able to follow through on its commitment to abolish upward-only rent reviews to help the ailing retail sector, which has seen 470 shops close in the first seven weeks of 2011. “I don’t know if they’ll be able to do it . . . it has constitutional issues.”

Exporters were another key element of the programme. Trade has been coupled with foreign affairs and Irish Embassies around the world will now play a more active role in promoting Irish businesses.

“We had called for a minister for exports, but this is probably as close as we will get,” said John Whelan, chief executive of the Irish Exporters Association.

The programme says the tax credit scheme for research and development expenditure will be reformed, subject to a cost-benefit analysis.

In particular, Whelan said the proposal to allow companies to offset research and development credit against employers’ PRSI as an alternative to corporation tax would “assist cash flow” for the businesses. “This is a positive measure,” he added.

He also welcomed plans to exempt from Vat those service companies that export more than 90 per cent of their output. “We are seeing more software start-ups that don’t trade in their home market,” he said.

Overall, Fielding described the programme as a “mixed bag”. But he said the most positive element of the deal between Fine Gael and Labour was that it should reinvigorate the Civil Service.

“We’d been getting no response from any departments since last October,” he said. “Hopefully now things will get moving.”