Oireachtas Joint and Select Committees
Wednesday, 25 February 2026
Joint Oireachtas Committee on Enterprise, Tourism and Employment
Statement of Strategy: Department of Enterprise, Tourism and Employment
2:00 am
James O'Connor (Cork East, Fianna Fail)
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Before we proceed, I have a few housekeeping matters to go through. I wish to explain some limitations to parliamentary privilege and the practice of the House as regards references the witnesses make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentations they make to the committee. This means that they have an absolute defence against any defamation action in respect of anything they say at the meeting. However, witnesses are expected not to abuse this privilege, and it is my duty, as Chair, to ensure that the privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that they comply with any such direction.
I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. I will not permit a member to participate when they are not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting. In this regard, I ask any member participating via Microsoft Teams that, prior to making their contribution to the meeting, they confirm that they are on the grounds of the Leinster House campus.
Members and witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks, and it is imperative that they comply with any such direction.
I suggest we invite our witnesses to speak for approximately ten minutes and then allow members to ask questions and make comments for approximately seven minutes each. If time permits, we may have a second round of questions when members will be allowed to ask questions or make comments for around four minutes. Members may be called as they appear on the speaking rota which has been circulated. Committee members may substitute within their party or political grouping. Attendees who are not members of the committee or substitutes may speak only after committee members have completed their contributions. Is that agreed? Agreed.
I propose we publish the opening statements and submissions provided by the witnesses to the committee's website. Is that agreed? Agreed.
On today's agenda is consideration of the statement of strategy 2025 to 2028 for the Department of Enterprise, Tourism and Employment, which was laid before the Houses of the Oireachtas on 17 October 2025. The previous committee considered the previous statement of strategy from 2023 to 2025 on Wednesday, 12 July 2023. The committee looks forward to hearing the Department's strategy for 2025 to 2028. The committee is interested in the implementation of the Department's goals, including the roles of the agencies within the remit of the Department.
I am delighted to welcome back Mr. Declan Hughes, Secretary General of the Department of Enterprise, Tourism and Employment. He appeared before the previous committee at the meeting on Wednesday, 12 July 2023 to discuss the previous strategy. He is joined by the following assistant secretaries: Mr. Harry Lester, head of the corporate division; Mr. Gary Tobin, head of the economics, competitiveness and climate division; Mr. John Newham, head of investment and innovation division; Ms Fiona Coyne, head of the tourism, trade and development division; Ms Yvonne White, head of the workplace regulation and economic migration division; and Ms Jean Carberry, assistant secretary of the digital division; as well as Ms Karen Hynes, principal officer in the Irish enterprise division.
I invite Mr. Hughes, to make his opening comments.
Mr. Declan Hughes:
I am delighted to be before the committee again. We had our informal meeting last summer when the committee commenced its work. It is a pleasure to be here to present my Department's statement of strategy for 2025 to 2028 and to set out how the Department supports our Ministers to deliver on the programme for Government commitments, to consolidate our strong economic performance of recent years and to position Ireland for the challenges and opportunities that lie ahead.
We are now in the starting point of 2026. We are coming at this from a position of relative strength. The most recent Central Statistics Office, CSO, labour force data shows that 2.83 million people were in employment at the end of 2025. That is an increase of 56,700 on 2024. Participation rates are at record levels and we have full employment in all regions.
On the employment side, the pipeline for indigenous enterprise and foreign direct investment remains strong. Last year saw the number of jobs in client companies supported by the enterprise development agencies of my Department, including Enterprise Ireland, IDA Ireland and the local enterprise offices, LEOs, reach a record of 585,000 direct employment across the economy, with a similar number indirectly employed. Enterprise Ireland’s end of year results for 2025 show total employment reached 232,425, with 12,600 new jobs created last year. Notably, 69% of those new jobs were created outside Dublin across a range of sectors from food nutrition and agritech to software, engineering, health and medical technologies and artificial intelligence, AI. These are precisely the areas where our strategy emphasises digital transformation and innovation and we are focusing for growth for the future. Similarly in terms of IDA Ireland and attracting inward investment, last year again was a record year with 323 investments achieved. This is up 38% on 2024 with over 15,000 jobs expected over the coming years from those approvals. Total employment in IDA companies is now at a record level of 312,400. Despite all the external challenges, Ireland remains a globally attractive location for enterprise and innovation.
At the small business level, I wish to mention the work of our 31 local enterprise offices and the companies supported by them, which are companies with up to 50 employees. They created 7,261 new jobs in 2025. For the first time, employment in client companies of the local enterprise offices reached over 40,000 and 82% of those new jobs are outside Dublin.
On the tourism area, which transferred to my Department last year, the latest figures from the CSO indicate that numbers and revenue increased by 30% in December, an encouraging indicator that adds near term weight to our long-term policy direction. This is the starting point for our new strategy. Investment and innovation remain strong. Our enterprise sector's ambition is real. Our trade and tourism are diversifying and the labour market is robust. Our task for the coming years is to consolidate these gains to realise our vision, as set out in our statement of strategy, of making Ireland the world's leading location to work, do business and visit.
In the context of developing our statement of strategy for 2025 to 2028, we will take our guidance from the Programme for Government: Securing Ireland's Future, which set out a clear direction for our statement of strategy and emphasised that further developing Ireland's enterprise base remains a key focus, from backing small businesses and start-ups to scaling firms and enhancing foreign direct investment. There was a strong commitment in the programme for Government to reducing business costs, simplification and effective regulation. We must also secure access to finance and investment, including in infrastructure, to help businesses to succeed. We continue to create and grow quality jobs and keep a laser focus on competitiveness, skills and innovation. While the programme for Government is a cornerstone of our new strategy, we also listened to our stakeholders while developing it. We ran a public consultation process and invited submissions from the enterprise forum, which we support, the retail forum, key social partners including IBEC, the Irish Congress of Trade Unions, ICTU, Irish SME Association, ISME, the chambers of commerce, regional assemblies, our offices, regulatory and enterprise bodies and Departments.
We have set out six goals to guide our actions and to realise the opportunities that are there to deliver on quality jobs and prosperity over the period to 2028. There is a key focus on driving a competitive, resilient and sustainable economy that supports enterprise, tourism and employment across all our regions. Our first goal is a clear focus on driving competitiveness, sustainability and innovation. As we discussed previously with the committee, competitiveness is the foundation of improvements in living standards. Under this goal, we have developed and are delivering on a new whole-of-government action plan for competitiveness and productivity which was published in September. It was developed within the first couple of months of the new Government. With an eye to the future, we are also developing a longer-term enterprise strategy called enterprise 2035, which we hope to bring forward to the Government with the Minister, Deputy Burke, this time next year. It will have that longer-term focus on strategy for jobs and growth. We will also increase our focus on enterprise research and development, scaling our technology centres around the country and advancing digital adoption, including AI and cybersecurity, so that 90% of all business reach basic digital literacy and intensity by 2030. We will step up our focus on decarbonisation, including implementing an offshore wind industrial strategy, leveraging the opportunities from the EU net-zero industry Act and driving growth in green manufacturing and supply chains in Ireland.
Following on from a focus on competitiveness, our second goal is very much on high-quality jobs and increasing productivity to drive prosperity and higher living standards. This also requires a sustained investment in innovation, productivity, digitalisation and upskilling at firm level. To deliver on high-quality jobs, it is essential that we, working with other Departments, activate those who are outside the labour market, as well as attracting international workers. Economic migration is a key part of the role of my Department and I emphasise that economic migration should not be regarded as a mechanism for importing low-cost labour. Rather, when developed and implemented in a strategic, cross-governmental manner it will allow for the attraction of talent to support enterprise and, critically now, the delivery of public infrastructure and services into the future. More generally, we will continue to work with the social partners to implement the action plan on collective bargaining, which we were very pleased to complete over recent months, as well as working with our newly established employment law review group to ensure employment rights frameworks are modern, proportionate and enforceable. We will also continue to support and strengthen the work of the Workplace Relations Commission, the Labour Court, the Low Pay Commission and the Health and Safety Authority, which fall within our Department's remit. I am happy to talk about those later.
Our third goal is to strengthen and support tourism and Irish based enterprises, particularly SMEs, to start, scale and compete internationally. As the committee will be aware, tourism has transferred to my Department and the Government agreed a new tourism strategy and policy statement before Christmas, with 71 actions. It is very much focused on supporting SMEs in the tourism sector right across the country to innovate, grow and prosper. The new strategy will form the basis for the corporate plans for Fáilte Ireland and Tourism Ireland over the coming years. Working with Enterprise Ireland and the local enterprise offices in every county, we will deliver a regionally balanced entrepreneurial pipeline of companies from start-up to scaling businesses. We will have a particular focus on access to finance, strengthening the SME finance escalator with new mechanisms through Enterprise Ireland to close the financing gap for scaling companies, in addition to what it does already with seed and venture capital; continue to expand the work of MicroFinance Ireland which supports companies below 50 employees; and also working with the Strategic Banking Corporation of Ireland, SBCI, and the EIB on low-cost, long-term debt finance and, again, the growth and stability loan scheme, which has been a particular success for us. We will also be working to support SMEs through navigating the supports that are available through improvement in the national enterprise hub to ensure the supports that are available are targeted and easy to use.
Our fourth goal, complementing our work in supporting the indigenous enterprise sector, is on supporting inward investment and ensuring we remain at the cutting edge of innovation, supporting IDA to implement its strategy Adapt Intelligently while also having a particular focus on deepening research and development collaboration. Last year, IDA attracted €2.5 billion of R and D investment to the country but we will be broadening that out to include more initiatives including, at EU level, involvement in what are called important projects of common European interest, IPCEIs, delivering on the IDA's regional property programme and Next Generation Sites, which we see as a signature initiative for the coming years, and delivering on the potential for green industrial parks around the coast in particular but also through the midlands where we can have a match between the supply and demand for renewable energy into the future.
Our fifth area is very much focused on the regulatory roles we have in the Department and on ensuring we provide measured, certain and innovation-friendly regulation for business, workers and consumers. We will remove unnecessary administrative burdens, strengthening the SME test, which we are now applying right across government, and championing EU-level simplification to boost competitiveness of firms operating in the Single Market. We will also continue to support and strengthen the Corporate Enforcement Authority, the Companies Registration Office, the Irish Auditing and Accounting Supervisory Authority, the Injuries Resolution Board, which is doing so much good work on the insurance area, the National Standards Authority of Ireland; and the Intellectual Property Office of Ireland to effectively deliver on their respective legislative mandates. We will also support the work of the company law review group to ensure company law is fit for purpose and facilitates enterprise and employment. We will continue to promote a digital and AI regulatory framework that balances and encourages innovation while mitigating potential risks for individuals. As the committee members have recently heard in discussions on the pre-legislative scrutiny of the AI and data Bills, we will also progress our work in establishing the national AI office as the central co-ordinating authority for the EU AI Act.
Our sixth goal is to advocate Ireland’s values and strengthen our relationships and influence with the EU and international partners. We will have a central role in the Irish Presidency later this year, including on some key files on European competitiveness, advancing the Single Market, in particular in areas like the terrible ten, simplification and better regulation, and also progressing agreement on the European competitiveness fund, which has over €400 billion as part of the overall multi-annual financial framework. That is one of the most important files for us as part of the Presidency and the work of my Department.
They are the six key goals and the focus of the Department as part of our strategy. As I have mentioned, we are not coming at this from a standing start; we have already made progress in a number of areas on delivering with our Ministers on some of the key elements. As I mentioned, we published the action plan on competitiveness and productivity to tackle structural costs and productivity challenges; we have launched the action plan on market diversification as a whole-of-government action to build resilience in the context of a global trading environment; we have advanced the AI Act implementation model, with my Department as the single point of contact and we are progressing preparations for the AI office; we have established a small-business unit as committed to in the programme for Government and are applying the SME test across government and we are simplifying grants as part of the national enterprise hub. Last year, on the innovation side, we administered and awarded nearly €160 million under the disruptive technologies innovation fund, published the semiconductor strategy as part of the EU Chips Act, and we have delivered the action plan on collective bargaining and are now into implementation on that strategy.
