The Government says a new Irish €250m subsidy scheme launched today is aimed at protecting 27,400 jobs which are at risk but the announcement begs the question as to why it has taken so long to produce, if it is expected to have an impact.

The Employment Subsidy Scheme (Temporary) will provide a subsidy of €9,100 per worker over 15 months - - it will equate to a subsidy of nearly 20% of the average industrial wage. It is aimed at exporting companies in the manufacturing or internationally traded services sectors.

The Government says that, to be eligible, companies will be assessed as vulnerable in the current economic climate but viable in the medium to long term. State agency Enterprise Ireland will examine companies which apply.

"Not only will the scheme support the maintenance of vulnerable jobs, but it will help our economy retain its productive capacity and assist employers retain their labour, knowledge and skills-base, thereby supporting a faster return to sustainable growth," said Tánaiste and Enterprise, Trade & Employment Minister Mary Coughlan.

She said the new scheme was in addition to a €100m Enterprise Stabilisation Fund put in place by the Government earlier this year.

Over 15 months, the new scheme will provide a maximum subsidy of €200 per full-time employee per week for the first 26 weeks, reducing to €150, €100 and €50 respectively for each of the subsequent 13-week periods.

Under EU rules on State aid, the maximum subsidy that can be paid to any one business, or group of related businesses, is €500,000.

Coughlan also said the Government was considering an investment scheme to help those working in the tourism sector. She said the tourism sector was particularly vulnerable and that companies had expressed a desire to participate in the Employment Subsidy Scheme.

At the moment, companies engaged in tourism activities are not eligible for the new scheme.

The scheme will provide for a tapering subsidy of €9,100 per employee, which will equate to a subsidy of nearly 20% of the average industrial wage. It is tailored to help those companies in internationally traded goods and services sectors, which export at least 30% of their turnover, to retain their employment and skill levels, thereby ensuring that they will be well placed to take advantage of the upturn when the global recession lifts. The scheme aims to safeguard 27,400 jobs.

IBEC Director Pat Delaney said: "This is a positive response from government to the predicament that faced viable companies attempting to trade their way through the global downturn. The scheme represents a significant part of a €1 billion allocation to job retention that IBEC believes is required to help national recovery. The scheme also recognises the great competitive difficulties companies have faced in recent months because of the strong euro.

IBEC had no doubt that the scheme will be quickly oversubscribed and urged the government to further respond positively to help companies retain employment levels. IBEC pointed to the fact that this scheme was one of the best ways by which Government could help to stem the rising tide of unemployment and said that the €250 million expenditure would have far less of an impact on the exchequer finances than the impact of lost income tax and increased social welfare expenditure caused by increased unemployment.

"The social welfare bill has increased from €17 billion in 2008 to €21 billion in 2009. Retaining employment is a far more cost-effective way of solving the exchequer finances.

"IBEC had made a number of other recommendations to government to help companies face difficult market conditions and improve their ability to obtain credit and trade credit insurance," concluded Delaney.

Director of the Small Firms Association, Patricia Callan, has welcomed the scheme but she noted with concern that whilst multinational businesses are included in the scheme, micro enterprises (those employing less than 10 employees) are excluded from the scheme. “This does not make sense as these micro-enterprises are the ones that we will rely on to become our next generation of exporters, and if we don’t support them in their early years of development, then they will not progress into successful small, medium and large enterprises, employing many people into the future.”