Employers are to be given a greater say in shaping the type of education and training that is delivered over the coming years, in exchange for increases in payroll taxes.
Earlier this year, Minister for Education Richard Bruton announced a proposal to raise an additional €200 million for the sector through increases in employers' PRSI to the national training fund.
He said the move was needed to help tackle a funding “crisis” facing the higher education sector.
However, employers have criticised the plans to increase the levy as an “inappropriate response” which would undermine Ireland’s competitiveness.
Following a consultation process, Mr Bruton will announce on Friday that employers will be give a greater input into “informing” the priorities of the national training fund.
In a statement, Mr Bruton said the State would invest €36.5 million extra in the sector this year, with a total of €160 million committed over the next three years.
“It is reasonable to ask employers to contribute more as their future success depends so much on the capacity of the education sector to respond to their needs.
“In return enterprise must also have a greater role in shaping the type of education and training that is delivered.”
There will also be changes to the fund aimed at easing employers’ concerns over whether the funding will be used appropriated. These reforms include a requirement to publish annual data showing evidence of its expenditure, engagement with employers and the impact of funded programmes.
Independent review
In addition, there will be a “comprehensive independent review” of the fund which will be overseen by a group including officials from government departments, as well as employers and other stakeholder representatives.
Mr Bruton said these measures would provide assurance to employers about what the fund was delivering and how it was responding, and how it could respond better to existing and future skills needs.
Under his plans the national training fund levy will increase from 0.7 per cent to 1 per cent in the three-year period to 2020.
He said the Government would also consider the scope for a multi-annual exchequer investment commitment to the fund, subject to overall budgetary and expenditure considerations.
Earlier this year, employers’ group Ibec describes the proposal to increase the levy as an “an inadequate ‘fix’ due to the absence of a credible and more sustainable solution”.
Challenges
"Given the challenges posed by Brexit, a slowdown in international trade, anti-globalisation sentiment and political uncertainty in Europe, an increase in employers' PRSI will have an adverse impact on Ireland's competitiveness," it said.
Instead it recommended that a portion of corporate tax gains should be ringfenced for investing in higher education.“Given the scale of corporate tax receipts, this is a more viable and sustainable employer investment mechanism.”
Ibec also says there are “serious issues” around the governance and use of the training fund, which is “essentially little more than an earmarked tax”.
It noted that the fund has carried large surpluses to help support the general government balance sheet.