Similarly, having published the policy statement A New Era for Irish Tourism we are now into the implementation phase of that. The committee is also considering pre-legislative scrutiny on the short-term letting and tourism legislation and we hope to progress that over the coming weeks. We launched the business events 2030 strategy and earlier this year we launched the large energy user action plan, working with our colleagues in the Department of energy to enable regions across Ireland to attract investment and that next generation of strategic industry.
As the members will be aware, we also published the Department's sectoral capital plan before Christmas, which details our investments over the next period to 2030 of €4.7 billion across all our range of responsibilities, offices and agencies. We have delivered all of those while supporting our industrial relations institutions, company law modernisation, employment rights, competitive markets and consumer legislation.
We are also committed to supporting and developing our staff who work so hard to deliver on this vital mission. Our new corporate services strategy focuses on the effective governance and oversight of all our offices, agencies and the Department but also ensuring we invest in our people and in digital transformation to ensure we have consistent and high-quality performance across the Department. Finally, an overarching priority for the Department in achieving its strategic outcomes is leading and influencing across government and it will continue to be a key focus for us and for our agencies to work with other Departments and State bodies to progress our strategic goals.
I thank the committee members for their time. I emphasise that my Department's statement of strategy is a plan to sustain full employment and quality jobs in all regions and support investment through effective and timely delivery of our strategic goals. As a Department, we are working with our Ministers with a renewed sense of purpose and ambition about what can be delivered. We are determined to sustain and translate the resilience of the economy into enduring productivity growth, higher living standards, and quality employment. Our statement of strategy builds on our long-standing strengths as an open, enterprising economy, recognising the centrality of SMEs and family businesses, leveraging our strengths as a location for leading-edge inward investment and embracing tourism as a driver of regional opportunity. As I noted, the strategy is grounded in consultation, built on evidence and designed for delivery. I and my colleagues here today look forward to working with the members of this committee as we implement the strategy. I welcome members' questions.
James O'Connor (Cork East, Fianna Fail)
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I thank the Secretary General. I appreciate the information and I acknowledge the work that is done by the agency staff worldwide. It often goes unnoticed but we have had the pleasure as a committee of engaging with some of the people from Enterprise Ireland and the IDA, etc., when we have been abroad and in the work they do and I thank them for what they are doing for the country.
Before we proceed, I welcome Edmund, who is here on his transition year work experience. I started here as a transition year student and they could not get rid of me.
James O'Connor (Cork East, Fianna Fail)
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I did my TY work experience with Micheál Martin and I ended up proposing him as Taoiseach, so keep at it and no pressure.
John Clendennen (Offaly, Fine Gael)
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I might get interrupted to speak in the Chamber, so my apologies if I do. I welcome Mr. Hughes and his colleagues here today. I wish to recognise the record employment we have, the buoyancy and strength of the economy, the general optimism, and leaning towards further investment and growing the economy further. It is all very welcome. However, there are challenges around, for example, the cost of doing business in general, insurance, energy and labour. As regards the three legs of the stool the Department has - enterprise, tourism and employment - which one do the witnesses see as the biggest challenge for the period ahead?
John Clendennen (Offaly, Fine Gael)
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If Mr. Hughes were to pick one, which would it be?
John Clendennen (Offaly, Fine Gael)
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One does not need more attention than any other.
Mr. Declan Hughes:
We come at it from the perspective of the entrepreneur and the enterprise in creating the jobs. We have got to work on those to ensure that they are resilient and robust, they have the good strategies in place, they know their markets and customers, and they have good practices on the employment side.
Tourism is new to the Department. It is probably the area where we saw the biggest impact last year in terms of what was happening globally and consumer confidence. If you had asked me that question this time last year, I probably would have had my biggest concern on the tourism side in terms of connectivity, etc. However, many of the issues that were there for the tourism sector regarding the airport cap and so on are in progress and action is being taken.
At this stage, all three dimensions are getting equal attention from us.
John Clendennen (Offaly, Fine Gael)
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In the context of progress being made on labour and ensuring there are good conditions so that this is an appealing place to work as a country, we have the increased minimum wage, additional bank holidays, sick leave, auto-enrolment and so on. However, when I look at the Department's strategy, the level of youth unemployment is flat. Does Mr. Hughes think we have pushed the minimum wage as far as we can before employers start taking decisions to go without a unit of full-time employees or whatever the case may be in their formulas for the workplace?
Mr. Declan Hughes:
We assessed this with the Government last year. The Government has taken a decision on moving to the living wage, for example, and putting that out to 2029. However, it has also remained steadfast in its commitment to the work of the Low Pay Commission. The Low Pay Commission has representatives from both the employer and union sides. Last year's increase was 4.8%, which was at or slightly above wage rates in other sectors. We are still providing an attraction for workers to come in, but it has not been at the rate of increase we have seen in previous years. That is the key point. We are still keeping track. You have to sustain living standards and support productivity while also being very conscious of business costs. That is why almost immediately after the Government came into place, we had a series of measures to support SME competitiveness in April last year, where there were some initial measures relating to the measures the Deputy talked about. Those include sick pay going up to five days, the living wage and the deferment of that, etc. It is recognising the balance between sustaining employment and youth unemployment, which is an issue and concern for us. However, we are not seeing any significant uptick in youth unemployment.
John Clendennen (Offaly, Fine Gael)
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It is something we need to monitor.
From the perspective of engagement with stakeholders, Mr. Hughes mentioned this is regularly done through the Department's document on strategy. How often would the Department meet local authorities or the County and City Management Agency, CCMA?
Mr. Declan Hughes:
Across the board, we would have regular engagement with local authorities. We work very closely with them on some of the schemes we have done. For example, the power-up scheme and the increased cost of business, ICOB, scheme were administered by local authorities for us. Up until recently, that was nearly daily if not weekly in some of our units. The local enterprise offices are funded by Enterprise Ireland and my Department but are embedded in the local authorities.
John Clendennen (Offaly, Fine Gael)
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Will Mr. Hughes explain exactly what the embedding in local authorities is and how that reporting works? If the funding is coming from Enterprise Ireland, it is essentially paying the wages, yet it is embedded in the local authority. How can the Department ensure consistency in that reporting element so that there is no conflict between demands from the Enterprise Ireland side and from the local authority side?
Mr. Declan Hughes:
We have several structures that cascade down from the Departments. We have a LEO policy statement, which sets out our policy for the coming three to five years. That is overseen by a steering committee, which has both my Department, Enterprise Ireland and the local enterprise office CEOs represented, as well as local authorities, the CCMA and the Local Government Management Agency, LGMA. We work through that. Every LEO has a service-level agreement and an agreement at the beginning of the year with Enterprise Ireland in terms of what the targets and metrics are and how they will be delivered. It is important that they are embedded locally and that they work with the county manager and the rest of the teams. The CEOs are embedded locally and they work with enterprises, but they also work on broader economic development.
John Clendennen (Offaly, Fine Gael)
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How does that work where you have a target or whatever it is from Enterprise Ireland - let us say it is for ten units - yet because of that local tailoring, the local authority says it can only do two? Who manages or mediates that?
Mr. Declan Hughes:
We have a centre of excellence in Shannon, where there are 20 or 22 people, and my colleague, Ms Hynes, works in that division. Every year, we set out our service-level agreement or oversight and delivery agreement as to the number of deliveries for clients, for example, that have to be brought through start your own business programmes, innovation programmes and applications for Microfinance Ireland. They are all agreed based on their previous performance, what we see as the enterprise base and also in terms of-----
John Clendennen (Offaly, Fine Gael)
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My fear is we will start seeing people on these courses just to fill numbers. It is something to be mindful of and I ask the Department to observe that.
I am conscious of time but I want to come back in on something. Mr. Hughes mentioned quality jobs several times. Does he see any cost associated with creating quality jobs?
Mr. Declan Hughes:
There is. If you invest in your people, the workplace and productivity, where there is digitalisation, etc., it gives increased returns. Our focus on quality jobs is ensuring there are good standards and so on as well as support for skills, training, digitalisation, etc. We get significant returns at the company level from that investment. That is why we do some of the investments we need in training and innovation. There are social returns from that as well, hence why we support that investment with grant support.
Rose Conway-Walsh (Mayo, Sinn Fein)
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I thank the witnesses for their opening statement and for being here today. This is very important.
The witnesses outlined many strategies, which are always welcome. However, I have to ask why business confidence is declining so much and how concerned the Department is about that. Obviously, that decline tells us the real picture. I am particularly referring to the Grant Thornton international business report that was done among Irish medium-sized firms. Business confidence there dropped to 54%, which was down from 81% at the beginning of 2025. Could Mr. Hughes speak to that as regards business confidence and what is driving that downwards?
Mr. Declan Hughes:
We continuously monitor this every week. For example, our own management board continuously monitors business sentiment through purchasing managers indices across manufacturing services and the construction industry. It can be at a point in time and it can be a response to a particular issue, for example, if there is uncertainty in the global environment and trade agreements, etc. That is continuing to weigh on business, particularly where they have well established routes to market and they are trying to work through how that will evolve into the future.
On the trade side, which Deputy Clendennen or the Cathaoirleach mentioned, we are working with the IDA and Enterprise Ireland to ensure that we stay close to businesses and to what is happening at both EU level and in the US, for example, in the global trade environment and to provide as much assurance possible. We are also working at national, EU and international levels on some of the issues of concern to business.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Those are medium-sized businesses. They are smaller businesses, not the main ones that we would associate with trade as such. While trade and the volatility of the geopolitical situation are very significant, one would also have to beg a question. We have all of these strategies, which on the face of it look good and I do not think anybody could disagree with any of it, but are we really reaching the businesses, particularly those telling us that the cost of doing business in relation to energy is just too much? They are telling us of skills shortages and the difficulties they are having there. There are also the obvious difficulties around housing for staff and all of that. What specifically are we doing?
Rose Conway-Walsh (Mayo, Sinn Fein)
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It goes without saying that that is important, but are there specific things, be they grant initiatives or support initiatives, for businesses right here and right now so that we do not have businesses closing down or losing confidence in the way that they have been?
Rose Conway-Walsh (Mayo, Sinn Fein)
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My time is limited. How does the Department know that those initiatives it is announcing are really getting to the businesses that are in bother right now or to the businesses that are concerned?
Mr. Declan Hughes:
We know that from our direct engagement with those businesses and the support that we have through the local enterprise offices. Last year, we delivered all of our energy efficiency grants, which we had set out as targets. Through Microfinance Ireland, MFI, for example, we have seen a significant uptick in access to supports or low-cost loans. This is to existing businesses but also to start-ups.
Rose Conway-Walsh (Mayo, Sinn Fein)
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Mr. Hughes is saying that access to finance should not be a difficulty and that we have plugged that gap. I want to get to the gaps that we have plugged and the ones that are yet to be plugged.
Mr. Declan Hughes:
Last year, we increased the lending threshold for MFI from €25,000 up to €50,000 and we expanded it to businesses employing up to 50 people. We had companies that were saying they could not get access to support because they had more than ten employees. It is similar with the local enterprise offices. Last year, we increased the threshold for support up to 50. Now, any business employing up to 50 people that is locally trading, a local enterprise or in the tourism sector can get support.
I should also mention that the VAT rate reduction to 9% will significantly help later this year companies in the hospitality sector. That is a sector that was particularly vulnerable last year.
Rose Conway-Walsh (Mayo, Sinn Fein)
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What I am trying to get at is based on what comes back to us from businesses, which is the administrative burden that is placed on them in accessing some of these schemes. I want to go on, however, because I have such little time.
