Mr. Tony Donohoe:

I thank the joint committee for the opportunity to address it on what continues to be a critical issue for the business sector from both an economic and social perspective. The emphasis may change, depending on the economic cycle. During the depths of the recession, there were compelling social inclusion imperatives to keep as many people attached to the labour market as possible. As the economy recovers, the labour market has tightened and skills shortages are emerging. However, before looking at some of the emerging challenges, it is important to acknowledge the achievements to date, which have been considerable. The headline figures are encouraging. Unemployment has fallen from more than 15% to 7.2%. The most critical metric, long-term unemployment, has fallen from 9.5% to 4.5% and the youth unemployment rate has more than halved.

In any discussion about labour activation, there will be a debate about cause and effect. How much of the reduction in unemployment can be attributed to the general economic recovery and how much to well designed activation policies? Without wishing to be too predictable, it is important to remember that the Government does not create jobs, it is business that does. Labour market recovery is more likely to continue in a business environment that supports competitiveness. However, Government policy has a major impact on the conditions which are conducive to firms rehiring and on the quality of education and skills of those seeking employment. The Government must also ensure that there is a strong incentive to work and that the best approach is taken to assist and upskill those who are looking for work. We have made significant progress on activation.

I recall the mid-1990s when long-term unemployment remained obstinately high despite very high growth figures. There was much discussion in those days about jobless growth. In 1995, when the economy was growing at 6%, the long-term unemployment rate was over 9%, twice the level it is today, so we have learned a great deal about activation. However, the figures are still too high. Despite the improved labour market, long-term unemployment of over three years, youth unemployment, inter-generational jobless households and unemployment among people with disabilities all remain serious concerns.

The challenge is multi-faceted, so I will outline four priorities: the consolidation of existing reforms; the need to have an increased emphasis on programme evaluation; the need to continue examining employer engagement; the development of relevant skills. On the first priority of consolidation of existing reforms, there have been significant improvements in the delivery of employment and activation services since the Pathways to Work strategy was introduced in 2012. The implementation of new engagement processes, jobseeker profiling, the establishment of an employer relations division, a reduced payment regime for people who do not engage with the system and the back to work family dividend are all positive developments. Employers are also well disposed to the JobPath contracted employment service which supplements Intreo in delivering support to the long-term unemployed.

We welcome the overall philosophy of Pathways to Work, which is based on a social contract to ensure that all parties understand that with rights come responsibilities. We believe that is the correct one. However, as always, there remains the challenge of translating the rhetoric we see in the strategies and policy documents into a reality for people who engage with the services. Although the delivery has improved significantly, there are still inconsistencies in the quality of service. There should be a particular emphasis on ensuring that Intreo staff have the capacity, competence and culture to deliver services that meet the needs of their clients.

We must also develop a culture of constant evaluation. The introduction of more labour market-facing jobseeker services and programmes such as JobBridge, JobsPlus, Springboard, ICT skills conversion programmes and Momentum has been positive. However, there is a plethora of other training and activation schemes for which we have very little outcomes-based data. In the few instances we have published evaluations, the results are not encouraging. For example, the Economic and Social Research Institute study on the back to education allowance scheme, which Bríd O'Brien mentioned, found that the employment prospects of people who used the scheme to undertake long-term training courses were significantly reduced, even four or five years after completing the programmes.

Ironically, where there was an independent evaluation of a scheme that showed very strong employment progression, JobBridge, we closed the scheme. The Indecon review of JobBridge showed that 79% of candidates were employed directly and 64% are still in employment. Matched against a control group, an unemployed person had a 32% better chance of getting employment and sustaining it after going on JobBridge. Despite the way it has been characterised this morning, the Indecon report was overwhelmingly positive. Where there were significant dissatisfaction levels they were around the payment issue, unsurprisingly. Undoubtedly we need a reformed work experience programme that matches the new economic environment. We welcome the Government’s commitment to introduce a replacement. However, I am concerned about the vacuum that has been created with the closure of JobBridge and the delay in establishing a replacement. That should be expedited.

As an aside, the amount of oxygen taken up by JobBridge is extraordinary. It appears to be more of an ideological debate than anything else.

At its height, JobBridge only ever had a maximum of 7,000 candidates. At the time it was closed, the number was 3,390. At its height, it represented less than 5% of all people on work activation programmes. It is a tiny fraction of this activity yet it seems to be a bit of a lightning rod for ideological debate. It is important to keep in perspective what was a very positive experience for a relatively small number of people.

