Oireachtas Joint and Select Committees
Tuesday, 4 March 2014
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Forthcoming Employment, Social Policy, Health and Consumer Affairs Council: Minister for Jobs, Enterprise and Innovation
Today's meeting will take place in two sessions. The first will deal with the forthcoming Employment, Social Policy, Health and Consumer Affairs Council, EPSCO. The second session will involve a discussion of the Action Plan for Jobs 2014, including an update on the recommendations contained in the following committee reports published in 2013: Creating Policies that Work - Actions to Address Youth and Long-Term Employment; Exploring a New Approach to Providing Mentor Services for the Small and Medium Enterprise, SME, Sector in Ireland; and the South East Economic Development Strategy, Plant the SEEDS - Grow the Economy. We will also discuss the budget allocations for 2014 and how they will be spent, as well as the effect of the recruitment moratorium on Enterprise Ireland's activities.
I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials, Mr. Paul Cullen and Mr. Dermot Sheridan. The officials will be involved in the first session only. I invite the Minister to make his representation on the forthcoming EPSCO meeting.
There are four core issues for discussion at the forthcoming EPSCO meeting. The first is the message the employment Ministers will send to the European Council on the priorities for the fourth European semester. Second is the adoption of a Council decision making some adjustments to the constitution of the tripartite social summit for growth and employment, which usually meets in advance of the European Council each spring and autumn. The third issue for discussion is the adoption of the Council recommendation on a quality framework for traineeships. Fourth on the agenda is a lunchtime discussion on the youth guarantee.
The European semester process begins with the publication by the Commission of an assessment of growth opportunities in the Union, which is followed by a debate on the needs thrown up by the growth survey. Coming out of that process is the publication of country-specific recommendations as to what each member state needs to do in order to meet the needs of European growth and achieve the co-ordination that is necessary across the Union. The adoption of these recommendations follows later in the process. This year, the country-specific recommendations will, for the first time, apply to Ireland. We were not included prior to this because we were in the troika process. The expectation on this occasion is that the recommendations for Ireland will focus on the same issues highlighted by the troika. The task for employment Ministers is to ensure there is sufficient emphasis on growth and employment opportunities within a broad European framework of economic policy. This is against a background where many EPSCO members are of the view that the European Council of Finance Ministers, ECOFIN, has had an excessive say in these matters. EPSCO has made some progress in this battle in terms of achieving a more balanced debate.
The second issue for discussion is essentially a technical matter, namely, to include the President of the European Council, Mr. Van Rompuy, in the tripartite social summit for growth and employment, together with the rotating Presidents of the Employment Council and the President of the Commission.
The Minister for Social Protection, Deputy Joan Burton, will lead for Ireland on the third and fourth issues on the agenda, namely, the adoption of the Council recommendation on a quality framework for traineeships and the discussion on the youth guarantee.
In addition, we hope there will be a positive outcome to the agreement reached at the December EPSCO on the posted workers enforcement directive. This requires that where a company in one member state wins a contract in another, the contractor must apply the employment conditions that prevail in the country where the contract was won. The directive has gone through a very lengthy process, but we seem finally to have reached a point where the trilogues between Parliament, Council and Commission have resulted in an agreed text that is likely to be adopted.
Finally, there may be a discussion on the targets for 2020 in regard to research and development, climate change, education, poverty and social inclusion, and employment. There is talk of an exchange of views in this regard, but it probably will not be a very substantive debate because the incoming Commission is expected to bring forward proposals in the autumn to launch a mid-term review of the 2020 strategy. The expectation is that this review will be where the real business is done, once the new Commission is in place.
I welcome the Minister and his officials. I am aware that many of the issues may arise in the next discussion on the jobs action plan but I am intrigued by the tussle, as it were, between ECOFIN and the Council. It is important that we get a jobs-focused agenda at the heart of Europe, otherwise, recovery will not mean anything to anybody. Where does Ireland stand in that regard? In particular, where does the Taoiseach stand on this issue, as the referee between the Minister and the Minister for Finance, Deputy Noonan? Are we with the Jobs Council in regard to this in terms of more influence and more power?