I am very concerned about youth unemployment. It is three times as much as unemployment across the board. We are looking at between 12% and 14%. Contrast this with the likes of Germany, which is at 6.87%. I know they have a strong vocational training focus there. What do we need to be doing that Germany is doing at the moment that is tackling youth unemployment?
Mr. Gary Tobin:
The Department is involved with the cost of business advisory forum. It is a tripartite forum composed of about 25 business groups, many of them small business groups, as well as Departments and regulators, which comprise many of the people who create a lot of the administrative burden and regulation that businesses have to deal with. This forum has been meeting over the last nine months and has been discussing things on a thematic basis. It has discussed energy costs, insurance, legal costs-----
Rose Conway-Walsh (Mayo, Sinn Fein)
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I know those and we are fully up to speed with that on the committee but what has resulted from those meetings?
Mr. Gary Tobin:
The final thematic discussion, which will be on banking, will be next month. The forum is in the process of producing a report with a set of recommendations to the Government and the aim of bringing forward proposals that are realistic and implementable to try to reduce some of the economic costs and administrative burden for business.
Rose Conway-Walsh (Mayo, Sinn Fein)
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The key phrase there is "realistic and implementable", but another is "time sensitive". This is what is coming back to us from businesses.
Mr. Declan Hughes:
The areas the Deputy mentioned included insurance costs. The task force on insurance costs met this morning. We are seeing stabilisation in premia versus the UK, for example, where we understand that premia are continuing to increase, along with energy costs and various other areas. We also have a clear roadmap now in relation to labour costs going forward.
Youth unemployment is an area we are mindful of and are keeping a very close focus on, particularly with our colleagues in the Department of further and higher education, which is responsible for apprenticeships. They have been doing significant work in trying to promote the alternative routes to the labour market, particularly with apprenticeships. Maybe I can come back to that on later questions.
James O'Connor (Cork East, Fianna Fail)
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In the absence of Senator Crowe, I might be able to take his position and then revert to the Leas-Chathaoirleach, who was in the Chamber. He was actually No. 1 on today's rota, so I will give him a chance to settle in and he can come in after myself.
I thank all of the witnesses once again for their time, their engagement and for outlining the strategy. Ultimately, one of the things I am most concerned about is the impact on our economy of the exponential increase in the use of AI. I have seen some doomsday predictions that it could lead to a 20% decline in the US stock markets and a huge increase in unemployment, particularly in the United States of America. Ireland is the biggest benefactor in the world per capita in relation to US foreign direct investment, FDI. We are the home of it. I have been talking to the people who work in this area day in, day out. They are some of our most qualified professionals in the services sector that has been generated in Ireland, for example, KPMG, PwC and Arthur Cox. These are big firms that employ many people. A potential worldwide decline in employment and economic activity at some of the multinational companies, many of which have their European operations here in Ireland, would have a spin-off impact. In fact, Meta's worldwide headquarters is based in Ballsbridge now. I am interested in watching what is happening in America in the context of job cuts and reductions. Deputy Conway-Walsh was right to raise it in relation to unemployment, including youth unemployment. I am hearing stories from college graduates and people who are looking forward to graduating from university. They do not feel there is the same level of opportunity that might have been the case five or six years ago. Could the witnesses put some flesh on the bone about this concern? In his opening statement, the Secretary General spoke of having a national AI office. There has been much debate about that by our colleagues over at the AI committee, including its Cathaoirleach, Deputy Malcolm Byrne. I have been around the block myself and have spoken to a few people. I will be going to the west coast tomorrow and meeting with people who are working in AI in a private capacity. How concerned are the witnesses about this matter? I am very concerned. Do they see it as more of a negative than a plus when it comes to the potential impacts on the level of employment?
Mr. Declan Hughes:
There is no doubt that the pace at which AI is moving is not like anything we have seen previously, particularly having gone through the adoption of e-commerce, the Internet and so on. This is five or ten times what we have seen previously. We have done a lot of work with the Department of Finance, including our joint piece of work last year, a series of reports entitled "Artificial Intelligence: Friend or Foe". We have identified a high exposure to AI across most of the economy. However, we are also very clear on where it is complementary to existing jobs and where it can be deployed, for example, for enhancing diagnosis in healthcare, for delivery of public services, for agtech, for precision engineering, for precision agriculture, for the manufacturing sector, and for building houses. Right across the economy, there are opportunities for the use and deployment of AI in transforming how we deliver from an enterprise perspective and in terms of public services.
Last year, we saw that the ICT sector is going through an adjustment of how it deploys and uses AI in its business, across its value chain. The use of chatbots and agentic AI is removing some of the roles that were there previously, but we also see significant investment in AI in the ICT sector itself and more broadly in other sectors such as financial services.
James O'Connor (Cork East, Fianna Fail)
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Is it being regarded as an extremely consequential risk to the country, to stability, and to quality of life here? We have built one of the most successful economies in the world. I think that is not really up for debate if we look at the performance of the Exchequer, and the fact that we brought in over €33 billion in corporation tax. Does Mr. Hughes register this as a potentially calamitous situation for the economy and the stability of the economic model Ireland has thrived on since the economic downturn?
James O'Connor (Cork East, Fianna Fail)
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Does it concern Mr. Hughes?
Mr. Declan Hughes:
When we do our foresight work and look at the big technology changes, it will have a transformative impact on business and on society. A point I keep coming back to is that we are coming at this from a position of strength for all the reasons that the Cathaoirleach mentioned. We are, pretty much as we always wanted to be, Europe's digital hub, in that we have a base of companies, both indigenous and multinationals, in the digital space, which have the infrastructure and technology. The Cathaoirleach mentioned that he is going to the west coast. I think 40% of investment this year under the S and P 500 will be by the large tech companies in AI infrastructure. That is infrastructure which we have been investing in for the last ten or 20 years, in international connectivity, compute power, and so on, which will underpin the digital economy for the future. It is a race. It behoves us to keep on top of that.
Our big focus at the moment is on how AI can be used in business, society and the public sector, and ensuring that we support the skills transformation and upgrade that is needed. Last year, IDA Ireland approved about €2.5 billion in research and development. A significant part of that was in AI-related research in Ireland, not just in the ICT sector but in manufacturing and so on. Last year, it approved over 30,000 training places and supports. That is something that we are directly supporting. I was just looking at the figures for IDA Ireland for last year. In the Cork region, there were a number of significant AI investments. For example, in December, Quest announced an advanced AI architecture facility and cybersecurity facility in Mahon. Fixify announced 50 jobs in an EU centre of excellence related to AI. Just earlier, I was looking at AI investments coming in from new companies and others. It is the top of our priority list, and we are looking at what it means for business.
James O'Connor (Cork East, Fianna Fail)
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I do not want to be a doomsday prophet or somebody who is trying to look at the worst-case scenario but, given the level of disruption it may cause, it is worth looking at that, considering, when one looks at the UK, how unprepared the public service was for the advent of Brexit. It never thought it could happen and it did. The UK still has not found its way through it. I remember on the day Brexit happened, Joe Biden, who was vice president of the USA, was in Dublin Castle, and I distinctly remember that he had a speech that was handed to him that morning. He was completely unprepared. Everyone was in a state of shock on the morning that result came in. With AI and the pace of change, whether deepfakes or the lack of requirement for low-skilled labour, we see companies that are very active in Ireland which are a huge part of the economy making cutbacks in the USA. How might that impact us here? Overall, I understand that 2025 was a bumper year. When it comes to the Department's strategy going forward, there is no harm to teasing out those questions.
Mr. Gary Tobin:
On the Cathaoirleach's point, we are monitoring job postings and how they relate to things like AI. In November 2025, over 11% of all job postings in Ireland on the Indeed website, one of the main job websites, referenced AI. There is huge demand for AI talent in Ireland. That 11% is twice the share observed by Indeed in the UK and it is three times the share seen in the Euro area generally. There is huge demand for AI jobs in Ireland. That is on the demand side. Many Irish-based companies are looking for people with AI skills. On the supply side, Ireland, according to Indeed analysis, has the highest share of STEM graduates per capita in the EU. LinkedIn data suggests that the concentration of AI talent in Ireland is the fourth highest in the EU. There is a challenge but there is an opportunity.
James O'Connor (Cork East, Fianna Fail)
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I appreciate the information. Sorry. I have gone significantly over time.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Apologies in advance if I bring up questions that were already brought up. I read Mr. Hughes' statements last night and I appreciate them. The employment levels at the moment have to be put on record. The first time I bought a business was in 1985. The unemployment level was roughly 18%. Sometimes we forget where we came from, which must be put on record. Last night, I read the Department's strategic plan from 2025 to 2030. I am not criticising it, but how can the Department produce a plan with the current geopolitical situation, which is evolving not by the year but by the day?
Mr. Declan Hughes:
That is why we put the focus on the six areas that are really important for us. I mentioned competitiveness, quality jobs, SMEs, inward investment, the regulatory side and our advocacy. They are the six pillars that we see that we need to be continuously focused on. We have a longer-term view of where we want to get to in employment, productivity and standards of living. Each of those will be subject to change and we need to be able to respond to that. For example, last year, the programme for Government set out that we should develop a competitiveness action plan within 12 months. We met the Minister and said it needed to be done much quicker, within 12 weeks, because of the nature of all the things that need to be done, whether relating to energy, cost competitiveness or other issues. We did that and brought it to Government. That is being continuously reviewed. It is quarterly monitoring.
Our market diversification plan, which my colleague, Ms Coyne, is responsible for, is similar. We are saying that everything is changing in trade agreements, geopolitical developments, the markets that we are in and where we deploy our resources. We need to be sure that we are continuously evolving and changing those. We know what we are trying to do. We are trying to embed what we have and deepen the markets that we are in, for example, the US and the UK, but we also need to open new opportunities, in northern Europe, Asia and so on. That is cascading into what we are doing in our tourism strategy. We are back to opening new offices in the Gulf and in India and trying to develop new routes from China. We have put in specific measures such as a new routes incentive programme in that area. We are providing supports to businesses to help them to diversify their markets. We have opened new offices in Seoul, Zurich and Glasgow with the agencies that the Cathaoirleach mentioned earlier.
On trying to ensure that we sustain industrial peace and good industrial relations, we have put a strong focus on collective bargaining in our action plan so that we have that dynamic at firm level. There is an enterprise partnership where employers can work with employees and workers to look at how they can navigate through the changes that are needed, for example, in AI, or to adapt to changing products, new customers, and so on.
In each of those areas, we are going in a broad direction but we are continuously monitoring, changing and tacking as we see issues arising.
At the moment in relation to the geopolitical situation, we work very closely with our colleagues right across Europe through the Competitiveness Council. The Minister, Deputy Burke, will attend a meeting of the Competitiveness Council tomorrow. Working with EU partners we will work out what are the things on which we need to have a common position at EU level and, more importantly, what are the things we need to do at European level or at national level. Hence why part of our focus and that of the Minister, Deputy Burke, is on the controllables, like the Single Market, the internal market and how we remove barriers to trade across the Single Market. How do we ensure we progress on simplification and reducing the administrative burdens for business? These are the things that are within our own control. The focus is continuously on energy costs and water costs and we are working with Uisce Éireann and the CRU as part of their consultation on that. We are also working with colleagues in the Department of further and higher education in that area and with the Department of Finance on our overall attractiveness from a tax perspective. Last year's initiative on attracting FDI and increasing the R and D tax credit rate from 30% to 35 % was really important at a juncture when there was so much volatility and uncertainty. We want to be really clear that Ireland is investing for the long term and that we are focused on bringing in cutting-edge innovation, embedding that in Ireland and sustaining the talent and skills we have here. That is why, last year, as mentioned in my opening statement, the number of projects by IDA Ireland was more than 320, and more than 70 of those were from companies coming into Ireland for the first time.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I am just conscious of time. The word I am getting back is "diversification".
