Address by Tánaiste at the Private Members Motion on Unemployment

Dail Eireann – Tuesday 7th October 2008

I welcome this debate and in particular the opportunity for the Government to set out how and why it is well placed to meet the challenges that face Ireland – challenges that also face most other major western economies – as a result of today’s difficult global economic climate.

I will begin by acknowledging the unwelcome increase in the numbers on the Live Register. As a small open economy, Ireland is vulnerable to the fall-out from the current economic turbulence, particularly the recent and ongoing severe fluctuations on the world’s stock markets. The turbulence has affected major banks and businesses across the globe, including those here at home. This day last week we introduced legislation to the House aimed at addressing the difficulties affecting our own banking sector. In my contribution to the debate, I pointed out that the importance of maintaining liquidity within the Irish banking sector was not just key to the ongoing ability of our banks to do business, but also to our small, medium and large enterprises. Their ability to get and retain credit impacts directly on the ability of their businesses to survive and therefore keep their employees in a job. The decisions we took in the House last week was not an easy one, but one that has ensured that we are not debating a significantly more serious set of circumstances in the house this evening. That said, our actions last week are of little comfort to any individual or family directly affected by a loss of employment or income over the past number of months. It will take further difficult decisions by this Government over the coming weeks to make sure their futures, and ensure that we return to stable economic and job growth in the short to medium term. In bringing forward its Budget by six weeks, this Government has made it clear that we are determined to make those necessary decisions.

Over the past two decades we have witnessed an unprecedented and extraordinary economic performance in the Irish economy. This performance has seen living standards raised to a level that would have been unimaginable a generation ago. A period, which as at the end of the second quarter of 2008 has seen an additional six hundred thousand people in employment, reflecting a rise of more than 40% compared to the same period 10 years ago.

This has resulted in the creation of the first generation of Irish people who have experienced the opportunity to work and build a prosperous future in their own country. It has happened because this Government has embraced the opportunity of creating a confident, dynamic and highly skilled workforce capable of competing in the international economy. As a result, success has been built and sustained and today we have an economy of which we can be proud and an employment market well placed to meet and tackle the current economic challenges.

In a global knowledge-based economy we must increasingly recognise human talent and creativity as a key resource – and indeed, the principal sustainable source of competitive advantage. And given the particular global turbulence-related challenges that we face today, how we unlock and further expand this talent and creativity in our workplaces has become an even more crucial issue.

Employment Services

Against this background, I first want to turn to the measures that this Government is putting in place to ensure that those who become unemployed are provided with effective employment services and training supports to help them to return to employment.

FÁS

FÁS, as the national training and employment authority provides a range of proactive job-related services, supports and programmes to assist individuals to remain in and return to the labour market. The Agency also promotes workforce development by upgrading the competencies and qualifications of individuals and by providing and facilitating targeted training programmes and services to both employers and employees.

FÁS is working closely with the Department of Social and Family Affairs so they can together respond quickly to the rising Live Register numbers, for example:

• FÁS is, with the Local Employment Services provided by Area-Based Partnerships, currently gearing up its Employment Services to provide increased capacity for expected increased referrals from the Live Register.
• In addition, FÁS will be providing a range of certified, short, flexible, modular programmes designed to upskill redundant workers so that they can enhance their prospect of securing employment. A number of programmes are already in place and the frequency and range of these will be expanded over the coming months.
• A range of actions are also being implemented by FÁS for those affected by the construction slowdown, including –
  • Focussing on providing retraining opportunities for redundant construction workers in emerging areas within the construction sector. This will include retraining in the following areas of activity:
    • the installation of sustainable technologies
    • environmental activity, and
    • compliance and regulatory work
• FÁS will also assist individuals in any way they can in seeking employment abroad in construction in other EU countries.

Redundancies

FÁS has a specific policy in place to deal with redundancies and/or company closures. It offers a tailored approach as early as possible to the workers affected with a view to assisting them to access alternative employment. This applies to workers in all sectors, including construction.

FÁS has a fast track redundancy notification system in place with my Department, to ensure a speedy and appropriate response is provided to redundant workers. Each response is tailored on a case-by-case basis. As part of the consultation process in the case of company closures and major redundancies, FÁS establishes the scale of the redundancies, the skills profile of the employees affected, the number of years experience of the employees, level of education and any other information deemed relevant to the particular case in question.

In addressing the issue of redundancies, FAS liaises with other relevant agencies such as Enterprise Ireland, IDA Ireland, the City and County Enterprise Boards and the Department of Social and Family Affairs. It also works closely with the agencies to identify and support individuals who wish to start their own business.