As part of our Presidency we put growth and employment at the top of our agenda and that is reflected in the approach Ireland takes throughout. In the heat of the crisis most of the attention was on ECOFIN. It meets every month and it tends to have many more tools in its armoury in terms of fiscal co-ordination and so on. There is a sense that the employment Ministers need to catch up. We have started to introduce scoreboards as well so that there is a social scoreboard, so to speak, being factored into the discussion as well as a public finance scoreboard.
There has also been a sense, and it would not affect us to any great degree, that the discussion on wages and pensions must take account of heavy commitments in terms of pensions and that there is a big pensions challenge. It is clear there has been some friction on those issues between employment Ministers, who might have one set of concerns, and finance Ministers. In terms of what has been worked out, the two committees, EPSCO and ECOFIN would have the capacity to present on an equal basis. That was brokered through our own work last year and worked much better last year under our Presidency than it had in the previous years where the employment Ministers felt they were not getting a fair say. It has improved, and I believe it will continue to improve. We have statutory recognised committees in Europe that report to the social committee and the employment committee, which jointly consider the country-specific recommendations before they go to EPSCO and ECOFIN. That process has strengthened the say of the employment Ministers.
This is more institutional to ensure there is equality of recognition. Employment Ministers find ways of putting a scoreboard of social indicators as prominently as the well-known scoreboards on fiscal. That has been adopted. A scoreboard is being introduced which includes unemployment rates; youth unemployment rates; the so-called not in education, employment or training, NEET; housing disposable income; and those at risk of poverty. There will a tracking of those indicators as well as the indicators that ECOFIN would track.
I wish to make a general remark in terms of pan European policies on recovery and growth. On the notion of a two-speed Europe, I get the impression that a more accurate description would be a three, four or five-speed Europe. Is a two-speed Europe an accurate description of the challenges to a pan European idea? What are the threats to recovery? Will the Minister make any comments on a particular threat to recovering growth that is represented by events in Ukraine and the factors underpinning growth and recovery that could unravel if the situation gets more serious there? On the issue of workers' rights, I did not get a chance to read the document in detail and is that included in this broader set of proposals? Is it being handled by the Minister for Social Protection, Deputy Joan Burton, and the Minister as an integral part of the wider discussions taking place at the EPSCO Council meeting? In terms of training and education for young people - the report on apprenticeship was published here recently - how can we have an input into the review being carried out? What could we bring to the table in terms of apprenticeship and training in a new era of apprenticeship and training in light of some of the proposals in report?
I will start with the last issue raised by the Deputy. I have no doubt that some of the country-specific recommendations will focus in on training and activation and the policies that are being pursued by Government and will be looking at ways in which we could improve them. The report on apprenticeship has just been published and although it is the area of responsibility of the Minister for Education and Skills, Deputy Ruairí Quinn, I have taken a keen interest in it. Basically, it seeks to simplify apprenticeship and to make it shorter and easier to introduce new skills within the apprenticeship programme. Clearly, there will be an invitation to tender from industry to get involved in new apprenticeships. That will be one of the initiatives of SOLAS during the course of the year to invite expressions of interest to take up new areas where apprenticeships could be developed. This will be an interesting area. There is much currency in Europe about how well the German and Austrian system has weathered the recession and that countries that have that strong apprenticeship tradition have weathered the recession much better than others. There is a keen interest to build and develop stronger apprenticeships and traineeships in Europe. That will be a major focus of the discussion.
Workers' rights and work strikes appear in individual directives. The posted workers directive is finally crossing the line. As I have explained, it is about workers winning contracts in an overseas market, what they will be paid when they come from one country to be posted in another and how enforcement can be conducted. The directive attempts to have a harmonised system of enforcement applying right across Europe. It sets out the type of enforcement regime that can be put in place.