Brian Brennan (Wicklow-Wexford, Fine Gael)
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That is really what we are looking for. A wise man once told me when I was buying an hotel to stand at the front door and see how many chimney pots I could see. It is about the population and demand. America has fewer than 400 million people. China has 1.6 billion people and India has 1.6 billion people. I am not saying we should turn our backs on America but I totally agree with the strategy of looking to other markets and other clients as well in terms of tourism.
Moving on, the most frightening figure I have seen in the past six months is our tax take and that 40% plus of our tax take is coming from two companies. If they were to fail, would we be in trouble?
Mr. Declan Hughes:
I should say in relation to the corporation tax take, and Revenue has done some work on this, it can change. It is not necessarily always the same two or three companies because of where we are at in attracting cutting-edge innovation. Ireland is very attractive for bringing new innovations and technologies to market. We are at the cutting edge of the deployment side, whether is it in buy-in processing or ICT. It is not necessarily always the same companies. There is some speculation at the moment as to who they might be, such as whether it is related to GLP-1 drugs.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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Is Mr. Hughes concerned that such a bulk of our tax take is from whichever two companies, that we are putting so much emphasis on those two companies and if one of them fails, we will lose 20% of our tax take?
Mr. Declan Hughes:
That is something our colleagues in the Department of Finance continuously factor into their budgetary projections. That is why the Government has set aside the windfall gains coming from corporation tax and is ensuring we put those into funds for the future. Does Mr. Tobin want to come in on this?
Mr. Gary Tobin:
Internationally, corporation tax revenue tends to be very concentrated. It tends to be that a small number of large companies pay the majority of corporation tax, no matter the country they are in. Ireland is particularly concentrated. Just over 50% of corporation tax comes from US-based companies. About 30% comes from UK companies and the balance of around 20% comes from others, so we are concentrated. That is why the Department of Finance and the Government have been very vocal that they believe there is a proportion of corporation tax receipts that are potentially not sustainable into the longer term. That is why they have proposed the use of long term funds to set aside some of these corporation tax receipts so they are not all spent. The danger is if we use all of these transitory corporation tax receipts for day-to-day spending because then we would be embedding them in the base and then if and when these receipts disappear, there would be a hole in the public finances.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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To finish off on that point, would I be right in saying that we should really focus on our own and control the controllables? Our SME and tourism sectors are the ones that should get as much support as possible going forward because at least we can control them and it is our home base.
Mr. Declan Hughes:
It is a balance between ensuring we have both and hence our focus, as can be seen in our own statement of strategy and also in NewEra. I refer to the tourism sector, for example. We are very focused on the resilience, productivity, performance and investment in that sector but also on its profitability; and driving the profitability right across the sector so it has the investment capital for investing for the future and also can provide good returns for the entrepreneurs who are in those sectors. As my colleague Mr. Tobin mentioned, there are windfall gains coming but that is also based on productive activity in Ireland. It is a return on capital by those companies that are investing significantly in Ireland and we want to sustain that for the future.
James O'Connor (Cork East, Fianna Fail)
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I apologise; Deputy Brennan has outdone me as regards the time. We have to be careful with the clock. I have two points before we proceed. Mr. Hughes raised a very interesting point that South Korea is similar. There are South Korea's chaebols where 60% of South Korea's GDP comes from ten families. The consolidation is happening in other countries as well. It is fascinating. The next speaker is Deputy Dolan.
Albert Dolan (Galway East, Fianna Fail)
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I thank the representatives from the Department of Enterprise, Tourism and Trade for being here and for having this discussion with us. A lot of the conversation today has centered around the AI risk that we and every modern, developed nation are facing. If we look back at what made Ireland so successful during the past 20 or 30 years, it was the fact we had a really strong education system that led to people being very proficient in knowledge worker roles. It is those same knowledge worker roles that are now simultaneously under threat and also have an opportunity to be enhanced more greatly than ever before, with the advent of AI. It is a really exciting time but uncertainty creates fear and fear creates worry.
In the past few months, and it is the first time in my six or seven years in politics, I have had young people come to me who have finished an undergraduate or a master's degree and are now actually struggling to get into some of these larger companies. The competition is fierce because not only are they trying to get into the companies and get going with life, there are also people who have been quietly made redundant in other roles across the country and they are competing with those people. There is a higher number of applicants for every job and the problem is that there are fewer new jobs available now. There might be more new companies coming in and creating new jobs, which is brilliant, and that is testament to our success but companies are looking internally and asking whether they can leverage AI before take on any new person or creating any new job. That seems to be the conversation that is happening. I am not saying it is necessarily a bad thing or a good thing. I want to hear if that is the Department's experience and whether I am reflecting that fairly.
Mr. Declan Hughes:
This is hugely dynamic at the moment. I mentioned we had a 56,000 net increase in employment last year. ICT was down 10,000 to 12,000 and that is an adjustment within the sector as roles are changing. We have also seen an increase of 18,000 in the education sector, the construction sector was up 15,000, transport was up 10,000 and industry was up 22,000. Across other sectors there is significant job growth. As I mentioned, we see it in terms of what is happening between ICT and financial services.
In financial services, there is significant recruitment going on, for example, around cybersecurity. There is also recruitment happening in the ICT sector. There is an adjustment going on. That is partly down to some pausing and questions as to how we make use of AI. Companies are telling us they still cannot get the people that they need to apply for positions. This was always an issue between the indigenous sector and the foreign-owned sector.
Albert Dolan (Galway East, Fianna Fail)
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Is it a labour shortage from the perspective of the volume of people needed or is it from a skills perspective? What skills are we lacking that we are not able to provide to companies?
Mr. Declan Hughes:
It is probably a bit of an adjustment in the labour market in terms of matching, as Mr. Tobin mentioned. There is a demand for AI skills. Those with master's and primary degrees in ICT are being sought right across all sectors. It is not just in AI and ICT. There was a traditional focus whereby ICT companies would go after those people, but now their skills are in demand right across other sectors. For example, we are seeing job growth in both construction and industry. The biggest transformation happening there is around digitisation. I refer here to building information, modelling and off-site construction where things are being built off site and then brought on site. All of that is computer enabled and ICT driven. That is where those skill are. We are looking at how we match the skills that are in our skills pipeline with where the demand is.
In terms of worry, I would not be overly concerned but there is an adjustment going on. We are working on it as part of the expert group on future skills needs. We are doing work on the pharmaceutical side. We are looking at ICT skills. We are also looking at modern methods of construction, which are fundamentally underpinned by digitalisation. That is an adjustment that is going on. Overall, to have come through last year with 56,000 additional people at work in the economy is a good performance.
Albert Dolan (Galway East, Fianna Fail)
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Have there been any conversations between Mr. Hughes' Department and the Department of Social Protection about considering the potential need for some form of universal basic income in the event that AI were to really shift the jobs landscape over the next 12 to 24 months?
Mr. Declan Hughes:
As the Minister, Deputy Burke, has stated previously, we do get redundancy notifications. We know they are at an elevated level and we know there is significant churn in the labour market. This is something we work on continuously with our colleagues in the Department of Social Protection. We also ensure that we have protections in place for people, particularly on the frictional side where they are between jobs and are looking at jobs. Overall, we have seen that those who are losing their jobs are actually in demand in other areas. Mr. Tobin can tell us whether that is coming up in the expert group.
Mr. Gary Tobin:
Yes. I have two points that may help answer the question. We published research last year in conjunction with the Department of Finance called Artificial Intelligence: Friend or Foe? We were trying to come up with a catchy title. Specifically, based on the analysis we did - we were using IMF data and methodology - we estimated that about 53% of employment in Ireland is likely to be exposed to AI. That is very high, but it reflects the sectors Ireland is involved in, namely ICT, pharmaceuticals and high-tech. We estimate that about 33% of that employment is in occupations where AI will be complementary. AI will help a lot of people who are currently in employment. It will make them more productive. That actually means they could ultimately earn more. If we think about the medical sector, for example, that is an amazing area in which AI could be really positive. We estimate that there could be 30% of jobs where there is some risk of substitution. There is definitely a subset that is potentially more at risk.
Overall, we need to take a balanced view to AI because there is huge potential for productivity gains in the Irish economy from using AI. Ultimately, as the population ages and we have more people not in work, we will need those who are in work to be more productive in order to pay the taxes for all of our pensions and social welfare. Potentially, AI has a hugely positive role to play.
Paul Donnelly (Dublin West, Sinn Fein)
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I thank everyone for coming in this afternoon. Some of my questions have already been answered, particularly those relating to the AI issue. Given that rents are going to increase from next weekend, have companies been in touch with the Department and talked to it about the housing crisis and how difficult it is for them to employ workers on foot of the housing crisis?
Mr. Declan Hughes:
As stated, housing is something we have been working with our colleagues in the Department of housing and right across Government for the past number of years. Our specific focus is on two issues. One is the supply side and trying to ensure that we have adequate provision and that we meet the needs of the labour market. The Department can add real value on the construction side is in the area of home construction. As I mentioned, our focus is on modern methods of construction and working with construction companies-----
Paul Donnelly (Dublin West, Sinn Fein)
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I am sorry to interrupt, but have the people the Department has been engaging with raised housing and increasing rents as concerns?
Mr. Declan Hughes:
Not the specific issue the Deputy mentioned. They have raised the general issue of housing supply, ensuring that we deliver on Housing for All targets and the strategy and commitments that are there and that we continue to make progress on ramping up the supply. Those are the key issues.
Paul Donnelly (Dublin West, Sinn Fein)
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That is interesting, because the companies I have been involved with have all mentioned housing as a key issue for employment. When they are creating jobs, their concern is that they will not be able to sustain those jobs into the future because there will not be enough housing.
Mr. Declan Hughes:
Absolutely, and that is why credibility and delivery are so important. They have to see it being delivered right across the country, not just in the main cities but also across the regions. We can clearly articulate that it is ramping up each year, that we are getting through the planning process and that we are getting deployment. We have new providers and operators in the market, and they are scaling up. That is what we are seeing with some of the larger construction companies. They are moving more off site. The have are more efficient and leaner construction sites, and the companies are actually delivering on time. There is also a need to maintain prices as well. We have seen a degree of stabilisation on the part of some of the larger providers in terms of the quota companies. I will not name them. In the context of trying to stabilise the market price while continuing to increase-----
Paul Donnelly (Dublin West, Sinn Fein)
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The market price for a new house in Dublin was announced as €500,000 last week. I want to move to another question.
Given the international issues regarding tariffs, the instability of geopolitics at the moment and the fact that there has always been a very strong focus on foreign direct investment, do witnesses think it is time we looked at the energy, time, money and commitment that are put into foreign direct investment as opposed to indigenous businesses?
Mr. Declan Hughes:
It is important to document that over the past 20 years the indigenous enterprise base has been radically transformed. The top ten Irish multinational companies employ over 400,000 people. These are global businesses that have built up over the past 20 years. They have their headquarters and their key activities here. They are significant employers. That is 30% to 40% higher than the foreign direct investment employment in the country. That is the first point.
The second point is that we are continuously focusing on growing more of those companies and helping them to expand into international markets while keeping their core activities here. In many cases, that means doing acquisitions abroad and putting people on the ground abroad. Hence, we have our 41 Enterprise Ireland offices around the world and are opening new offices in the interests of helping these companies to grow globally.
We have also better aligned the pipeline between the local enterprise offices and Enterprise Ireland, with a target of having an additional 1,000 exporters in the period to 2030. That is a key objective for Enterprise Ireland. Many of those will come from the local enterprise offices and through ensuring that we have the continuous transition of 100 to 150 a year transitioning from microenterprise through the Enterprise Ireland pipeline. Local enterprise offices will also work with a range of companies that will not go international but that will service local markets and continue to innovate, be productive, etc. There are two pillars. On the FDI side, it is really important for keeping us at the technology front-----
Paul Donnelly (Dublin West, Sinn Fein)
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I am not saying it is exclusive; I am just saying this is important.
