Mr. Paddy Cosgrave:

I will begin by dealing with the points raised by Deputy Dooley on youth unemployment, which is a huge challenge throughout Europe and not just in Ireland; the use of funding for job creation; and skill levels in Ireland and educational attainment in general. An interesting report released in the past 12 months by EUROSTAT, which is the CSO of Europe, is on the sectors chosen for study by undergraduates in Ireland, which is one cohort of the population. One of the sectors dominated by Ireland is maths, computing and engineering in which it has the highest rate in Europe. With regard to training people for the areas with the greatest demand, Ireland is doing incredibly well. Much of the rhetoric and many of the opinions published in newspapers are somewhat misleading with regard to the dedication of the education system in Ireland to addressing huge skills deficiencies.

I wish to speak about the role of the Government in job creation. There has been a tendency in the past 40 years in economics in general to increasingly sideline the role of the State in job creation and creating companies. For some reason people tend to forget an enormous amount of economic history, in particular with regard to most of the world's advanced industrial nations. The United States is a pertinent example, and is a country people look towards as one which has almost entirely embraced free markets with a minimal role for the State in the creation of jobs and companies. This is largely inaccurate in the face of evidence.

If one takes snapshots over time one will find the role of the State has been incredibly significant in supporting, nurturing and creating many of the most competitive elements of the US economy globally. This refers to their largest export industries. Aviation is a huge driver of US exports, mainly through companies such as Boeing. In the mid-1960s, many years after the Second World War, the level of research and development funding to the aviation industry in the United States was more than 90%. In the United States the electronics industry, which was a key driver of exports, was also funded almost entirely by State funding with more than 60% of research and development funded through the National Science Foundation; the Defense Advanced Research Projects Agency, DARPA; the Pentagon and elsewhere. On comparing this to other advanced industrial nations such as Japan, South Korea and Sweden one will find very similar patterns, whereby the state played a huge role in underwriting the costs incurred by companies in research and development, which allowed companies to build new products and find new markets throughout the world and in turn they grew their revenues and employed more people.

For many years some countries in the western world exported a version of economics to the less-developed world which encouraged those countries not to invest in their own companies but instead to export raw materials. It was a policy Great Britain foisted on this country for hundreds of years. The potato famine is a stark example of a government not nurturing or stepping in and helping indigenous industry to create jobs and create demand in this country. There was sufficient grain to feed a large portion of the starving population but it was exported to England because there was a better market for it there which meant the indigenous population starved or had to leave the country.

To return to the point on job creation, we need to examine very carefully how governments in other countries have created jobs in key industries and the huge role governments have played, in particular through state agencies. The United States has the Export-Import Bank which helps provide loans to foreign companies which wish to purchase US products, be they aeroplanes or weapons systems.

Ireland does an incredible job of nurturing small businesses through a number of State agencies. Enterprise Ireland in particular must be commended for its ability to work with businesses with between ten and 50 employees. One of the biggest challenges for Ireland is to work with companies in the middle, which are not very small or very big. We have incredible big companies such as Glanbia, Kerry group and CRH and incredible small companies, but in between compared to many other European countries one will find a dearth of medium-sized export-focused companies. The role our agencies are given in helping to create markets and build relationships on behalf of these companies throughout the world is much smaller compared to a number of other countries with a much greater history of international trade than ours. We are catching up very quickly and I commend Enterprise Ireland in this regard.

Deputy Byrne asked if there are so many educated people why is there is so much unemployment and this is a relevant point. With all of these issues there will always be a supply and demand challenge. It is great to train people to have skills which are, in theory, needed but if the demand is not there for them to be employed they can have all the skills in the world but they will lie idle, hopefully for a short time but in many cases for a much longer time. One of the greatest challenges not only for Ireland but for a number of European countries is in stimulating and creating this demand, which seems to be a huge challenge. There is a huge philosophical divide in economics on whether we should take money out of the economy and stop spending or spend money and put money into the economy and create demand. There are huge structural challenges at European level and in the United States, in that when money is printed through quantitative easing and given to banks it does not seem to seep down into the hands of businesses; much of it appears to be used for speculative purposes which does not help with creating real demand.

With regard to how to deal with people who do not have a third level degree, it is a highly relevant point. I grew up on a farm and nobody I worked with there had a third level degree. I do not think it is necessary in many cases for a range of jobs. Many vocations and trades require different sets of skills, but unemployment is more acute now in these areas. Construction was a huge driver of the economy but it has collapsed. I do not have any quick answers.