While the situation regarding Ukraine is very disturbing, I would not venture to speculate on its potential impact on economic affairs. Clearly it has potential to have an impact depending on how the situation develops but I am not qualified to comment. The wide issue of how to create a recovery and growth strategy dominated debate during our Presidency when the broad budget for the coming years was put in place. As the committee is aware, that included programmes such as COSME, which is for small business and access to finance; Horizon 2020, which was a big winner with Europe seeing investment in research and development and commercialisation of research and development as being very important; the youth guarantee; winning additional money and focusing on countries with over 25% youth employment; the whole debate about strengthening the skills area; and the ESF moneys. The debate has raged in Europe but those are the types of instrument that have been put in place to drive it.
I welcome the Minister and his officials. Following on from the point made by Deputy Dara Calleary regarding the economic and social indicators, are these similar to country-specific recommendations? Is it that the recommendations given to the Government have to show where challenges were not being met in, say, youth employment, education, general employment or training? Presumably youth unemployment would be the main challenge for Ireland.
I believe it would be long-term unemployment as well as youth unemployment.
Our unemployment is particularly affected by the collapse in construction, where employment went from approximately 300,000 to 100,000. Many of the people who are unemployed in Ireland are people with construction skills, so we have that dimension as well as the youth unemployment dimension. There is a mix of challenges in the unemployment area but both long-term unemployment and youth unemployment are decreasing, so at least they are going in the right direction. The Pathways to Work, JobBridge, Springboard, Momentum and other new initiatives are having an impact but clearly we wish to do more in those areas. This is the Minister for Social Protection, Deputy Joan Burton's, area and she has prepared a submission for which we will be seeking funding from Europe. That submission has been made and is awaiting a response.
I understand Ireland was pushing this very much during its Presidency. When the score chart is published what impact will that have? Are they binding recommendations or suggestions? Is it like the country-specific recommendations or something else?
The recommendations will undoubtedly focus on what countries are doing about their NEETs and youth unemployment rates. These will be the drivers of the country-specific recommendations. That is the reason it is so important to get a score card that has broader social rather than solely fiscal elements. We would expect in Ireland's case, as has happened in the past, that they will look at activation, our skills, research and development, how effectively various markets are working and access to finance. They will be the types of thing to which we would again expect to see country-specific recommendations apply in Ireland. However, obviously that is only speculation. We have yet to see them.
I welcome the Minister and his team. On the question of workers' rights and trying to harmonise them across Europe, is there a danger that it will make Europe less competitive? It is very worthy and important to have workers' rights. However, we are in a world competition and every time we insist that a country must do something it has not done until now to harmonise the workers' rights with another European country, we make Europe a little less efficient and less competitive than it would have been otherwise. To what extent do we contribute to that or take action to avoid it?
The agenda has not been full of new restrictions on employment in recent times. It is not that Europe is seeking to impose many new obligations on employers. The thrust in Europe recently has been not to undermine workers' rights but to reduce regulation in areas where it is unnecessary. Obviously areas such as the posting of workers overseas was one where there was a perception, and a reality, that people's rights were being abused and there was no enforcement mechanism to deal with it. That is the reason for the debate about enforcement for posted workers overseas. To my knowledge, there has not been a welter of new regulations being imposed on member states. There were in the past, such as the working time directive which governs certain provisions and so forth, but one cannot say that in the midst of this crisis Europe is seeking to make it harder to employ people. There is no evidence that country-specific recommendations or directives are going in that direction. Arguably, it is in the other direction whereby they are increasingly focusing on how good the state's training and activation systems are, what it is doing about young people who are out of school for a long period, and how it is picking them up and bringing them back. That is the focus of European interest, rather than dreaming up new sets of restrictions.
There are the general matters such as employment equality, consultation, health and safety, mobility or the right to move and the temporary agency workers, on which we had legislation this year. Those are the types of areas Europe has generally regulated, but the only one on which there was legislation was with regard to temporary agency workers. Again, that was an area in which there was evidence of widespread abuse, so there was a directive to deal with that abuse.