Mr. Declan Hughes:
We have maintained it at about 10% or 11% of employment, so it is not that the FDI is outweighing anything, either on the employment side or at local level, in terms of building up risk. You may see it on the export side, and it is probably overweighted there in the context of the corporation tax. As for the mix in the economy, IDA Ireland is about 10% of employment, Enterprise Ireland is similarly about 10% and tourism is about 10%. We are trying to keep that balanced portfolio but, the IDA Ireland piece is still an important part.
Paul Donnelly (Dublin West, Sinn Fein)
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I thank Mr. Hughes very much. I really appreciate that.
My final question is about something I read at the weekend that I am really concerned about. On 23 June 2025, the Department took part in a closed-door and strictly confidential meeting with a lobbying group representing arms manufacturers Lockheed Martin, Saab and KNDS. I suppose-----
James O'Connor (Cork East, Fianna Fail)
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Deputy, with respect to today's agenda, we are here to-----
James O'Connor (Cork East, Fianna Fail)
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No, Deputy, I am speaking. I will listen to anybody's case. We are discussing the Department's strategy between 2025-----
Paul Donnelly (Dublin West, Sinn Fein)
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This is very important in terms of the strategy.
James O'Connor (Cork East, Fianna Fail)
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Yes, but it is not relevant to today's agenda.
Paul Donnelly (Dublin West, Sinn Fein)
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I think it is important. If we have a Department-----
Paul Donnelly (Dublin West, Sinn Fein)
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-----which is engaging with arms manufacturers-----
James O'Connor (Cork East, Fianna Fail)
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No. There is a format-----
Paul Donnelly (Dublin West, Sinn Fein)
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-----and that is part of a strategy it has going forward-----
Paul Donnelly (Dublin West, Sinn Fein)
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-----it needs to be in the strategy, and we need to know that. The people need to know that. It is extremely important.
Paul Donnelly (Dublin West, Sinn Fein)
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If that is what the Department is doing, it is really important in the context of the development of the strategy it will have going forward. It is also important that the people are aware of that.
James O'Connor (Cork East, Fianna Fail)
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Hang on a second. Spare me the sanctimonious lecturing. I am chairing the committee in an impartial way, and I am just trying to make a valid point.
James O'Connor (Cork East, Fianna Fail)
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Hang on a second-----
James O'Connor (Cork East, Fianna Fail)
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No, hang on. Excuse me-----
Paul Donnelly (Dublin West, Sinn Fein)
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-----we got two and a half minutes for the Deputies over there-----
James O'Connor (Cork East, Fianna Fail)
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Without interruption, please.
Paul Donnelly (Dublin West, Sinn Fein)
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-----so if they want to talk about time being up, then talk about time being up for the Chair as well.
James O'Connor (Cork East, Fianna Fail)
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The point I am making is that this is not on today's agenda. The Deputy could ask about this matter by means of a parliamentary question. He could also table a Topical Issue.
Paul Donnelly (Dublin West, Sinn Fein)
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Sorry, but the agenda is about the future-----
James O'Connor (Cork East, Fianna Fail)
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The Deputy could raise it as an oral parliamentary question.
Paul Donnelly (Dublin West, Sinn Fein)
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-----plans of the Department.
James O'Connor (Cork East, Fianna Fail)
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The Deputy is asking the witnesses to outline details of meetings they had on a specific issue-----
Paul Donnelly (Dublin West, Sinn Fein)
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These are the most senior people we have in the Department. If they do not know that this meeting took place or if they do not know about this strategy in relation to arms manufacturers, I would be really concerned. I would be even more concerned than I am today.
James O'Connor (Cork East, Fianna Fail)
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Yes, but it is not relevant to the schedule and today's business.
Paul Donnelly (Dublin West, Sinn Fein)
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Well, I would contend-----
James O'Connor (Cork East, Fianna Fail)
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Will the Deputy raise the matter in any of the other appropriate formats to which I have referred?
Paul Donnelly (Dublin West, Sinn Fein)
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What did Senator Fitzpatrick say?
Mary Fitzpatrick (Fianna Fail)
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I just want to know if the Chair is ruling the question out of order.
James O'Connor (Cork East, Fianna Fail)
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Yes. It is not specific to today. As I said - and I want to be crystal clear - Deputy Donnelly can table a parliamentary question, an oral parliamentary question-----
Paul Donnelly (Dublin West, Sinn Fein)
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This is an opportunity for us-----
Paul Donnelly (Dublin West, Sinn Fein)
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-----to ask the Department about its future strategy. There was a meeting held with arms manufacturers. Is this part of the strategy of the Department moving forward?
James O'Connor (Cork East, Fianna Fail)
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The question is of critical importance. However, is this appropriate forum at which to raise it?
James O'Connor (Cork East, Fianna Fail)
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No, it is not. And I think the Deputy knows that.
Paul Donnelly (Dublin West, Sinn Fein)
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No, I do not. I would not ask the question if I did.
James O'Connor (Cork East, Fianna Fail)
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In any event, the Deputy's time is up. We move to the next speaker, who is Senator Fitzpatrick.
Mary Fitzpatrick (Fianna Fail)
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The integrity of the communications and the information we exchange at this committee is incredibly important. There were two items of information put on the record of this committee in respect of which I would like to have the record corrected. It is unfortunate that Deputy Donnelly has left, but the first relates to his statement that rents will increase from next weekend. That is just factually incorrect, and the record should reflect that. Second, he asserted that the current market price for a house in Dublin city is €500,000. Again, that is incorrect.
James O'Connor (Cork East, Fianna Fail)
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Can I just interrupt for a second? I want to take a moment. The Deputy has left the meeting.
Mary Fitzpatrick (Fianna Fail)
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Just for the record of the committee, I would like those two items to be corrected because they are factually incorrect. That is important.
Mary Fitzpatrick (Fianna Fail)
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Fake news is all too common.
I thank the officials for being here and for the work they are doing, which is really important. There are two elements in particular I would like to speak to them about in the five or so minutes I have. The first relates to labour costs. It is excellent Government moved so efficiently to establish the cost of business advisory forum. I am interested in what actions the forum is taking in respect of costs, especially labour costs. The latter account for approximately 80% of SMEs' costs. We will not have any SMEs if they are not competitive. They are not going to be sustainable if they are not competitive. We do not compare well with Europe in the context of labour costs. Average EU labour costs are in the region of 60%. Having them up at 80% is like a 20% tariff on our competitiveness. What actions is the forum taking in that regard?
Mr. Declan Hughes:
I might just let my colleague who looks after the forum talk about that. On labour costs specifically, the Government has already taken a range of measures in terms of sick pay, the living wage and the work on the minimum wage that falls to the Low Pay Commission. As was the case last year, the commission will be reporting to the Minister and the Government in the summer. It is the primary forum for the discussion relating to labour costs. Mr. Tobin might address the cost of doing business more generally.
Mr. Gary Tobin:
There was a lengthy discussion, almost from the first meeting of the cost of business forum, on the issue of labour costs. Businesses and trade unions are represented on that forum. As has been highlighted, there are also the Labour Employer Economic Forum, which is run through the Department of the Taoiseach, and the Low Pay Commission. There was quite a lot of discussion about the matter and there were concerns that there should be no overlap or competence creep to cover areas in respect of which social partners are separately engaged. After that discussion, it was agreed that the cost of business forum would focus on non labour-related costs of business. That is why it is focusing on costs relating to energy, insurance, legal, regulation and so on. There was a general view that, understandably, the focus tends to be on labour costs, so the cost of business forum is trying to focus on everything else, if that makes sense.
Mary Fitzpatrick (Fianna Fail)
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It does. From a management perspective, it makes absolute sense.
For the next two minutes, I would like to hear from the officials about youth unemployment. It is great, and they are right, that our employment rates are very high and that we are at almost full employment right across the country. However, youth unemployment stands at 10%, which is very worrying. This is a matter which, I am sure, the Department has already identified and is focusing on. Will the officials share the actions that are being taken to address youth unemployment.
Ms Yvonne White:
When you look at employment for 15- to 24-year-olds, the ratio has been relatively unchanged for the past decade. The vast majority of people who are unemployed are those whose levels of education are at secondary level or below. Thus the first focus for Government is ensuring we continue to keep people in the education system. Our colleagues in the Department of further and higher education are obviously at the coalface in relation to all of that. It is about making sure we have new pathways to work, including the apprenticeship routes and all of that.
If we do not get people into the workforce at those early stages, we will have a longer term issue. We are very conscious that is a group we need to continue to focus on. As others have said, we are conscious too of the impact of overall job uncertainty and AI on jobs. The new national AI strategy looks at supporting displaced workers and upskilling, and it is that upskilling that will make the most impact. We have our expert group on future skills needs. We work very closely with the Department of Social Protection on activation. We work with the Department of Further and Higher Education, Research, Innovation and Science on skills. Now we will have our new national skills observatory under the AI work we are doing. We are also looking at how we can accelerate job creation generally, making sure that youth, in particular, benefits from those things. Our focus as a Department is more on employment than unemployment, but we are constantly working with all those other Departments to make sure there is a joined up approach to that.
Mary Fitzpatrick (Fianna Fail)
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That is great. I presume then that the Department is working directly with the Department of education, informing it of the need to prepare young people exiting school to be enabled to prepare for the employment experience.
Paul Gogarty (Dublin Mid West, Independent)
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I could ask so many questions but I have so little time. I will not talk about the dangers of AI or the pressure on the grid. They are both important and they need to be looked at, as do youth employment and diversity. I will talk about a couple of things as regards how the Department is operating in a holistic way. I have raised this before but I do not think a stick is being used enough. As regards software companies and the knowledge-intensive FDI the Department is targeting and trying to get into the country, 20% of the employees of these companies come from elsewhere in the EU or from outside the EU. These are high-paid jobs. The software companies want to come to Dublin. In my constituency we have seen some estates where 80% to 90% of these well-paid individuals are able to bid on housing, so nurses, doctors and gardaí are dependent on the affordable housing scheme, basically. There is a shortage of housing, as we know. The Government is trying to rezone half of my constituency, which is a separate issue in terms of a lack of facilities, infrastructure, etc. In terms of policy, should we not at this stage be telling software companies to go to Tullamore, Mullingar and Athlone to set up hubs where people will work remotely for two or three days of the week and can work from home? There are a whole lot of towns feeding into these areas that have above-shop units and derelict buildings unoccupied and where there are croí cónaithe grants. Equally, for people in the western suburbs, in Kildare, Meath, Lucan and Rathcoole, who might want to work in these companies, if it is going to take an hour and a half to get into Dublin in many cases, why not have a 40- to 50-minute trip westwards to free up the congestion? It is that point of having a holistic policy. If we are bringing in companies that want to employ more workers but some of those workers come from abroad, we are adding to the population, so let us look at it in a more strategic, holistic way. That is my first reference point or question.
My second relates to AI. More and more data centres, as the witnesses know, tend to provide low employment, except during their construction. The maintenance is quite low. The jobs that are coming are not in security or keeping things ticking over. They are electrician jobs. Someone working in a data centre could be getting up to €100,000. We still have not looked at the more vocational types of work, which is why I am raising it again, not just in terms of training plumbers or electricians in general, which we need in this country, but also because the advent of these types of companies requires highly skilled people in those fields.
Lastly, as to where we are investing, there is a deficit in investment in wave technology and tidal technology in this country and the related port infrastructure to find deep-water ports where we could harness wind energy, wave energy on the west coast and tidal energy on the east coast and in the Shannon Estuary. If we are looking at this from a holistic point of view, the Department should be interacting with other Departments and should already have a plan in place. I know there was supposed to be a single point of contact, which has not really been appointed yet, but have there been any discussions with other Departments on moving this issue on, employing more people, spreading out the grid, creating redundancy and preparing stuff for private wires, as my colleague Deputy Heneghan has often mentioned?
