Mr. John McKeon:

I thank the committee for the opportunity to appear before it to discuss the youth guarantee. I am joined by my colleague Mr. Terry Corcoran, principal officer, who was a member of the delegation representing Ireland in the negotiations of the European Council recommendation on a youth guarantee.

Between 2008 and 2012 employment levels in Ireland fell by about 340,000, or 16%, from just under 2.2 million to just over 1.8 million. This lead to an increase in unemployment levels of over 220,000, from 107,000 to a peak of 328,000, a threefold increase. According to figures from the Central Statistics Office, CSO, the overall unemployment rate increased from 4.6% to approximately 15%. In relative terms, the reduction in youth employment levels was more pronounced than for the working-age population generally. The number of people aged 15 to 24 years in employment fell by nearly 60%, accounting for over 210,000 of the overall reduction set out above, with just 147,000 young people in employment at the start of 2013. However, in relative terms, the increase in youth unemployment levels was not as pronounced as for the population generally. Youth unemployment increased by approximately 45,000 from about 38,000 to a peak of about 83,000. The rate peaked at 33%.

There are several reasons why the reduction in employment did not translate directly into a commensurate increase in youth unemployment. First, the reduction in the birth rate during the 1980s and 1990s meant there was a net reduction of 30,000 in the number of young people entering the labour market. Second, the reversal in migration trends since 2010 has further reduced the number of young people entering the labour market by approximately 16,000 over the period. Finally, more young people are staying on in education, reducing the labour force participation rate of young people from about 53% to about 45%. The combination of these factors saw the number of young people participating in the labour market fall by about 110,000 between 2008 and 2012.

Recent data on youth employment and unemployment levels are more positive. Youth employment appears to have stabilised in the first half of 2013 at about 153,000, while the level of youth unemployment has fallen from its peak of 83,000 to 65,000, equivalent to a youth unemployment rate of 29%. It is hoped this improvement in employment of young people will continue. Past experience in Ireland and abroad indicates that youth employment, which tends to fall relatively rapidly in a downturn, can be expected to increase relatively rapidly during a period of economic recovery.

The Government’s strategy to tackle unemployment, including youth unemployment, comprises two main elements. First, it aims to create an environment for a strong economic recovery by promoting competitiveness and productivity, as well as encouraging entrepreneurial activity. This is the focus of the Action Plan for Jobs as developed and managed by the Department of Jobs, Enterprise and Innovation. The plan’s objective is to stimulate the demand for labour by encouraging and supporting entrepreneurial activity, along with investment in the economy, with the target of adding a net 100,000 jobs into it by 2016.

Second, it aims to provide services to support and assist unemployed people in returning to paid employment. This is the focus of the Pathways to Work approach, which is concerned with ensuring that as many as possible new jobs and other vacancies in the economy are filled by candidates taken from the live register. Under the scheme the Government is implementing several programmes to assist unemployed people in remaining close to the labour market. Examples of such initiatives, all of which are available to young unemployed people, include the Intreo service, JobBridge, JobsPlus and Momentum.

Although it is always difficult to establish a causal relationship between intervention and outcome in the labour market environment, we are encouraged to see that the most recent statistics for the second quarter of this year from the CSO quarterly national household survey show positive trends in the labour market, both overall and for young people. More recent live register trends suggest this positive trend is continuing.

However, the level of improvement is small relative to the underlying scale of the problem, and the pace of progress is not uniform across the European Union. Even where there is progress, it is too early to declare the recent trends will continue to develop or accelerate. Accordingly, youth unemployment continues to present a major challenge for Ireland, as it does for all EU member states. Throughout the EU area, it is estimated 5.5 million young people aged 25 and under are not in employment, education or training – the so-called NEETs. In the Union overall, the rate of youth unemployment is still growing and in some countries is close to 60%. It is even higher in Greece.

Recognising the urgent requirement to tackle the challenge of youth joblessness, the European Council agreed on a recommendation for a youth guarantee in June 2013. It states member states should "ensure that all young people under the age of 25 years receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within a period of four months of becoming unemployed or leaving formal education." In agreeing this recommendation, the Council accepted that the guarantee would need to be implemented over time on a phased basis in those countries facing significant fiscal constraints, such as Ireland. Also, in support of the recommendation for a youth guarantee, the Council agreed that a total of €6 billion would be earmarked in EU funds to support approved youth guarantee projects over the course of the seven-year multi-annual financial framework. This €6 billion comprises €3 billion from within the existing European Social Fund and an additional €3 billion in the form of youth employment initiative funding. The Council also agreed this funding should be front-loaded to support projects implemented during the first two years of the framework, namely, 2014 and 2015. It will be reserved for use in those regions where youth unemployment levels exceeded 25% during the reference year of 2012. Both regions in Ireland satisfy this 25% threshold. To access these funds, member states have been asked to submit a youth guarantee implementation plan to the European Commission by the end of 2013. To develop and implement such a plan in Ireland, the Department of Social Protection has set up an interdepartmental youth guarantee implementation group with officials and programme managers from the Department of Education and Skills, the Department of Jobs, Enterprise and Innovation, the Department of Public Expenditure and Reform and the Department of Children and Youth Affairs. The terms of reference for this group are to review the current range of youth employment services in Ireland, to assess what measures are appropriate to deliver the youth guarantee in Ireland and to develop an implementation plan for the Government's approval and transmission to the EU before the end of the year.

As an input to this plan, the Department of Social Protection held a stakeholders’ consultation forum on the guarantee on October 14 and has invited further submissions from the bodies that attended. It is intended that feedback from the forum will feed into the final design of the implementation plan. In addition, the Department has retained the OECD to provide input and advice on the framing of the plan. The OECD is also providing assistance to several other countries. In particular, it has been asked to identify best international practice and how it might best be applied to the implementation of the youth guarantee in Ireland. A delegation from the OECD has already met with stakeholders at the aforementioned forum, as well as with a range of relevant public bodies. It is due to produce a report with recommendations for the Department by the end of November, the findings of which will feed into the final design of the implementation plan.

The development of the plan will also draw on expert work already carried out by the European Commission over the past few years, as well as the output from the specially convened Heads of State meeting held in Berlin in July. In summary, the work of the Commission, as reflected in the conclusions from the Heads of State meeting, suggests several elements for inclusion in any youth guarantee, including the development of a vocational dual-training model, as used in Germany and Austria; the support and promotion of internships; the promotion of intra-EU labour mobility; the targeted use of employment subsidies; the development of youth entrepreneurship supports, including micro-finance; the review and redesign of business processes in public employment services, PES; and the development of closer links between PES, training agencies and employers.

Ireland already has a number of services, schemes and initiatives that address each of these elements, including JobsPlus, JobBridge, Intreo and MOMENTUM. A key part of the challenge, therefore, will be to increase the impact of these schemes in supporting young unemployed people.