Strengthening the Startup Community Report of the Entrepreneurship Forum January 2014 Entrepreneurship in Ireland-1-Foreword Executive Summary 1. Introduction 2. Innovative‘Can-do'Culture 2
based remuneration to employees 5. 2. Skills development programmes 5. 3. Immigration reform 6. Access to Finance 6. 1 Encouraging investment
Adjustments such as implementing a flat tax would have an immediate positive impact on nearly every productive worker in the nation,
Learning Innovative Can-do Culture Executive Summary-6-Pillar 1, Innovative‘Can-do'Culture A central recommendation of this report is that Ireland should leverage our existing talent base:
Currently, unemployed workers in Ireland are a vast, underused resource, and we must collectively find ways to engage our unemployed
and regulations to improve Employee Stock option Programmes. Reforms should make it easier and less expensive for companies to run employee share programmes,
while making participation in these programmes more tax efficient for employees. Allow youth to participate in a new work experience programme,
to be called an‘Apprenticeship Programme, 'to be funded directly by the companies. Enlarge the Jobbridge programme by a factor of up to 20 times to help more people escape from the trap of being unemployed perpetually.
so that a multitude of entrepreneurial people will emerge in future years and build strong Irish businesses that offer exciting employment opportunities for local communities.
as well as their success in the job market, their tendencies to innovate and their likelihood to start their own companies. 4 Much progress has been made in Ireland with initiatives such as the County & City Enterprise Boards‘Student Enterprise Awards'5, RTÉ's Junior Dragons'Den
Lastly, Government should ensure that a female employer is entitled to the same welfare benefits as a female employee.
Currently a female employer must have 52 weeks of PRSI contributions as opposed to a minimum of 39 for an employee.
The Department of Social Protection also requires female employers to give 12 weeks of advanced notice for maternity leave,
as compared to just 6 weeks by female employees. The Forum believes that changes to these current Government approaches would enhance a supportive culture for female entrepreneurship. 9. Continue the programme of targeted and tailored supports for female entrepreneurs. 10.
The qualifying weeks in terms of PRSI payments to qualify for maternity leave should be the same for female entrepreneurs as for female employees
The Dublinbic manages the Guinness Enterprise Centre, the single largest entrepreneurship facility in the country with 60,000 sq ft. of space, over 80 startup companies and 320+employees in one building.
and more established startup and growth companies to offer internship opportunities to‘youth unemployed'persons who are interested in entrepreneurship/startups as a career path.
As a pilot initiative, 50 of the larger more established startup and growth companies based in the Guinness Enterprise Centre could be engaged to take one‘youth unemployed'person each to undertake an internship. 14.
For startups, paying consultants to do executive coaching is unaffordable for the long term. Consequently, successful entrepreneurs draw other successful entrepreneurs into their network through boards
which can connect experienced executives with each other as well as with startup founders. Much of this already happens both informally
through once-off, expensive executive-MBA-style programmes. These programmes through Stanford, Cambridge, Harvard, etc.
or technology niche that wasn't being exploited by their existing employer and built a business around it.
and aspiring entrepreneurs to network with each other with the option of attending seminars from guest speakers and obtaining mentoring from experts in their field.
Currently unemployed workers in Ireland are a vast resource that is significantly underused, and we must collectively find ways to engage our people
and reward talent. 5. 1 Share-based remuneration to employees According to statistics from The irish Proshare Organisation in the first quarter of 2013,
companies that operate Employee Share Ownership Plans (ESOP) in the United kingdom have grown by 50%more than the average growth rate of FTSE 100 companies (the UK's largest companies.
Indeed there is growing evidence that share ownership in companies significantly improves employee commitment, and in turn drives stability while significantly increasing productivity.
Currently, employee share based remuneration is not attractive to entrepreneurs. Employees must pay tax immediately (via the company payroll system) at typically 52%of the market value of shares received. 27 The employee would then have to sell the majority of his shares
in order to cover the expense of owning them, defeating the purpose of share ownership. We propose a deferral of triggering of the tax liability
in order to make employee share ownership a viable option for entrepreneurs and their staff. In Ireland, legal requirements make it impossible for companies to repurchase their own shares
ESOPS generally require repurchase of shares from departing employees. Therefore, Irish law has unintended the consequence of making it cumbersome and expensive to have ESOP programmes.