I am thinking slightly outside the box here, but this does relate to industrial policy and employment policy. Is the Department thinking of these things? Will it go down with a heavy stick and say to the software companies we have lots of people here but Dublin is now out of bounds because we are over-congested and we need to go elsewhere?
Mr. Declan Hughes:
I thank the Deputy for his question. I think we are very much at one on many of those points. The IDA's focus is, first, on winning jobs and investment for Ireland and, second, on trying to incentivise and to support them going all around the country. I mentioned that 57% to 60% of the projects last year were outside of Dublin, which is really important. It is part of the strategic objective. I mentioned the success of Cork but I can also see it in the projects over the past six months that are going to Donegal, Kildare and Galway. These are significant investments not just in medtech but also in AI and the ICT area. In Kerry, for example, there is Astellas, and there was €120 million in investment last year in Louth, Limerick, etc. Part of it involves communication, and ensuring that these are good and attractive places to live and work and that there is sufficient supply of energy, water and housing infrastructure. Also, we see - and this is why the link with tourism is so important now - that we can support the development of place that we are working on. These are good places to live.
On the point about a joined-up approach, we have just completed a review of remote working, remote working policy, etc. That has been considered by the Government and will hopefully be published shortly. It is broadly positive, but what we are finding is that we need to increase awareness of opportunities for people to live and work outside of the main cities.
Similarly, on the holistic piece, the Deputy mentioned the Shannon Estuary task force report. We developed that report two or three years ago. We have also since had our Powering Prosperity offshore wind action plan. The most recent piece, which we published in January, was pretty much exactly what the Deputy said in terms of the development of green parks around the country, such that you can match where energy supply will come from offshore wind, landing in the country and then developing industrial parks, not only for new green industries but also for ICT-intensive industries and high-paying jobs.
Data centres are one part of the overall ecosystem in terms of the development of our ICT industry. They are significant employers in their own right, including on the construction side, and the companies that have gone into the construction are now doing those internationally. The Deputy will have seen the most recent announcement, I think this morning, in Dundalk, with a few hundred jobs and significant investment in engineering and the equipment that is needed by data centres. We see that as an opportunity for the future.
There was a meeting of the clearing house group on offshore wind. Our focus right across the Government is working with other Departments to ensure we can develop the single permitting regime the Deputy talks about. That would be a requirement under the Net-Zero Industry Act at European level. For our responsibility, the Department of public expenditure has also set up a new regulatory and licensing team, which will look at how we streamline licensing and permitting more generally in order that we can get those investment projects happening more quickly. The regional dimension of that is hugely important, and that is where we see the real opportunity from an industrial development perspective, in that we have the infrastructure, the companies and the jobs and they are attractive places to live and work. We will continue to work with-----
Paul Gogarty (Dublin Mid West, Independent)
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I will come back in during the second round.
George Lawlor (Wexford, Labour)
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I thank the Secretary General and his team for coming along. We have heard some fine statistics and figures in relation to full employment and the fact that we have full employment in all regions.
I am very familiar with the local enterprise office, LEO, in Wexford, which is one of the top performing LEOs in the country.
In relation to remote working, a Bill on this issue that I proposed last week was rejected by the Government for a number of reasons, despite the fact that it had a lot of safeguards for employers. I was in Brussels over the weekend and came back yesterday. Remote working in many of the member nations of the EU is very popular and is being pursued. The latest country is Cyprus, where a similar Bill was passed by its Parliament. In terms of productivity and work-life balance, while I know the Department is constrained by Government policy, what is its attitude to remote working in the context of the levels of congestion we face, climate change and the rental market in our major cities? This latter issue means people who would like to work in companies based in the city centre cannot afford to reside there. They are forced to travel for many hours a week. I call them stolen hours. Productivity and work-life balance are then affected.
In relation to tourism, there was some disparity last year in the statistics being delivered by the Central Statistics Office, CSO, and the apparent statistics on the ground. Is there an explanation for that? At one stage, the CSO was saying much lower numbers of tourists were coming, but the industry was not reporting that? Is there any indication of how that disparity may have come about?
Mr. Declan Hughes:
I will take the question on remote working and then I will ask my colleague Ms White to come in on it, because we have just completed the consultation process on it. More generally, from a departmental perspective, we are very positive about remote working. We see it as hugely beneficial from the perspective of work-life balance and enhancing productivity in certain areas. It is an aspect we keep under continuous review, particularly from the perspective of business needs, which change depending on where the priorities are, in terms of different policies, etc. There is a need for agility and an ability for everybody to bail in when it is needed. I think we broadly work on that basis. Perhaps Ms White would like to comment.
Ms Yvonne White:
There are 956,000 people working remotely, which is an enormous number. It is more than double the number doing so before the pandemic. Remote working is not going away. It is very much supported by the Government’s strategy. There is a difference between how it was developed during the pandemic and how we build it for the long term. We are going to see a suite of new supportive developments coming through from the Government in the next couple of weeks and months. The National Economic and Social Council, NESC, is doing a very interesting report on exactly the point the Deputy made on productivity, both the business and work perspectives on that. The Government will respond to that.
The rural strategy is coming through and there is more work being done on remote hubs to allow people to work remotely so they do not have to commute, as the Deputy mentioned. We have just done our review of the right to request remote working. We were one of the first countries in the EU to have that right. It is new legislation, which has only been in place for two years. We are finding a number of things. One is that it is almost universally liked. We got Ipsos to do this research, so it is not just the Department saying this. Employers are finding that the legislation did not create the administrative burden they thought it would. Between 94% and 96% of workers have got some or all of what they looked for from that process, which is really positive.
We are also finding that 48% of people are not even aware of that right. Obviously, the more people are aware of a right, the more they can invoke it and benefit from it. We are anxious to do more work to build that awareness. In all that we do here, we are trying to manage the balance between giving workers what they need and managing productivity and the balance in business, so that we are not dictating how businesses develop, including how they develop their contracts. We are trying to ensure we are giving them the supports and evidence they need, while not compelling them, other than providing the right to request remote working.
George Lawlor (Wexford, Labour)
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The thrust of the Bill I proposed was reasonably practical, with safeguards for employers in cases where remote working compromised GDPR or confidentiality or where the location in which the person was working was not suitable. It included a number of safeguards, yet it was rejected. We are seeing a creeping back towards bringing people back to the office. Last year, 16,000 people returned to the office. I am told that Enterprise Ireland is asking its workers to return to the office in greater numbers, despite it being out in Ringsend. I think that is where it is.
George Lawlor (Wexford, Labour)
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Yes, sorry. It is very difficult to get to and access, and congestion is bad, yet one of our leading enterprise agencies is bringing people back into the office.
Ms Yvonne White:
There is an upturn in the figures for the first time. It is hard to say it is a trend, though, because it is the first time there has been an uptick. In all honesty, we have seen the growth in employment in sectors like construction, education and transportation which would not traditionally lend themselves to remote working. The Deputy is right, though. More can be done to improve the processes surrounding how people ask for remote working and how employers engage with them in relation to it. We are anxious to work with the Workplace Relations Commission, WRC, to develop a code of practice, which will be statutory rather than a set of guidelines, so the social partners will engage with each other and find a way that works for business and employers and remote work works for everyone.
George Lawlor (Wexford, Labour)
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I thank Ms White. I asked another question.
Mr. Declan Hughes:
As regards the public and private sectors, as with businesses, agencies and offices have to work through their business need. If they are serving clients or working with the public, etc., the question is whether that is a face-to-face engagement. They have to have the flexibility and agility to do that.
I will ask Ms Coyne to come in on the next matter. When the tourism section came across to the Department early last year, there were lots of different views. The industry was quite positive in terms of what it was seeing because there was a mix of international and domestic tourists. What we were monitoring from the CSO and the international side might have been slightly different. They worked through it last year and there is a high level of consistency now.
Ms Fiona Coyne:
I am happy to take the question from this point. The issue was really about different methodologies and tracking different things. There has been a long process of reviewing the monthly statistics that have come in. Happily, at the end of the year, for the last five months of the year, all the statistics were up. In fact, it was one of the best Decembers we have ever had, with a 30% increase in tourists.
George Lawlor (Wexford, Labour)
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Was that purely due to a change in methodology?
Ms Fiona Coyne:
The CSO did not change its methodology. The difference between the figures was a methodology issue. In order to get to the bottom of what the methodology question should be and to improve the statistics in future, we are setting up a data group under the oversight of the new policy statement. We hope to have that chaired by the CSO and to bring all the parties together. To be fair, there has been very good engagement and monthly briefings with the industry and the tourism agencies. We are also looking to second some statisticians into Fáilte Ireland so we can get a good overview of tourism statistics and not just visitor numbers. That is the plan moving forward, which we hope will leave the industry, ourselves and the agencies aligned on the numbers being used.
George Lawlor (Wexford, Labour)
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Good stuff. I thank Ms Coyne.
Aubrey McCarthy (Independent)
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I thank the witnesses for being here. That we have full employment is a really good news story. As a child, I remember when the economy was in a bad state and there was high unemployment. I am involved in business and enterprise, but I also have a social enterprise hat. I work with people through an approved housing body called Tiglin. It tries to get people who come from a background of addiction, mental health issues, etc., back into the workplace and education.
Reference was made to there being near full employment and record participation rates, but youth unemployment remains stubbornly high. Certain cohorts remain outside the labour market. We have to be careful that we do not mistake full employment for full inclusion. There are people who are excluded from the labour market. I meet many of them at our Lighthouse Homeless Café. There is a skills mismatch, there is social exclusion, etc. Does this strategy tackle any of those barriers? Is it in the Department's remit to prevent those cohorts of people from being locked out?
Mr. Declan Hughes:
I thank the Deputy for the question. He will see in our strategy that we have a focus on two areas, which I referred to in my opening remarks. One was participation and how we increase it, particularly for those on the margins, working with the Department of Rural and Community Development, the Department of equality and others, especially around human rights and the disability strategy.
We have a particular role to play there in terms of access to employment opportunities, working with employers and working with other partners on the training and activation area, which Ms White mentioned, as well as on the anti-poverty strategy, which the Department of Social Protection is very much focused on. I would say it is a whole-of-government approach now in terms of ensuring that we have increased participation, activation and access to the labour market.
The Senator mentioned the social enterprise side. That is an area we see as particularly important. The Government published recently, I think in 2024, the social enterprise strategy under the Department of rural and community affairs. Through the local enterprise offices, we can provide assistance to social enterprises where they are trading and looking to make a profit, they are not necessarily on the contract side, and they want to develop the business. That is an opportunity to provide trading businesses and enterprise for those who may be on the margins, are looking to get back into the labour force or have particular sectoral areas.
Aubrey McCarthy (Independent)
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Yesterday I was in Croke Park where Rethink Ireland had the Driving Social Enterprise event. There were different social enterprises from all over the country. They were game-changers. There was one group called Bounce Back Recycling, from a Traveller cohort. They recycle mattresses. The way they had it all laid out, it is a phenomenal social enterprise employing 24. It was something that was not in my line of sight before.
Ms Yvonne White:
As part of the EU Presidency, we are going to have a particular focus on this, especially on people with disabilities and getting them into employment, but also quality jobs and what that means for everybody. Some of that is about rights and some of it is about access. We have more to do on all of this. The Future Forty report, which the Department of Finance came out with a couple of months ago, is really interesting on all of that. It says we need to activate everybody we can in the workplace, we need all of their skills now and we need to do more on that. We need to upskill far more because of the changing world of work. Even if we activate and upskill everybody, we are still going to need migrants with particular skills for our economy up to 2040. We have a lot more to do on all of those fronts and we are all actively working on them.
Aubrey McCarthy (Independent)
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There was a recent advertising campaign which was covered in the newspapers yesterday. It was a big billboard saying, "You built Sydney, so now come home and build Ireland." One question was asked as to how many people have responded to that campaign. There was no research; we do not know. Regarding FDI, when the Department is asking for first-time investors, how are we going to measure that?