There is also active engagement with the unemployed after 3 months on the live register to assist them to progress towards employment, training or active labour market programmes.

Retraining redundant Construction workers

I referred to the actions FÁS are carrying out in relation to retraining those formerly employed in the construction sector. We are all aware that there has been a significant downturn in construction related activity since the start of this year. In fact the construction sector is undergoing a major structural change at present. Resulting from this structural change there has been a significant increase in the numbers of people within the construction sector who have been made redundant and also a corresponding increase in the number of apprentices being made redundant.

To respond to these challenges we have instructed FÁS as the National Training and Employment Authority to place a particular focus on providing support and retraining opportunities to construction workers and apprentices who have been made redundant.

A recent FÁS report while recognising that the fall in construction sector employment can be attributed to the downturn in the house-building sector also stated that this fall will be partially offset by an expansion in other sub-sectors of the construction sector, including those such as housing repairs and maintenance, general contracting and civil engineering.

Since its publication, FÁS have begun the process of implementing the report’s recommendations. As part of this process FÁS, in addition to the usual supports they provide to redundant workers, has established a training fund to enable them provide a timely response to identified training/re-training needs for low skilled and redundant craft workers from the construction sector.

It is intended that this will enable individuals to secure a speedy return to work, or where this cannot be secured to provide relevant upskilling opportunities in order that the job seekers can secure employment in alternative sectors. FÁS are currently focusing on providing retraining opportunities for redundant construction workers in emerging areas such as the installation of energy efficient and renewable technologies within the construction sector.

In relation to redundant apprentices, both my Department and FÁS have been actively examining this issue and have put in place a series of actions to facilitate redundant apprentices in completing their studies. Among these include redundant apprentices being allowed to progress to their next off-the-job phase of training without having to do the next on-the-job phase. FÁS have also established a register of Redundant Apprentices by Trade in order to identify these people at the earliest possible point in time and FÁS have prioritised the need to locate an employer to sponsor the completion of the Apprentices “off-the-job” training.

In addition to these initiatives the traditional employment support services provided by FÁS are available to apprentices who have been made redundant.

My Department and FÁS will continue to monitor the trends and activities in the industry and will work with all of the relevant stakeholders to ensure timely and satisfactory responses to assist redundant construction workers and apprentices to secure alternative employment whether in the construction sector or another area of the economy.

Community Employment Schemes

Further help for those who have become distanced from the labour market for some time and who are seeking to re-enter is provided by the Community Employment Scheme (CE). CE is an active labour market programme designed to provide eligible long term unemployed people and other disadvantaged persons with an opportunity to engage in useful work within their communities on a fixed term basis. The programme helps unemployed people to progress to the open labour market by breaking their experience of unemployment through a return to work routine and assists them in developing both their technical and personal skills.

The Government is investing €377 million this year in CE with a view to maintaining overall numbers on FÁS schemes at 2007 levels. At present there are over 22,400 people employed on CE schemes nationally.

In delivering these places, FÁS operates flexibly in the management of this allocation in order to maximise progression to the labour market while at the same time facilitating the support of community services.

Importance of Upskilling

I would now like to return to the importance of skills and human capital development for our competitiveness. The continuing development of Ireland’s education and training systems will be key in maintaining and sustaining our economic success. In fact our success is now more than ever dependant on our continued ability to produce individuals who possess the necessary skills and qualifications to succeed in this era of change.

We must ensure that our education and training systems continue to harness the collective skills and talents of our workforce. We must ensure that our systems are meeting the changing needs of our society from both an economic and social perspective. In short we must continue to invest in the development of our greatest asset – our people.

That is why it is of paramount importance that we continue to focus attention on developing the skills of our population, so that the Irish labour force can consistently adapt and upgrade its skills to meet emerging opportunities and challenges.

In Ireland we must encourage greater participation in lifelong learning by facilitating and motivating people to increase their skill levels and qualifications. It is no longer the case that learning should be seen as something that is complete once a person finishes their initial formal education. Nowadays, we must all look to continue our own skills development throughout our working lives.

Lifelong learning is key to our continued success and ensuring that we remain one of the world's leading knowledge economies. That is why the Government is committed in the Social Partnership agreement, “Towards 2016”, the National Development Plan and more recently in the National Skills Strategy to continue to invest significantly in the development of Ireland’s work force.

The continued support and enhancement of measures to increase the number of people who are upskilling and participating in lifelong learning will be essential if we are to realise the vision contained in the National Skills Strategy.

The Government, through the training programmes run both by FÁS and Skillnets, is committed to investing in lifelong learning opportunities for our work force. But in order to be truly effective this will require a similar commitment from the social partners and individuals. In short if we are to succeed then we must all fully embrace the opportunity and challenge that lifelong learning presents to us individually and to us collectively as a nation.

