Significant improvements in tax relief for profit-sharing schemes have been signalled as very likely in the next Budget by the Tanaiste, Ms Harney. She was speaking at the Institute of Personnel and Development conference in Galway yesterday.
She said the Government would "have to look at how the tax system can be changed to encourage profit-sharing for employees". She also said the Government remained committed to reducing the tax burden on the low paid and providing more effective training for the long-term unemployed.
She defended the proposed national minimum wage of £4.40 an hour as a very reasonable figure for anyone to earn who has been required to undergo three years of training. The economy had the capacity to deal with a rate of £4.40. She hoped tax rates could be reformed so no one earning the minimum wage would be paying income tax or PRSI on it.
A more crucial element in preserving the increased competitiveness of the Irish economy, Ms Harney said, was how competition policy was applied. In the past, ownership of resources had been seen as the key to controlling the system. She had traditionally argued for minimal State involvement in economic enterprises. While that remained her position, she added that monopoly was the more important issue.
In that regard, "private monopoly is more serious and damaging than state monopoly", she said, and competition policy must be used to combat it. She also said she would be taking a close look at "closed shops and barriers to entry" into certain trades and professions.
The Tanaiste and Minister for Enterprise, Trade and Employment criticised many small indigenous companies for their failure to diversify. They remained over dependant on the British market. One of the main aims of the reorganisation of An Bord Trachtala, Forbairt and a section of FAS was to help these firms diversify and become more flexible.
While the new orientation of policy on unemployment in the Government's Action Plan, published earlier this week, had been towards targeting the short-term unemployed, Ms Harney told the IPD that she would be looking at the role of FAS in aiding the long-term unemployed back into the labour market. Employers inevitably preferred younger and better qualified staff. The State would have to invest in training programmes targeting the special needs of long-term unemployed.
Training and education would have a major role in maintaining our competitiveness, she said. The Government had set up "a fire brigade operation" to provide increased resources to meet skill shortages in the information technology area, but a group was also being established to forecast long term skill needs.