There is no doubt that in certain areas, such as workers' rights, there is a necessity for a team effort across the EU to develop certain standards. If there are certain standards, it is easier for countries to compete on other issues because they share a level baseline with regard to workers' rights. As to other areas, there is a continuous push to homogenise the tools we use to develop our economies and jobs, but sometimes a diversity of problems demands a diversity of responses. Is that opportunity available?
Second, when one analyses the credit provisions that have been put forward by the Government one sees a low take-up. Is the Minister confident that the instruments at European level are being properly harvested by Ireland at State institutional level and at enterprise level?
Our long-term youth unemployment crisis is far greater than that in most member states. Are we getting an adequate financial response from Europe in efforts to combat that? Is there recognition of our special needs because of our difficult problems?
I will take the questions in reverse order. The threshold for the youth guarantee is 25% unemployment in the youth category, so it is only for countries above that level. We are on that level so we are included. We are getting support under that and it was deliberately targeted at the countries that had the biggest problem. We are not the worst. There are some chronic cases, such as Greece and Spain which have really serious problems with youth unemployment, but we clearly have a problem in that area.
The State has been quite successful - I suppose we are old hands at it - in harvesting returns from instruments. On FP7, which is the big one that we deal with, we box above our weight. We were the best in terms of SMEs securing draw-down. Ireland was top of the league in getting draw-down for SMEs from FP7, the research budget, but it is a challenge and we are setting a more ambitious target. We got approximately €600 million under the last one and we are seeking €1.25 billion this time.
With regard to the first question, the Deputy answered it himself to a degree within the question. There is always a conflict between the desire to harmonise and the desire to leave countries with a diversity of tools to respond as appropriate to their circumstances. By and large, Europe has sought to apply the principle of subsidiarity. In other words it only seeks to harmonise where it is necessary to the fair operation of the European market. It does not seek to go below that and it leaves diverse arrangements. Many of the product markets are being harmonised to avoid non-tariff barriers being used. They have all been swept away. However, countries continue to have different regimes in respect of many other areas. It started from the Common Market so product and service markets have been the focus of attention. In terms of labour markets, the attention has been to ensure free flow and that people can exercise their rights under the European Union to move from place to place.
The member states have policed it. Many member states do not want to see encroachment on what they see as their rights, so they defend their position. In areas such as tax there is a veto so each member state has a guarantee of freedom of operation.
Several questions were asked about the European semester process. Does the Minister have evidence that the semester is working? Its aim is to co-ordinate economic priorities throughout the member states. Is this being achieved? Is it useful for informing long-term decision-making?
The policies advocated and proposed for countries are essentially structural reforms, and no one would deny structural problems which needed to be addressed were part of Europe's problem. The focus on making markets work, taking down barriers to entry and allowing networks throughout the EU to achieve advantages due to the scale of the market have been sensible strategies. People can rightly criticise and suggest that the budget should have been bigger if the aim was to drive a growth strategy. We know many countries do not want bigger budgets at European level and Europe can only operate in the areas in which member states permit it to do so. Europe will always be limited in this respect.
The structural reforms it sought to introduce are valid. This country was behind the times with regard to the welfare system. For years the OECD and the EU criticised Ireland for not having a more developmental welfare system, with more attention on activation and opportunity. Ours was a model steeped in the idea that one had to be idle to get support, and we needed to move to a model that was more driven by activation and development. This is what the Minister, Deputy Joan Burton, has been trying to do, similarly to policies driven by corporate social responsibility. It is the same with skills. People criticised FÁS and perhaps it got fossilised in the boom times and needed to shift to be more relevant. These are the policies being pushed. There is no doubt the policies being advocated are worthwhile. They are also a spur to change.
Over time the semester process will probably have greater force as an obligation to act on country-specific recommendations that might be introduced. At present it is moral pressure but over time, if certain countries fall out of kilter with regard to some of the bigger indicators, these policies will take the force of obligations, as they were when we were in the troika process. In response to the crisis we see more vigorous pursuit of sensible economic policy and it is gradually filtering down from broad fiscal demands to ensure other structural parts of policy instruments work effectively. This is here to stay, and we will be subject to more scrutiny on how well we are doing. This is the nature of the process.