Enterprise and business growth

Despite the current global turbulence we nonetheless remain determined to further develop the country’s economy and create the right conditions for fostering growth in the business sector. We must not lose sight of the fact that we need to ensure the continued development of our enterprise sector even in these challenging times.

On a macro-level, Enterprise Ireland, at the direction of this Government, is committed to the development of world-class Irish companies so that they achieve strong positions in global markets. The agency works effectively with both manufacturing and internationally trading services companies and provides a variety of financial and non-financial supports to enable their development and growth in international markets.

In my view there is no doubt that future prosperity will be founded on the development and growth of Irish-owned companies. This vision can be realised if the challenges faced by Irish enterprise are met head-on. In this context the development of the strength and depth of our indigenous sector will be critical if we are to return to the levels of prosperity achieved in recent years. We will need to foster the emergence of significant numbers of new indigenous businesses that:

• Have the potential to achieve significant growth;
• Are highly innovative;
• Embrace and develop new technologies;
• are export driven, and above all else,
• Are productive and sustainable.

We will only be able to foster the emergence of such enterprises if the operating environment for business, particularly small businesses is supportive. This has been, and will continue to be, a key focus of Government policy.

This Government has put in place policies and programmes that encourage the emergence of new business creations and facilitate long-term business survival. Examples of the actions that we have taken include:

• The positioning of our tax system as one of the most supportive of business in the world,
• The development of Ireland as a knowledge-based economy through the dedication of significant Exchequer resources to the promotion of research and development;
• The introduction of the Better Regulation Programme to tackle regulatory burdens, particularly those faced by the business community;
• The adoption of new strategies to support the enterprise sector, including small business based on the Reports of the Enterprise Strategy Group and the Small Business Forum.

The level of entrepreneurship in Ireland is strong. The 2007 Global Entrepreneurship Monitor (GEM) Report for Ireland shows that the number of entrepreneurs increased in Ireland during the past year to the extent that 2,700 individuals were setting up new businesses each month throughout the country - 1,000 of these were women.

However, if we are to build a much greater number of competitive and innovative companies in Ireland, then we will need to see many new businesses being created now and in the years ahead. The challenge is not only to generate a high level of new businesses being started, but also to maximise the number of innovative businesses among them that subsequently develop to achieve high growth.

The education and training sector will play a critical role both in developing entrepreneurial mindsets and in equipping current and future entrepreneurs with the skills necessary to successfully strategically position new enterprises and then manage their subsequent development and growth.

County Enterprise Boards

The SME sector is making an important contribution to our economic prosperity with over 250,000 small businesses operating in our economy and employing about 800,000 people.

The County and City Enterprise Boards already have a clearly defined role as the principal deliverers of State support to the micro-enterprise sector in Ireland. As a result of their strong regional presence they have been to the forefront of Ireland’s recent economic success and are now well placed to help micro-enterprises to deal with changing economic circumstances.

The Enterprise Boards have an excellent track record in tapping into local entrepreneurial potential and their focus has increasingly been on the development of sustainable growth-orientated local enterprise, which can deliver high quality job creation without displacement or deadweight. The current parameters within which the Enterprise Boards operate enable them to deliver valuable assistance to business start-ups with good growth and employment potential. Through the provision of both financial and non-financial support the Boards have assisted many micro-enterprises in developing their growth and export potential as well as bringing them to a stage where they have sufficient mass to access the services of Enterprise Ireland.

While the current climate surrounding public finances cannot be ignored I am of the view that the Enterprise Boards will be able to use their available funding in a judicious and effective manner so as to ensure that business growth and development will not suffer and that employment creation opportunities are not missed. The reality is that State financial resources are finite but I can assure the House that we will work closely with the Enterprise Boards in seeking to determine how best to target interventions in the indigenous micro-enterprise sector, and in identifying any necessary changes to those interventions.

IDA Ireland

The work of this Government, though IDA Ireland, in fostering the growth and development of business in Ireland is also core to the continuing development of the Irish economy - particularly during straitened times such as this. The level of foreign direct investment in Ireland, relative to the size of the economy, is one of the highest in the world. When measuring FDI job creation relative to population size, Ireland is ranked in the top three locations. Currently the FDI sector in Ireland comprises approximately 1,000 companies employing 136,000 people directly with a substantial multiple in indirect employment.