This will allow employees who stay with startup companies to participate more fully in their success. We also recommend allowing stock
This will create incentives for an employee to own long-term shares in a company rather than encouraging employees to flip ownership of any granted shares immediately,
as is the current common practice in Ireland. It would also enable entrepreneurs to compete more effectively for highly skilled employees with both multinationals and other countries,
since startup companies can offer more attractive terms on share ownership versus the relatively minor share holdings proffered by multinationals. 41.
Enable Employee stock ownership without creating taxable events until the time of sale of the stock.
Enable companies to repurchase share options for the benefit of their employees (from departing employees,
a programme that allows those who are receiving benefits on the Live Register to work for companies in Ireland for up to a period of 9 months while receiving their job seeker's allowance plus €50 per week in additional payments.
and large numbers of these workers are then graduating to full-time employment within the companies where they gain their skills,
Unfortunately, many small companies find it extremely difficult to justify employing unskilled workers, one reason being the high minimum wage requirements.
giving them the real work experience that is generally sought by employers. We believe that formalising a programme to enable youth to develop work skills would benefit youth, employers and the economy as a whole.
Therefore the Forum recommends that companies should be allowed to offer work placements to youth (those without work experience,
The Open Ireland33 campaign was initiated to highlight the need for high-tech foreign workers and graduates to have easier access to visas.
The growth of companies in Ireland becomes more possible by reducing the constraint on specific technical workers.
Opening our doors to talented workers is an essential part of a dynamic startup ecosystem. In April 2013, the Department of Jobs, Enter p r i se and Innova t i o n,
More work was envisaged in automating this process further34 to provide certainty to the employer and to the employee that the visa could be issued in a matter of two weeks
or so, establishing Ireland as the most competitive country in the world for technical talent.
or IDA approved companies would be trusted parties to ensure that the qualifications of the employee are advanced sufficiently to qualify for the visa,
As mentioned above, immigrant workers have added consistently value to the entrepreneurial and academic bases of their destination country.
or industry or volunteer association to promote Ireland as a destination country for entrepreneurs, high-tech worker s and acceler a tor-rela ted act ivi ty.
a. Enable medium-sized enterprises (50-250 employees) in the non-assisted areas35 to avail of the EIIS. b. The EIIS should be amended to increase the period of investment from three to five years. c. Under the EIIS,
and their executives would be subjected to fines. 6. 3. 1. 1 Attracting International Banks Ireland currently has a duopoly of banks that control and dictate the culture of banking in Ireland:
and bank executives who violate the Code of conduct. 57. One or more reputable international banks should be recruited (not subsidised,
Basic measurements of the number of companies who employ-48-7. Public Policy recommendations workers is not just useful for startups.
Startup size classification number of employees(<5,<10,20,<50, etc..The Startup Monitor should also have capabilities to produce up-to-date information on:
How many startups<2 years established have over 5 employees?.Business survival rates. Trends in new enterprise creation-self employment/companies. 61.
Furthermore, even if they are employees of their own companies, they do not enjoy the same level of tax credits as other PAYE workers.
Improving social insurance supports for the self-employed is an important way for Government to demonstrate that entrepreneurship is a priority.
Many workers are discouraged from starting companies because of the knowledge that the self-employed don't receive Jobseeker's benefit.
Those who have established their entitlement benefit by working for an employer for a number of years should get a longer period to retain their Jobseeker's benefit.
Where an entrepreneurially inclined employee leaves employment, the current structure of the Jobseeker's Benefit system encourages them to remain on Jobseeker's Benefit for the full six/nine month Jobseeker's Benefit entitlement period before setting up a new business
it is recommended that such entrepreneurs would be provided with a five-year period to claim the remainder of their former Jobseeker's Benefit entitlement as an employee.
3. Enable a lower capital gains rate (20%vs. 33%)for money immediately reinvested in Irish businesses. 4. Enable Employee stock ownership without creating taxable events until the time of sale of the stock,
just as it is for employees (the top effective rate dropping from 55%to 52%).6. To support cashflow,
just as it is for employees (the top rate dropping from 55%to 52%).66. New entrepreneurs should be provided with a fiveyear period to claim the remainder of their former Jobseeker's Benefit entitlement as an employee. 7. 4. 1 Long-term tax policy From a long-term perspective,
structural changes are necessary to make sure that the primary burden of taxes do not fall too heavily on the shoulders of the indigenous companies and the private taxpayer,
The qualifying weeks in terms of PRSI payments to qualify for maternity leave should be the same for female entrepreneurs as for female employees
As a pilot initiative, 50 of the larger more established startup and growth companies based in the Guinness Enterprise Centre could be engaged to take one‘youth unemployed'person each to undertake an internship. 14.
