ISME which represents small and medium sized businesses, has carried out a report to examine how state policies are impacting the decision-making of low skill workers with regard to work.

The 'Job Kill Zone’ report finds that policies on tax and other deductions for workers in the income range from €18,000 to €30,000 per year have made working "unattractive" for many in this income zone.

It reveals that workers with lower market skills, such as early school leavers, could either drop out of the labour market or adjust their work practices to minimise taxation.

ISME has long argued that driving up the statutory minimum wage is not a solution to the problem of low wages in the economy.

Neil McDonnell, CEO of ISME said he believes there is a lack of understanding when it comes to tackling this issue.

"There is compelling evidence that suggests policy-makers, senior civil servants, politicians and policy advisors lack understanding of the situation of low-income workers and have allowed the complex interaction of state policies to develop in a way that has created a 'Jobs Kill Zone' affecting low-income workers.

"As this report shows, workers in the €18,000 to €30,000 income zone have concerns not just with their earnings, but with payment for medical costs and access to Local Authority housing," he said.

Based on the report findings, ISME has outlined a number policy changes which it says are required to eliminate the 'Jobs Kill Zone' and significantly improve the incentive to work among low-skill workers.

The report suggests adjusting PRSI "to eliminate the very high marginal rate on additional income in the PRSI Transition Zone from €18,304 to €22,048 per annum".

It also recommends setting the basic rate for qualifying for the medical card at more than 30% above the comparable Jobseeker's assistance rate.

The ISME report also suggests replacing the child element in Jobseeker’s payments and all other welfare schemes by doubling Child Benefit, phasing out Working Family Benefit, and at the same time making the Child Benefit taxable.

It is also calling on the Government to significantly increase the income thresholds for access to social housing.