I will turn to the issue of employer engagement because an effective activation policy requires a significant level of engagement with business to identify opportunities for jobseekers and promote the recruitment of people who are on the live register. The structure of Irish business, which has a large number of small employers and a relatively small number of large companies that have the resources to engage with the many State agencies, makes this a challenge. Intreo is also competing with many other avenues of recruitment, including staff referrals, private recruitment agencies and online services. Therefore, we should ensure it has the staff and resources to develop this important work and that the Intreo office will be the first destination for employers looking to hire.

In respect of training and employability skills, I followed some of the committee's debates around whether the approach to labour activation should be job first or education first. We heard echoes of that again this morning. I believe the response is determined by individual circumstances and is not a binary decision. There is a need to ensure that the unemployed are matched appropriately with upskilling. There is a sizeable cohort of very low-skilled unemployed people who are distant from the labour market and who need specialist interventions within education and training provision. The low-skilled can become trapped in insecure employment punctuated by spells of unemployment in the absence of upskilling opportunities, while previous negative educational experiences, lack of awareness of the opportunities and benefits of education and lack of familiar role models may all act to dissuade individuals from engaging in upskilling. This is why guidance is such a critical component. As Ms O'Brien mentioned earlier, close and formal collaboration between Intreo offices and education and training boards in guiding the unemployed to effective training or work placement opportunities is critical. I am aware that protocols are in place but I am not convinced that a systematic integrated service is being delivered in all areas. On this point, we would agree with the Irish National Organisation of the Unemployed. The principles that should guide our education and training strategy have been well documented in lots of previous reports. They are flexibility and responsiveness in delivery, robust evaluation of outcomes based on ongoing collection and assessment of data, developing and adapting courses that meet the skills needs of local and regional employers, allocation of resources to the most effective elements of education and training in helping the unemployed, meeting skills needs and continuing to provide a pathway to work for school leavers. These have been acknowledged in the national skills strategy and the Action Plan for Education. The establishment of the regional skills councils, in which Intreo will, hopefully, play a significant role, will also help to bring employers together with all the local stakeholders in what can be a very crowded space.

We would also like to place a particular emphasis on developing what we call employability skills. IBEC's research has consistently shown that in recruiting people for entry-level positions, employers may not require a lot of hard skills and qualifications. However, they want evidence that candidates have the attitudes and soft skills that will enable them to learn what the job entails, adapt to the company culture and get on with their colleagues. On the last occasion that we asked our members to indicate the level of importance they attached to each of ten attributes when recruiting for entry-level jobs, 75% described work attitude as very important. This was more than double the weighting attached to the second and third attributes. In follow-up focus groups, companies told us that they are willing to arrange for or supply any specific training required once the requisite willingness to learn and adaptability are present.

This an important message for our guidance and training services.

I wish to conclude with a comment on how we can ensure our labour activation policies can adapt to an uncertain future and the inevitable shocks imposed on economies. Recently, in the United States and United Kingdom, we have seen a dramatic manifestation of concerns about outsourcing and relocation, increased income inequality, automation and gaps between skilled and unskilled workers. To meet these challenges we need new forms of flexibility and security for individuals and companies. Individuals need employment rather than job security, as fewer people will have the same job for life. Companies need to be able to adapt their workforce to meet changes in economic conditions. They should be able to recruit staff with a better skills match who will be more productive and adaptable, leading to greater innovation and competitiveness.

More than a decade ago the European Commission promoted the concept of "flexicurity", an integrated strategy to enhance, at the same time, flexibility and security in the labour market. Unfortunately, the strategy was overtaken by the recession and we heard very little about it. It should be revisited. There are four main policy components to flexicurity, namely, flexible and reliable contractual arrangements from the perspective of the employer and the employee; comprehensive lifelong learning strategies to ensure the continual adaptability and employability of workers, particularly the most vulnerable; effective labour market policies that help people to cope with rapid change, reduce unemployment periods and ease the transition to new jobs; and modern social security systems that provide adequate income support, encourage employment and facilitate labour market mobility. While we have certainly made some progress under all of these headings, if we hope to fulfil our commitments to growth, job creation and social cohesion, we need to create a situation in which security and flexibility can reinforce each other.

I again thank the joint committee for giving me the opportunity to present the business perspective on this important issue. I will be pleased to address questions members may have.