Every STEM student undergraduate and postgraduate) should receive a course on entrepreneurship or product commercialisation as part of their degree. 5. Access to Talent 5. 1 Share based remuneration to employees 41.
Enable Employee stock ownership without creating taxable events until the time of sale of the stock. 42.
Enable companies to repurchase share options for the benefit of their employees (from departing employees,
high-tech worker s and acceler a tor-rela ted act ivi ty. Corresponding website development, campaigns and media outreach should be undertaken. 50.
a. Enable medium-sized enterprises (50-250 employees) in the non-assisted areas43 to avail of the EIIS. b. The EIIS should be amended to increase the period of investment from three to five years.
and bank executives who violate the Code of conduct. 57. One or more reputable international banks should be recruited (not subsidised,
just as it is for employees (the top rate dropping from 55%to 52%).66. New entrepreneurs should be provided with a fiveyear period to claim the remainder of their former Jobseeker's Benefit entitlement as an employee. 7. 4. 1 Long-term tax policy 67.
A flat tax on all types of income at 15-20%would be a fantastic way of attracting corporations
%Furthermore, a higher proportion of Irish early stage entrepreneurs expect to become employers (85%)than their counterparts in Europe as a whole (72%)and those in all OECD countries (71%.
financial assistance through Jobs Plus and a range of workplace support schemes to support employers who employ a person with a disability.
An Employer Pack, available on the Department of Social Protection's website, contains more details on these supports
The value of the relief in each of the three years is capped at the amount of employers'PRSI paid by a company. 2. 1. 2 Start Your Own Business The Start Your Own Business (SYOB) scheme provides relief
National Policy Statement on Entrepreneurship in Ireland 27 2. 1. 3 Share Based Remuneration In private Companies Share based employee remuneration can significantly reduce fixed labour costs
The extent to which a company can avail of tax efficient share based employee remuneration relief in Ireland,
which facilitate employers who wish to allocate shares, or grant options to buy shares, to their employees.
These include share option schemes, ‘save as you earn'share option schemes, approved profit sharing schemes, restricted share schemes and employee share ownership trusts.
The current tax treatment of share options, however is considered to be less competitive than that available in other countries
This creates a particular challenge for businesses seeking engineering or executive level talent to fill such roles as chief executive officer, chief operating officer and chief financial officer.
the use of share based employee remuneration by private companies in Ireland is limited. In addition for smaller companies the administrative burden of setting up such schemes is unduly high.
The Bill provides that the existing provision requiring that at least 50%of an enterprise's employees must be Irish
which is aligned closely to the Expert Group on Future Skills Needs (EGFSN) analysis. These skills include all occupations relating to ICT,
which new types of mentors (volunteer entrepreneurs or serving executives) would be attracted. DJEI)- Test market on a regional pilot basis the establishment of an interactive searchable portal for mentors accessible to all enterprises.
of which over a quarter was generated from purchases by UK stores. 6. 5 Global Sourcing Projectthe Global Sourcing project has been a major area of focus for the EI-IDA senior management teams since its establishment in early
This voucher can be redeemed against the cost of practical advice provided by participating expert providers in Northern ireland and the Republic of ireland to a company considering trading across the island.
Tourism and Sport EGFSN Expert Group on Future Skills Needs EI Enterprise Ireland EIB European Investment Bank EIF European Investment Fund EIIS
d. Increasing federal funding for worker training by at least $10 billion per year; e. Increasing the gas tax by 35 cents per gallon
including making it harder for workers to receive disability benefits, while also providing incentives for workers to retire at a later age.
This includes: PAGE 3 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 a. Increasing the Social security
(and Medicare) full retirement age to 67 for workers born in 1954 and continuing to increase it by two months every year until it reaches 70;
a. Instituting progressive indexing that indexes SSI benefits to wages for low-income workers and to inflation for high-income workers;
or policy increase the amount of work hours per-capita by encouraging those workers who are able to work to enter into
federal support for worker training should be increased by at least $10 billion per year. There are several areas that should be targeted for investment,
Congress should dramatically reform federal personnel regulations to make it much easier to fire federal workers, especially underperforming ones. 28 Moreover,
increased immigration) or increase the number of hours workers work in their life. The former can increase GDP
having workers remain in the labor market, even for just a year or two more, would have a positive effect on both the deficit (by increasing taxable income and reducing entitlements) and GDP.