Mr. Declan Hughes:
Exactly. There are various skill areas where we have needs, including healthcare, construction and so on. Last year, construction employment increased by 15,000. Some of that was work permits, so it was about 2,000 from around the world. More of those are coming from school leavers, people coming back into the labour market and then also, it is to be hoped, a proportion coming back from abroad. They now see with the Government's capital investment plan of €250 billion for the next ten years that there is certainty in relation to careers. That is the key piece. This is not stop-start now. We have a plan, and that is the key message for building houses, grid, water, roads and other parts of infrastructure. There are attractive careers here. They are at the cutting edge. What was the other part of the Senator's question?
Aubrey McCarthy (Independent)
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How do we evaluate whether it is paying off? The Department is looking for FDI investors. How is it measuring all that?
Mr. Declan Hughes:
A key measure is their economic impact. We look at multiple objectives. What is their economic impact in terms of the number of people they will employ, what are the wage rates, and what are they spending in terms of goods and services? My colleague Mr. Newham might have the figures, but it is about €40 billion per annum directly into the economy, with 312,000 employed in IDA-supported companies. They are really good metrics. We also assess them on technology and innovation and whether they are at the cutting edge in terms of new technologies, for example, selling gene therapies, artificial intelligence, cybersecurity or other areas. IDA Ireland assesses each project individually. We also look at their regional impact, which is a key policy objective we support.
Aubrey McCarthy (Independent)
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The only thing is that the underlying cost base in Ireland, certainly for SMEs, is highly uncompetitive. I am thinking of energy and insurance costs and so on. It is an uphill battle regarding attractiveness.
Mr. Declan Hughes:
It is an uphill battle and that is why we have to compete at the higher end on innovation, cutting edge technologies and higher productivity areas. There are certain activities that we just are not competitive for and that is the reality of our base. There is a continuous churn within the economy but particularly at regional level. I can think of specific areas in the north west where, ten or 15 years ago, we would have had maybe 5,000 or 7,000 people working in the textile industry. That industry has moved off and now we have a similar number in ICT, insurance and back office activities. It is incredible to see the wage rates and careers that are available. It is a transformation of the sector, the industry and the FDI base. That is why we are continually focusing on where those opportunities are and ensuring we have continual reskilling and upskilling in the population. We must also provide opportunities for those who are coming through from the technological universities and the third level system in order that we have matching between supply and demand. As Ms White mentioned, we have had joint management boards with the Department of further and higher education to ensure we are aligned with where the jobs and opportunities of the future are but also that we have the skills and talent pipeline. Mr. Tobin has the figures on the evaluation side.
Mr. Gary Tobin:
We do two key surveys every year. For the annual business survey of economic impact, ABSE, we survey all the IDA Ireland and EI client companies. We also do an annual employment survey. Between those surveys, we canvass between 4,000 and 6,000 companies every year. As Mr. Hughes was saying, the annual employment survey shows that total agency employment between EI and IDA Ireland companies was 554,000 last year. There were big increases in the chemicals sector, up 1,200 jobs, financial services were up significantly, along with medical devices. We saw there was a tick downwards in the ICT and computer services sector. That is how we try to monitor how the different sectors are performing each year.
James O'Connor (Cork East, Fianna Fail)
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We are obliged to suspend briefly to allow our witnesses and the committee staff members to take a couple of minutes' break and use the facilities.
Tony McCormack (Offaly, Fianna Fail)
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I welcome the Secretary General, Mr. Hughes, and all of his team. I thank him for his answers. Everything he has said has been very forthright. I found the answers very interesting.
Ireland is entering this strategy period from a position of strength, as was said earlier, with full employment and strong investment. There has been great investment from Enterprise Ireland, from the IDA last year, and good work by the local enterprise offices right across the country. Our local enterprise office in Offaly, led by Orla Martin, is a fantastic enterprise office that has created many jobs across the midlands throughout its tenure. The real test is whether we can translate that strength into improved competitiveness, stronger indigenous enterprises and sustainable long-term growth across all regions.
We have a very strong foreign direct investment landscape in this country, and if it was not for it, we would have been in the last recession a lot longer. Furthermore, we would not have as many people working in our economy. We have to accept that foreign investment with open arms and really look after it because it is such a vital part when we think about the 212,400 working in that area. There is a multiplier the IDA uses a lot of the time that says, conservatively, those jobs contribute to four further jobs in the economy. On that basis it is well over 1.5 million jobs. That is over half the working population that are either directly or indirectly employed by foreign direct investment companies. It is very important.
My remit is as spokesperson for Fianna Fáil for small and medium-sized enterprises and retail. We talked briefly earlier today about the tsunami that has hit small and medium-sized enterprises with the 40% increase in the minimum wage over a short period of time, the five sick leave days, the auto-enrolment and the cost of doing business. SMEs continue to face sustained cost pressures, particularly energy, insurance and regulatory compliance. What concrete, measurable reductions in operating costs will small businesses see in 2026 as a direct result of this strategy?
Mr. Declan Hughes:
I thank the Deputy. I agree, especially in terms of the performance of the local enterprise office in Offaly. It is a very strong and very good local enterprise office. Indeed, there is a huge amount happening in Offaly at the moment which is very positive, particularly looking to the future, future digital technologies, ICT, etc., and all the transformation that is happening around just transition. There are other initiatives on the tourism side we are delighted to have in addition to future tech.
In relation to managing costs, that has been a key focus for the Minister for Enterprise, Tourism and Employment, Deputy Burke, the Department and right across the Government.
We are doing everything that we can and going through every cost area. There were a number of initiatives in the labour cost area which we had previously. On the ICOB scheme we had over €400 million administered just in the last two years. That was helping with the increase in terms of the minimum wage but also energy costs, which, to use the Deputy's term, was a tsunami, but it was a very significant increase - a double-digit increase for a short period. Due to international developments, the war in Ukraine, etc., all of Europe was hit with that. Supporting companies was the legitimate and right thing to do. We have seen those costs come down somewhat and more moderation.
We have also been working with companies on their internal productivity improvement, reskilling, innovation and helping businesses on the adjustment, as well as significant investment more generally in terms of improvements for the retail sector, including for the place. We are working with local authorities on issues such as retail crime and in other areas. Then there is digitalisation and digital grants, etc. All of that has been well received by the retail sector. There was a very high take-up.
Four or five years ago we were thinking that the retail sector would be hit by e-commerce and all of those factors, but the retail sector has adapted. Covid helped in terms of click-and-collect and everything else. Similarly with energy grants, we had a really strong campaign with our energy efficiency grants for companies, in particular for microenterprises, administered through the local enterprise offices. The target for last year was 600. These are easily accessible and are for the replacement of equipment, whether it is in a retail unit, a café or whatever, so that it is more energy efficient. We have seen significant cost savings for businesses in those areas. It is about stabilising and holding labour cost increases and keeping them on track with the rest of the economy. The Low Pay Commission is very conscious of that in terms of the deferment of the living wage, while still also maintaining progress on the minimum wage is important. Mr. Tobin might want to come in again on the cost of doing business and its focus on the cost elements.
Tony McCormack (Offaly, Fianna Fail)
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I heard Mr. Tobin speak about the cost of doing business earlier so I do not need him to respond. Time is short and I would like to move on to other topics.
Mr. Declan Hughes:
I will just mention two. One was on insurance costs in particular. The insurance task force met this morning. It is trying to drive down costs, get the new book of quantum agreed, and open up the market to new entrants. We do see that, where new players are coming in on the insurance side, we are getting better value and better offerings.
Similarly on the energy side, we are very much working on helping businesses. One of the things that came out of the examination of the cost of doing business is that a huge amount of switching is happening with households. We do not have the same level of switching and moving between providers in the business sector, in particular SMEs. They really should spend the time working on what they can do to reduce their costs. We just launched our new toolkit, which is the climate toolkit for SMEs, which they can go on, develop an account and see how they can reduce their own costs on a progressive basis.
Tony McCormack (Offaly, Fianna Fail)
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I will stay with retail in this question. Most town centres have been ripped apart. We are now talking about enterprise, tourism and employment. Tourism is in the Department's remit as well. We need to make town centres attractive for us to bring people in, whether it be tourism from Ireland or from outside, be that the UK, America or wherever. What is in the strategy to help and give supports? As we already said, retail is doing a lot better now because of the supports that were given previously. The ones that are gone are gone and we need to bring more life back into town centres. The mix of shops or retail outlets that are in town centres are the same in a lot of cases. They are not the kind of mix that we would like to have. What supports are in the strategy or where does Mr. Hughes see retail going on our high streets in the future?
Mr. Declan Hughes:
Just to say, we have a retail forum for a number of years. Up to now it has met three to four times a year. The Minister of State, Deputy Dillon, is responsible for the retail sector. He is very engaged in it and he is very ambitious for it. It transforms the offering and includes digitalisation. The sector must avail of the range of supports that are available in terms of whether it is on digital, energy, management development, etc. Why it makes sense for tourism to be part of the Department is that we have a joined-up approach to thinking about town centres as places to live, work and shop. We work very closely with the local authorities. One of the things we see as really helpful is that we had an initiative a couple of years ago, town centre first, and we had a template for where all the parties would come together and ask what the experience looks like – part of the experience economy of a town centre. We are working with Fáilte Ireland, which has 23 what we call destination experience development plans in place. It will be doing another ten this year. Essentially, all town centres and cities will have such a plan based on what is that experience. That puts it back to working with the local authorities on where investment is needed, for example, for parking, retail, tourism and amenities? What is the look and feel for living but also for tourists to come in? That is a new element to the strategy, which we see as really important. We work with local authorities to bring the investment in behind that.
Tony McCormack (Offaly, Fianna Fail)
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What does Mr. Hughes see as being the timeframe for something like this?
Mr. Declan Hughes:
We have 23 done and another ten will be done this year. If I am right, there are another six or ten to be done into next year. That is not stopping us working with the local authorities.
The other part I would mention is the regional enterprise plans, which again have a focus on the region and what investment is needed both from the local authority side, the tourism side and then EI and the IDA.
We also want town centres to be places that are attractive for remote working, start-ups etc., so the work on innovation hubs is really important. We have 400 digital hubs-remote working hubs around the country. We work with about 100 of them for start-ups and we have programmes with LEOs and enterprise. They are part of that mix.
Linda Nelson Murray (Fine Gael)
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I apologise as I was not in for the start of the meeting, but I have read the introductory statements. I was at the education committee, which sits at the same time.
I love the whole enterprise thing. As Deputy McCormack knows, I very often sing off the same sheet as him.
I will start with goal No. 3, which is to strengthen tourism and support Irish-based enterprise to start scaling and competing internationally. I will make a couple of points on it. The last point in that regard is to support tourism enterprises to be market-ready in a competitive environment. I am really glad that tourism is now in the Department of enterprise because it is a sector that I represented in the past and one I am heavily involved in. I would like if the Department first identified all the tourism enterprises before it started working with them to be market-ready because a whole cohort out there is being completely left behind. I will explain what I mean. I am sure the witnesses would count Center Parcs and Tayto Park as a tourism enterprise. If someone is on a holiday, including as a domestic tourist, in either place and it starts to absolutely lash rain, they will ask, "What are we going to do now?" They will head into a bowling alley, a soft play centre, a bounce park or a trampoline park. They are not included in any tourism strategy. They are not identified by Fáilte Ireland as being in the sector.
I will outline to the witnesses how important it is when you are not a stakeholder and you are not involved. It is when it comes to going through a process like Covid. That sector was completely forgotten about. It was the last sector to get opened. It was very hard to push for the grants at the time. Mr. Hughes mentioned the success of the ICOB grant, which was just great for businesses. A lot of the businesses in the leisure sector serve food to 400 to 600 people every weekend, be it lasagne, curry, chicken nuggets or chips and burgers. They were serving so many but they could not get in there under hospitality because another part of the business was soft play or bowling. No matter how many times we pleaded with the Department to consider this sector for the ICOB grant, we could not get it across the line. They missed out on that. Only yesterday on the WhatsApp group I am on, I could see someone asking if there is any chance they could be considered to get any part of the ICOB. It is such a pity they were left out, which is the case consistently.
