Applicants for the second call of the employment subsidy scheme, a €70 million fund to assist in sustaining jobs have recently been notified as to whether or not they have been successful. Russell Brennan Keane’s clients are among the 2,590 businesses in Ireland that applied for support, and 80 per cent of applications made by the firm’s clients were successful. For many of these businesses it has proved to be a timely boost to cashflow with support of up to €9,100 per employee being secured.
Chris Ball, corporate finance director, Russell Brennan Keane, has been analysing the results of applications made by clients of the firm. “Overall we are very satisfied with the number of businesses that have received positive news arising from their application, with 80 per cent of applications proving successful. The successful applications come from a broad range of industries and business sectors. The subsidy will prove to be an important aspect of cash flow for the remainder of 2010.”
However despite the positive nature of this analysis, one interpretation of the results reviewed by Chris suggests that the scheme has failed to assist those businesses most in need of support. “The funding available under the scheme was capped at €65 million and from early in the process it was clear it would be oversubscribed.”
“From our analysis we are finding that businesses most in need of support and who therefore applied for a higher number of supported jobs have been turned down in this process. This could suggest that certain businesses who might only have applied to the scheme as a boost to cash flow have been rewarded while those who see it as critical to their business have been overlooked,” said Chris.
What is clear from the scheme overall is that there is a huge demand for financial assistance and access to finance. Overall, the analysis would further suggest that only 60 per cent of the actual jobs submitted for support will receive the grant. Chris believes there would be a massive benefit to job retention for the Government if they extended the scheme and provided additional funding to those companies that have been unsuccessful in this round due to the oversubscription for funding.
“We believe further funding in the region of €50 million could save these businesses from taking cost cutting measures including redundancies and potentially closure. Many of these are in sectors that are constrained by minimum wage rates on one side and are facing the continued erosion in profit margins due to our uncompetitive economy impacting on construction, tourism services and manufacturing. If as the economic forecasters are predicting, the country expects to emerge from recession later this year, additional funding now could be the lifeline that many businesses need to hang on,” concluded Chris.
For more information please contact Chris Ball on (01 ) 6440100 or email [email protected].