Conor Lenihan (Dublin South West, Fianna Fail)

The National Recovery Plan 2011-2014 is a strategy for economic recovery with the aim of restoring stability to the public finances, improving Ireland's cost competitiveness and stimulating enterprise growth and job creation. Reducing the budget deficit is necessary but it will not, by itself, solve the economic difficulties. Continued export growth will protect and expand high-value employment and stimulate domestically traded sectors of the economy.

Ireland has regained competitiveness over the past two years as wages have adjusted and costs have fallen, helping to price ourselves back into global markets. The frontloading of structural reforms to increase competitiveness and to improve labour market flexibility is central to the strategy outlined in the national recovery plan. Building on the progress already achieved by this Government, it includes extensive measures to underpin our ability to compete in international markets by reducing the costs facing business, but also by increasing competition in sheltered sectors of the economy and supporting sectoral enterprise policies.

I am glad to say that there is now clear evidence that wage and other costs are adjusting throughout the economy, and are expected to continue improving relative to trading partners. The fall in the live register in each of the last three months is a welcome sign that these changes are beginning to bear fruit. The latest research shows that a reduction in the national minimum wage will reduce the cost of doing business and support an increase in employment in the medium term.

It is clear that there are significant labour market bottlenecks that we have to tackle. These include the access to opportunities for up-skilling and re-skilling, especially in the case of those who were employed up until recently in sectors that have been most affected by the impact of the recession; the challenge - in the face of tight fiscal conditions - of targeting cost-effective activation programmes to those most at risk of losing contact with the labour market and of drifting into long term unemployment; and developing a more effective and streamlined response to the needs of the unemployed and removing disincentives to participation on training, education and employment opportunities.

In order to target better our activation measures, the national employment action plan,or NEAP, supports activation measures for job seekers and provides for a systematic engagement of the employment services with unemployed people. It has been in operation since 1998 and is currently being re-invigorated to ensure deeper engagement with those at risk of long-term unemployment. The Minister for Social Protection has set out his plans for the rationalisation of the NEAP towards greater capacity and efficiency. These measures will include more frequent and intense intervention with priority clients; the development of a profiling and case management system in 2011; sanctions in the case of unemployed persons on the live register unreasonably refusing to co-operate with the plan and-or with appropriate training, education and employment interventions; and changes to provision for one parent families to alter the passive nature of income maintenance that currently prevails.

In 2009, job search support measures were put in place to double the capacity to cater for the rise in referrals from the national employment action plan, increasing the annual referral capacity to 154,000 persons in 2010, which is almost double the referral capacity that existed in 2008. Despite the difficult fiscal situation, the number of training and employment programmes for the unemployed has increased significantly from 66,000 in 2008 to over 160,000 in 2010.

The labour market activation fund aims to assist in the creation of training and education provision for the specific priority groups among the unemployed. A total of 60 organisations have been successful in securing funding. These organisations encompass the private, not-for-profit and public sectors and are providing approximately 12,000 training places for priority groups of the unemployed at a cost of €32 million.

In addition to the training and employment provision for the unemployed, the Government has indicated in the national recovery plan and in the 2011 budget that it will be introducing several new measures to strengthen the framework of labour market activation supports for the unemployed. These will include a skills development and internship programme with provision for up to 5,000 places; an expansion of the number of placements available on the work placement programme from the current figure of 2,000 to 5,000 in 2011; and a new community work placement scheme, which will provide up to 5,000 additional places in the community and voluntary sector.

An estimated 166,000 learners, including the unemployed, will benefit from full-time and part-time further education opportunities. Almost 1,800 unemployed people were supported to embark on part-time undergraduate and postgraduate programmes from September 2009 in areas that support the goals of the Smart Economy. Over 70% of these were between six and 12 months on the live register and 55% indicated that their motivation for undertaking the programme was to enhance their career prospects.

The labour activation measures I have outlined are being complemented by measures to generate employment opportunities, including the extension of the employer job PRSI incentive scheme to the end of 2011 and by the transformation of the business expansion scheme into a new employment and investment incentive. The family income supplement scheme provides income support to families with children that have employees on low earnings. The payment effectively preserves the incentive to take up or remain in employment in circumstances where the employees might only be marginally better off than if he or she was claiming other social welfare payments.

The FIS applies equally to one and two-parent families. The payment amount is based on a fixed proportion of the gap between the assessable income - net of income taxes and social contributions - of the household and prescribed FIS income thresholds. Currently this fixed proportion is 60% of the difference between the weekly income and the income threshold for the family size. As these thresholds are linked with the number of dependent children in a household, FIS provides an important policy instrument in reducing child poverty in working households, as well as improving incentives to work. FIS was paid to 25,963 families last year, in respect of 55,724 children.

By implementing these measures over the past two years, we have radically transformed the nature of our skills-based economy. All is not lost and many of the people who previously worked in our boom economy are now getting the opportunity to re-skill, retrain and to re-educate themselves. This is happening in line with a situation where the economy is expected to grow in the future. It is no accident that we have responded swiftly to this challenge, doubling the number of places in a very short timeframe. The minimum wage reduction has to be seen in the context of making ourselves more lean, more competitive and more ready to adopt the export led growth that will grow with greater intensity once we climb out of our current situation. I thank Members opposite for their patience.

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