Opening Address by Mr. Noel Treacy, T.D. Minister for Science, Technology & Commerce At The Business Education & Training Forum on Thursday, 2nd December 1999 at 9.30am Conrad Hotel, Earlsfort Terrace, Dublin 2

I am delighted to be present today to formally open the Business Education & Training Forum.

It has been over 18 months since the Forum last convened and in the intervening period the very positive economic momentum of recent years continues apace. For example, figures from the Quarterly National Household Survey released in October, last confirms these positive developments on all fronts. The numbers of people at work have increased by nearly 100,000, in the year to Spring 1999 - this builds on an increase in the numbers employed, of the same order, one year earlier.

Unemployment has fallen to a new historical low of 5.7% of the labour force and is rapidly moving to the 5% target set in the Employment Action Plan.

In this context, this Government continues to review and, where appropriate, implement a wide range of policies to meet the demands of this new environment. Clearly skills and general labour shortages can pose a threat to our future sustained growth. While tackling unemployment will remain a fundamental policy concern, we must now address new labour market challenges.

As part of this agenda, we need to prime our responses at mobilising, fully, our potential labour supply. In the area of general labour shortages, we can respond by assisting the unemployed gain entry to jobs, and by encouraging the re-entry of those who have left the labour force - women at home who wish to return to work.

Clearly, yesterday's budget serves to underpin our efforts here, with fiscal initiatives aimed at increasing the incentive to work. The focus of tax changes in the Budget on the lower and middle income groups builds substantially on the major reform to the tax system introduced in last year's budget and implemented this year through the tax credit system.

Tackling skills shortages also remains fundamental to meeting our goals. Here we can point to the many positive aspects of our current situation: our human capital stock continues to rise significantly and is forecast to continue to do so. Recent research has shown significant improvements in the educational profile of the labour force over the last decade and, into the next. Thus whereas in the early 1990s over one-fifth of the labour force had reached only a primary level of education, this is forecast to fall to less than 10% of the workforce by the latter part of the next decade. By contrast, the numbers of persons with a third level education is expected to nearly double to 37% over the same period

However, we cannot afford to be complacent. We have built a strong competitive base. We must ensure that we sustain our competitive advantage and make further progress in areas where Ireland is lagging behind best international practice. We need to continue to build a knowledge-based economy with an increased proportion of high income, high value-added jobs if we are to successfully achieve growth in living standards in an increasingly competitive environment.

Our capacity to adapt to changing conditions will mean that we will stay at the forefront of technological development. We have shown an ability to cope with new industries, such as "Shared Services" and are getting to grips with the phenomenon of E-commerce.

The number of new opportunities for our population, young and not so young, continue to increase and the work of the Expert Group on Future Skills Needs is very important in highlighting the areas of greatest skills needs.

In the areas for which I have responsibility there have been significant developments.

Over the last ten years the level of business investment in research and development has been growing at a compound annual rate of 17%, well above the rates recorded in the 1970s and 1980s. This investment has raised the level of business sector R&D in Ireland to approximately the EU average level and has been instrumental in generating the innovation intensity behind the business growth figures.

Notwithstanding this achievement, the existing composition of Irish industry - with many of the world's leading firms in the pharmaceuticals, electronics, telecommunications and healthcare sectors located here and with a dynamic and growing indigenous industry in software and other sectors - means that even greater R&D efforts are needed if existing rates of growth are to be maintained.

Research and development, like other knowledge-driven activities, is ultimately dependent on the capabilities and imagination of the people involved in it - the research personnel. Up to now the emphasis for industry in Ireland has been on the development side of research and development, with less emphasis on research. As industry moves away from manufacturing only towards higher value activities such as R&D then its demand for more and more highly trained research personnel will increase.

Furthermore, the experience in other countries has been that technology-based industries cannot meet all of their own research and knowledge requirements and look to universities and other research performing organisations to provide highly specialised support. On both counts, therefore - meeting their own internal needs and the necessity to staff research centres outside the business sector - industry will be looking for more and more highly skilled graduates, particularly those with doctoral degrees, to be produced by the education system. Failure to anticipate and meet this demand could have very serious implications for the future welfare of technology-based industry in Ireland.

I am pleased to note that later on in the proceedings of this Forum, there will be a discussion on the findings of the Expert Group regarding the current position on Research Skills availability.

The Government has invested in a very substantial programme of research in Third Level Institutions which will enable the Irish Third Level research system to play its part in our future economic growth.

Clearly, the National Development Plan with its significant future investment in the areas of employment and human resources development, of just under £11 billion, and in Research, Technological Development and Innovation, of just under £2 billion represents a fundamental framework for the period ahead. The challenge being met by this Plan is to build on investment needs in people, and the physical infrastructure, to meet the needs of a strongly growing economy while avoiding adding unduly to inflationary pressures which could undermine the achievement of sustainable growth.

The performance of the enterprise sector in the years ahead will continue to shape trends in Irish employment and living standards. Its future success will more than ever be determined by its broadly defined competitiveness. Meeting this challenge will require a continuous emphasis on innovation and productivity improvements. From a public policy standpoint, it is of paramount importance that the future international competitiveness of Irish enterprises is not comprised by an insufficiency of labour or by deficiencies in the quality of labour.

The Government, for its part, have responded quickly to the future needs as identified in the first Report of the Group on Future Skills Needs. The next Report from the Skills Group will focus on further aspects of our skills needs into the future which will be discussed today at this Forum.

The Business, Education and Training Forum is an important mechanism which underpins, with its inputs from business and academia, the work of the Skills Group on the future development of our skills base.

We ALL have an important role to play in educating the general public of the opportunities presented to us today. The media also have an important role in getting the key messages across.

Successful enterprises of the future will be founded on effective human resource strategies. While public policy can influence the external labour market environment, the specific development of human resources will continue to devolve on enterprises themselves.

It is imperative that enterprises given the new challenges which we face in our tightening labour market pay due attention to recruitment and in-work training. Investment in education also remains fundamental. Industry, training and education providers can develop flexible courses to cater for the wider audiences. Increased attention to these issues by human resource development managers will pay rich dividends, particularly in attracting and retaining qualified staff.

Finally, I wish you well in your important deliberations today which I am confident will lead to a successful and stimulating exchange of views in an area of fundamental importance to our future well being on the island of Ireland.