One way to increase total work hours per worker is to increase the number of hours worked each year.
Americans already work more hours per year than workers in most developed nations. 30 Do we really want Americans to take even less than their paltry two weeks of vacation
so that workers work more years. This means, as described below, raising the retirement ages for Social security, Medicare,
and federal government retirement programs, limiting disability payments for prime-age workers, and reducing America's prison population.
Americans will be spending more years in retirement consuming a share of the output of current workers,
but only for workers born in 1960 or later. Yet, on average, life expectancy during retirement is projected to increase by 11 percent (2. 2 years) between 2015 and 2050.
Americans will be spending more years in retirement consuming a share of the output of current workers,
Congress should increase the Social security full retirement age to 67 for workers born in 1954
and generate more federal tax revenues as workers work longer. 33 The government should also increase the eligibility age for Medicare at the same rate as for Social security. 34 In addition,
but it will encourage workers to not retire early, leading to higher GDP and tax revenues.
Based on CBO's estimate for similar proposals, these changes will save approximately $77 billion over the next 10 years. 35 Assuming these changes cause the average worker to remain employed for two additional years at the median
salary and average tax rate for workers approaching retirement, these changes could also generate an additional $40 billion in taxes each year.
particularly for workers who are not able for physical reasons to work longer. However, these workers would still qualify for Medicaid and Social security Disability insurance (SSDI.
Moreover, with the move to an economy with many more jobs in the services sector, the availability of jobs that require limited physical exertion has grown.
Federal government worker pension liabilities have increased also substantially, with unfunded pension liabilities reaching $761. 5 billion in 2011.37 The current federal pension,
the Federal Employees Retirement System, provides a lifetime defined benefit for 45%46%48%22%28%35%67%74%83%0%20%40%60
%80%100%201020202030old-age Dependencyyouth Dependency PAGE 10 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 federal employees.
Increase Prime-Age Residents'Work Rates It is not enough to increase incentives for workers to retire later;
we need to increase them for prime-age workers as well. The labor force participation rate for prime-age Americans aged 25 to 54 has dropped by 2. 9 percentage points
from 84.8 percent in 1990 to 78.8 percent in 2011.40 Every worker who leaves the labor force can generate a double-drag on the economy,
& INNOVATION FOUNDATION JANUARY 2014 would increase labor force participation rates as rejected workers would be required to find jobs.
If the share of workers receiving disability was reduced to the rates of the year 2000,
and taxes. 47 Although increased ease of obtaining SSDI benefits has been one cause of the decline in prime age workers in the labor force,
In addition, these workers would pay federal taxes. 54 Will These New Workers Take Jobs from Other Workers?
since there will not be enough jobs for the additional workers. But this view reflects what economists call the lump of labor fallacy,
which refers to the notion that the amount of work available to workers is fixed. In fact, the number of available jobs is fixed not.
female workers earned money that let them purchase goods and services, which generated further demand for What is certain is that the United states will be less prosperous
PAGE 12 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 workers in the sectors that satisfied their consumption.
Congress should institute progressive indexing that indexes SSI benefits to wages for low-income workers and to inflation for high-income workers.
For future low-wage workers, this means they would still receive more in real dollars than today's low-wage workers,
but future high-wage workers would receive close to the same amount. However, any progressive indexing should indeed be progressive,
with perhaps the bend point being set at the thirtieth percentile of earners while maintaining current-law benefits for the rest.
exactly as predicted by financial experts PAGE 15 THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION JANUARY 2014 like Aswath Damodaran, professor of business at the Stern School of business at New york University.
which workers choose to receive their income. Neither subsidy stimulates productivity or growth, and both distort consumer
Under current law, full-time employees pay a portion of their employer-provided health insurance premiums with before-tax dollars.
but because of the regressive nature of the tax deduction income taxes are lower for low-income employees
and fewer low-income workers have provided employer health insurance those who can most afford health care receive the highest income tax exclusion.
Furthermore, eliminating the employee portion of the health-care tax deduction puts both part-time and full-time employees on equal footing. 81
Under the CBO proposal the FRA would rise by two months every year for workers born after 1952.
It would therefore reach 67 for workers born in 1958 and then go up to 70 for workers born in 1976 and later.
CBO estimates this would save $58. 2 billion over the next decade. Congressional Budget Office, Options for Reducing the Deficit:
OECD, Employment and Labour market Statistics (summary tables; accessed October 15, 2013), http://dx. doi. org/10.1787/lfs-data-en. 41.