The quality of investments from global companies into Ireland is of the highest standard, reflecting the remarkable evolution of the business ecosystem in Ireland as international competition and Irish economic conditions have developed. Investments in the past year, such as those by Google, Cisco, GlaxoSmithKline, PepsiCo and Georgia Tech – and even in the last number of days, despite the ongoing global economic turbulence, by such prestigious international names as Cook Medical and Facebook – are clear evidence of this evolution.

114 new investments were won in 2007, which was an excellent result. In keeping with a cohesive national strategy of collaboration among all stakeholders we continue the economic transformation of Ireland into a leading 21^st century knowledge economy and we can look forward to securing new projects, investments, R&D operations and some broader research collaborations for Ireland again in 2008and beyond. The focus of the transformation must shift from pure employment numbers to take account of the job scope and value-added to the Irish economy.

We are now winning higher value FDI in new and emerging business areas such as internet and media business. We are also targeting the high growth clean tech sector and has established a dedicated team to drive this initiative.

The current slowdown is cyclical, related to a number of temporary factors - the adjustment in the construction sector and the deterioration in the international environment. However, it is important to recognise that we have weathered cyclical slowdowns before, most notably at the beginning of this decade with the fall-out from the ICT shock.

The focus of policy in Ireland is to ensure that we are in a position to benefit from the global economic recovery when it emerges. Securing FDI investment is not a short-term game.

As part of a renewed focus on securing FDI for Ireland, we have targeted new sources of FDI in Mumbai, Shanghai, Boston, and Southern California. We are moving a significant number of IDA Ireland staff from support to direct client-facing roles and in addition plans to increase its resources in both its London and Atlanta offices.

These changes provide a greater focus on client engagement with the emphasis on sustaining existing investment and winning new FDI for Ireland.

We have, through IDA Ireland, an active programme of client engagement to support the existing clients and secure additional investments. We pay particular attention to clients in vulnerable sectors in regional locations and work with them to secure their investment in Ireland. What is happening in multinational companies in Ireland today is the continuation of transformations – far more often positive than not – which have been occurring for at least the past decade. Companies like Apple, Pepsi and GSK are growing and transforming their operations in Ireland. We have had to update what we have to offer in order to win this investment, as new locations globally offer advantages such as a plentiful and educated labour pool and cheaper factors of production than we had in the 1990s, as new companies and business models are created and compete, and as Irish economic and employment conditions have advanced. This approach is succeeding, but the challenge is never-ending.

Ireland today successfully competes for the highest value FDI projects in the world. Inevitably, however, in a developed economy that means the termination or transfer of certain activities, which are no longer practicable. This “churn-effect” is an inescapable fact of modern economic life and should not lead to lamentation about the end of our attractiveness as an investment location nor suggest that Ireland is no longer a viable manufacturing location. It is regrettable that people lose their jobs as a result of this churn. Stringent efforts are therefore vital to up-skill such individuals to increase their future employment prospects. Manufacturing as a whole, however, continues to create and sustain jobs.

There have always been challenges of one type or another in attracting and growing foreign direct investment and we have successfully met those in the past. The fundamental difference now is that we approach the current emerging challenges from a platform of economic strength, much deeper expertise and a track record of performance. We are no longer a low cost location and competition for FDI globally has expanded and is relentless. Our response has been to put strategies in place to win mobile investment that seek to position ourselves as a location for more advanced activities, with more qualified and better paying jobs.

Ireland is a very different economy now than in the 1980s. Moreover, we are committed to maintaining sound public finances into the future. This Government is determined to control spending, and to ensure value for money in order to ensure that the public finances remain in a healthy position.

Ireland continues to be one of the most attractive places in the world as a location for global business. With our highly educated, skilled and adaptable workforce, our strong focus on R&D and knowledge, and our can-do, responsive and open attitude, we remain a location of choice. As a small open economy, Ireland welcomes the continued strong interest demonstrated by many of the world’s leading companies in investing and expanding here. Ireland has transformed as an economy over recent years, and we are well positioned to continue this transformation over coming years. We are pro-business, pro-European and proud to be always to the forefront of the minds of global business leaders as they make critical investment decisions.

Despite the economic turbulence currently being experienced, a reasonably strong investment pipeline coupled with our positive reputation in some of the world’s leading companies leads us to be optimistic that we will continue to secure for Ireland the best in innovation and investments from around the globe.

Conclusion

In conclusion then, as everyone in this House knows, good macro-economic and sound enterprise policies generate new, sustainable jobs and advance the standard of living of its citizens. Against the background of what is undoubtedly a challenging global economic climate I contend that this Government has in place the right balance of policies and flexibility of approach to ensure that we continue to not only maintain the current high level of employment numbers but to also generate new employment opportunities and in so doing maintain the social and economic advantages that have been acquired for this country over the past decade.

ENDS/ETE 1950