Mr. Hughes mentioned delivering on the cost of business advisory forum and conducting a comprehensive review of costs for SMEs. I will back up what Deputy McCormack said about the pressure businesses are under in terms of wages, insurance costs, energy costs and auto-enrolment. They are under so much pressure. As I am seen as somebody with a business voice, I hear an awful lot of it. I am delighted that the insurance advisory subgroup met this morning. I heard Mr. Hughes say that there is a lot more competition coming into the market. Unless things have changed in the past week, there has not been a new entrant into the market for public liability in ten years. These small businesses in the leisure sphere cannot even dream of moving from their current insurance providers. The sector I am involved in, which is Play, Activity and Leisure Ireland, PALI, thankfully has a group scheme. However, if anybody decided to come out of that group scheme there would be no insurance there for them. We have done a huge amount of work on insurance, and I have been involved in that. I am glad of it, but I want to make sure that we do not lose ourselves and think that things are sorted insurance wise because they are definitely not.
On the tourism side, the Department should not forget about the tourism leisure industry. It is forgotten about at the moment. I would love to work with the Department to bring it in under tourism so it can be considered when it comes to grant funding, or even to have its voice around the table and discuss ICOB. From the costs of doing business side, has the Department identified anything it thinks we are going to do in budget 2027 to help small businesses?
Mr. Declan Hughes:
I know there has been quite a bit of engagement over the years. I thank the Senator for that and for what she does for those businesses and enterprises. We work with between 45,000 and 50,000 SMEs in the tourism and tourism-related sector. Everybody thinks about which part they play but we see it as part of an ecosystem and part of the experience as I said earlier. The Senator articulated that well in terms of what the destination experience is for families or domestic and international tourists. On the insurance side, the Injuries Resolution Board has been doing a series of sectoral reviews. They have been helpful in putting the spotlight on the incidence of claims, etc. That is part of trying to ensure we have good information going out to the market with regard to the opportunity and what the risk is-----
Linda Nelson Murray (Fine Gael)
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To try to get more competition in.
Linda Nelson Murray (Fine Gael)
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We have seen new entrants come in on house and motor insurance. There is just nothing on public liability.
Mr. Declan Hughes:
Public liability and employer liability are two areas we are particularly focused on. More generally on tourism I turn to companies and enterprises. All businesses, whatever stage they are at, can access the supports of the local enterprise office. That is important in ensuring they have good business strategy, that businesses are clear in the context of financing and what they are doing with digital. Fáilte Ireland has a specific programme for digital. I am nearly sure that covers some of the activities as well.
Linda Nelson Murray (Fine Gael)
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That is only when you are outside and it is sunny. If you are outside on a boat, you are covered under Fáilte Ireland. If it rains and you come inside and go bowling or something else you are not covered under Fáilte Ireland.
Linda Nelson Murray (Fine Gael)
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-----that the one thing Mr. Hughes takes from what I am saying today is that the Department makes sure we look at those and include them in tourism because they are left out there.
Mr. Declan Hughes:
Absolutely, it has to be the whole experience. If it is not Fáilte Ireland, it is certainly from the local enterprise office. I am sure many of the Senator's members have availed of or should be availing of the trading online vouchers. There are also the energy efficiency grants. The ICOB grant scheme is closed.
Linda Nelson Murray (Fine Gael)
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They could not get the ICOB grant even though they serve all that food and are technically hospitality. They are not able to get it. It is just to look at that sector and take that as a standard.
Mr. Declan Hughes:
Maybe there is something we could do specifically. My colleague Ms Hynes is with the national enterprise hub. We have all of the supports from all of the agencies. There is a question of ensuring that, whatever sector they are from, they can see the supports available there. That is our ambition. You can log on and do that. The budget for local enterprise offices is almost €50 million this year. Across all the schemes we can come back with what is available.
James O'Connor (Cork East, Fianna Fail)
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That concludes the first round of questioning. I now open the floor for the second round.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I have a question on a policy or strategy matter in relation to Government supporting highly successful companies. However, if those companies decide to exit the Irish market, what is our policy? I will give an example. I am dealing with a live case at the moment. It is Merck in Arklow, County Wicklow. It has 100 staff. I know them personally. Some of them have been there for decades and others have started in the past few years. Some of the lads who have been there for the past few years are up to their eyeballs in mortgages and college fees. Merck is going to exit in 2028. At the moment it is being dragged through the WRC. I am not asking for comment on the individual case, but you have a company that is turning over €65 billion and showed a profit last year of over €6 billion and is dragging staff through the Workplace Relations Commission. I give credit to the Minister. Within 48 hours he was in Arklow talking to the staff. I give credit to the State agencies. Is there a Government policy regarding successful companies that are leaving? That Arklow facility alone received €1.3 million in funding and Merck in Ireland got over €20 million in funding. Can I have an answer on that? Mr. Hughes does not have to reply about the individual company. It is about the general policy.
Mr. Declan Hughes:
I cannot respond on the individual company. It is no doubt a client of IDA Ireland, which is working with it. We have so many companies in Ireland which have been here for 50, 60 and 70 years. The longevity is important and is a huge asset to the country. A key part of those companies staying in Ireland is that we continuously work with them to bring in new mandates and activities. That builds resilience for the longer term. That is why we have so many multinationals that have been here for decades. That is something we work continuously with senior management on. We have a range of programmes. We have subsidiary leadership programmes run through the IMI and the universities. That is the first point. It is something we put a particular focus on with IDA Ireland. It is engaging continuously and there are so many trade missions. We are continuously going out to headquarters to look for new mandates. Ministers will relay that. The second part is that there are times when companies make decisions about consolidation, changing or about a product that is maybe plant-specific. A real risk for us is a plant that is product-specific, and the market is gone, is no longer profitable or is moving. I gave Donegal as an earlier example of where that change happens. We do not want that to happen. It should not be happening because we should be on the front foot in making sure we are working with the companies. However, it does happen and those are legitimate decisions for the company. The first piece is always about the employees and how we ensure they are protected and get their statutory plus and whatever else. Good employers will want to do that. If there are disputes, the institutions are available from an industrial relations perspective.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I return to the specifics of the question. Is there a clawback for successful companies?
Mr. Declan Hughes:
There is, absolutely. Every grant agreement and every payment made is conditioned on performance. If there is an employment grant, it is that the people are employed and are sustained for five or seven years. If there is a training grant, it is that the training happens. If there is a R and D grant, it is that it happens, and if there is a capital investment, it is that it happens. There are also clawbacks. If a grant is made and the performance does not match what was contracted, that is followed up by IDA Ireland because that is a contract knowingly entered into on both sides.
It does actually follow up on a continuous basis.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I have a separate question.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I want to ask my last question, on hospitality, so as to keep to time. The development of hotels in rural Ireland is an issue in which I have a great personal interest. It is not financially viable to build a hotel in rural Ireland. So many hotels have been lost to IPAS centres, etc. Have we a strategy to support in this regard? I know developers who want to build hotels but cannot afford to do so because there is no real return on investment.
Mr. Declan Hughes:
One of the key commitments in the NewERA strategy for this year is to develop an accommodation strategy. As we develop products around the country in terms of visitor attractions and try to achieve our target of 5% to 7% per annum, we will be considering that. The aim is not just to have people visit an attraction or a visitor experience while passing through the midlands or other areas, but to have them stay. Part of this is working on the supply-and-demand side. It is about saying that while we will have the visitor numbers at public assets like big houses and castles, we actually want visitors to stay, and that there is accommodation available. We know hotels are coming through a pretty good period.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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The number of beds is the issue.
Mr. Declan Hughes:
They are investable. In the midlands, for example, we have €60 million for just transition, including for walkways and all the various attractions. Things will be completely different, but that makes hotels investable propositions. One can have extensions to existing facilities or upgrades, but we also want those to be investable. We will be working on that. My colleague Ms Coyne will be leading on that this year.
Brian Brennan (Wicklow-Wexford, Fine Gael)
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I thank the witnesses.
Tony McCormack (Offaly, Fianna Fail)
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One of the questions I was going to come to was on hotels, which Deputy Brennan asked about. Previously, hotels got built around the country because there were special tax rates and designations. I do not believe that is going to happen. I realise Mr. Hughes says there is a business opportunity but I do not believe there is the demand in question. At the moment, it is cheaper to buy a hotel than to build one because of all the regulatory changes and so on. To be able to build and to have balanced growth in tourism right around the country, we will have to introduce some sort of tax break or support.
Tony McCormack (Offaly, Fianna Fail)
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Ultimately, everything is on the table because the Department’s job is to develop the country through enterprise and tourism.
Tony McCormack (Offaly, Fianna Fail)
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Hotels are being built in Dublin because the volume is there, as is the potential profit.
Tony McCormack (Offaly, Fianna Fail)
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It is a chicken-and-egg situation down the country because, to get visitors, you need the hotels, but to get the hotels you need the people.
Tony McCormack (Offaly, Fianna Fail)
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Mr. Hughes is right about the midlands. It is going to be the capital of the country very soon.
Mr. Declan Hughes:
That is where all the money is going. Just transition will be really helpful in terms of what we are doing on slow tourism and all the new areas of opportunity. I am referring to where people want to linger and do not necessarily want to spend all their time going to the coasts. Ireland's Hidden Heartlands has been extended to Fermanagh, which creates opportunities.
Tony McCormack (Offaly, Fianna Fail)
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I thank Mr. Hughes and everyone else for their contributions.
James O'Connor (Cork East, Fianna Fail)
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I will make a final statement. We spoke about this matter with the Secretary General the day he met us privately in room 2. It was our first formal meeting, as such. We were speaking about strategy. Tourism is now under the remit of Mr. Hughes’s Department. We have to remember locations like Youghal. I always raise this because it is prudent to do so. I met the Youghal socioeconomic development group recently. The Minister for justice met it last week.
Consider what towns that were told to focus on tourism because IDA Ireland was not coming went through all of a sudden as a consequence of international humanitarian circumstances, the flow of refugees, the war in Ukraine, and subsequently the huge increase in numbers applying for asylum in Ireland. Youghal lost 60% of its tourist accommodation owing to the sale of one hotel in the town. Towns like Youghal need urgent assistance. The short-term letting Bill, which we did not really discuss today, is very problematic. I am concerned about it as Chair of this committee. The majority of us here are very concerned about the planning implications for people in short-term letting and how many people might be driven out of it. Obviously, there is a need for housing. Ironically, it was Deputy Donnelly, who left earlier, who raised the housing need when we last met on the matter. There is not necessarily a majority view here but the prevailing view is that we are quite concerned about the planning impact, which I am aware is under the Department of local government. The Departments are sharing responsibility in respect of the passage of the legislation.
I thank the witnesses for all the work they do and for being here. It was a very informative discussion. I thank the Secretary General, Mr. Declan Hughes, and his colleagues for their contributions. I wish them well with the implementation of the strategy and look forward to working with the Department on many of these issues and on upcoming legislation.
The select committee will meet at 12.30 p.m. next Wednesday, 4 March 2026 to consider the Revised Estimates for public services for 2026 – Vote 32, Enterprise, Tourism and Employment, with the Minister for Enterprise, Tourism and Employment, Deputy Peter Burke. The select committee is scheduled to consider Committee Stage of the Industrial Relations (Provisions in Respect of Pension Entitlements of Retired Workers) Bill 2021, No. 15 of 2021, a Private Members' Bill, on Wednesday, 25 March 2026.
The joint committee will next meet at 2.15 p.m. on Tuesday, 3 March 2026, when we will meet in private session. We will next meet in public session at 12.30 p.m. on Wednesday, 15 April 2026.