Social security administration, Annual Statistical Supplement to the Social security Bulletin 2012,(Average primary insurance amount for retired workers and average monthly benefit for retired and disabled workers,
The COLA is determined now by a version of the CPI that measures prices for urban wage earners
and clerical workers (CPI-W). The CPI-W measures price changes but does not assume that people change their buying habits in response to those changes.
Jonathan Gruber, The Tax Exclusion for Employer-Sponsored Health insurance NBER Working Paper no. 15766 (February 2010.
Gruber writes that keeping the tax exclusion for employers but removing deductibility of cafeteria plans raises only $42 billion
executives, and academic leaders who contributed to our global survey on which many of this report's findings are based.
Nearly half of industry executives report having only some success, with remaining industry responses split between rarely having success to regularly having success in the translation of R&d into new or improved products.
In the past year, 22%of industry executives reported significant technology growth and another 56%slight-to-moderate technology growth affecting their industry.
Seven out of ten of the industry executives report productivity gains in the last two years, with 20%noting significant improvements.
The results from industry executives who track return on investment is one of a generally improving bottom-line impact of research and development activities,
S. researchers is the shortage of skilled R&d workers. Finally, there is some commonality in the challenge of translating research into products,
%Competition 14%Translating Research into Products 10%15%Finding New Collaborators 17%Skilled worker Shortages 16%Rankings of Research Impact Metrics Broad Factors Influencing Research
B Sustainable Growth and EU 2020 Regional Innovation Monitor Plus Regional Innovation Report West Transdanubia technopolis group in cooperation with Andrea Szalavetz, independent expert
establishing a network of regional experts with thematic specialisation, and organising specialised workshops taking into account the relevance
Aligning the supply of graduates with the demand of the regional labour market necessitates actions that target the improvement of the curricula, the services and the research capacities of the relevant higher education institutions.
on Market size Labour market efficiency Higher educa: on/Training and Lifelong Learning Infrastructure Macroeconomic stability Ins:
on R&d(%GDP) Government R&d(%GDP) Business R&d(%GDP) Employees with ISCED 5--6(%)RESEARCH & TECHNOLOGY INDICATORS HU22 Nyugat-Dunántúl Performance rela:
It is indispensable to align the supply of graduates with the demand of the regional labour market,
county-level municipalities neither possess any experts (huge capacity gap) nor have any experience in such a planning-programming exercise.
The majority of NIO's experts were fired. Currently the government is planning to create a new institution, the National Research Development and Innovation Office
Regional Innovation Monitor Plus 17 These institutional changes coupled with the firing of experts, dispersion and redistribution of authorities and responsibilities have slowed necessarily down the absorption of EU Structural Funds.
5) the firing of the lion's share of past experts the allocation of funding from EU Structural Funds (that accounted on the average for 57%of annual government budget outlays on R&d in Hungary over the period between 2007 201310
4) to the promotion of companies'foreign market access, through training, employment of foreign trade, marketing and innovation management experts.
and innovation € 600k National Development Agency http://palyazat. gov. hu/doc/3555 Support to research of future-oriented ICT technologies and to ensuring the supply of IT-experts
. eu/enterprise/policies/innovation/policy/regionalinnovation/monitor/supportmeasure/support-research-futureoriented-ict-technologies-and-ensuringsupply-it-experts Source:
Centrope tt (the former CENTRIS) is an international experts community for technology transfer and innovation support. 22 Several regional actors are members of this community,
Some of the conditions of eligibility for support were considered superfluous by the experts who drafted the evaluation report, for example,
including the number of their employees and the volume of applicants'net sales. As for the impact of the measures, the report found that it contributed to some extent to territorial cohesion,
Evaluation experts recommended that universities'basic research projects should be addressed separately from applied and collaborative (industry-university) undertakings
the primary task of the former group is to ensure alignment between the supply of graduates and the demand of the regional labour market,
an indigenous automotive supplier with 128 employees and sales of €4. 9m in 2013 among the 251 beneficiaries.
Nevertheless, according to the interviewed expert, it would have been more reasonable to consider a region's innovation potential
Higher education/Training and Lifelong Learning 69,00 67,86 70,07 2010 RCI 98,5 101,7 Labour market efficiency 47,00 40,86 55,03 2010 RCI 85,4 115,0
Source Performance relative to Performance relative to RESEARCH & TECHNOLOGY INDICATORS Employees with ISCED 5-8(%all employees, ISCED 2011) 20,3 27,2 33,5 2013
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