Dáil debates
Wednesday, 31 January 2007
Priority Questions
Economic Competitiveness.
Arthur Morgan (Louth, Sinn Fein)
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Question 124: To ask the Minister for Enterprise, Trade and Employment if he will initiate an assessment of sectors and geographic regions expected to experience job losses in the next five years; and if he will put in place specific funding to upskill and re-train vulnerable workers in advance of the expected job losses. [2882/07]
Micheál Martin (Cork South Central, Fianna Fail)
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The continued availability of a well-educated, highly skilled and flexible workforce will be critical to ensuring the continued competitiveness of the economy and to enhancing social inclusion. Our labour market situation is favourable with forecasted 2006 employment growth of 4.4% and an unemployment rate of 4.4%. Total employment now exceeds 2 million for the first time in the history of the State.
The National Development Plan 2007-2013, published last week, recognises that continued investment in education, training and upskilling will be crucial in maintaining Ireland's successful economic performance. Investment in human capital will have an important role in promoting the development and competitiveness of the regions over the period of the plan.
Under the plan, €7.7 billion will be invested in training and skills development. This includes some €2.8 billion which will be invested in training for people in employment, new skills for those affected by industrial restructuring, expansion and enlargement of the apprenticeship system and school leavers. Almost €4.9 billion will be provided for training and employment to promote opportunities for a wide range of groups, including the unemployed, people with disabilities, lone parents and Travellers.
A key input into determining investment priorities in the coming years will be the findings of the expert group on future skills needs report, entitled Towards a National Skills Strategy and due for publication shortly.
In addition to supporting companies and workers at the point where redundancies are announced, FÁS and Enterprise Ireland are open to early intervention in supporting the training and upskilling of workers where the initiative is taken by the industry or sector. A recent practical example of an early special intervention, which offers a potentially useful model for the future, was one recently taken by the paper print and packaging industry. In the manufacturing sector generally, the establishment of the high level manufacturing group, as provided for in Towards 2016, will include among its deliberations the challenge of supporting the upskilling of workers in that sector. The members of that group have been appointed.
Arthur Morgan (Louth, Sinn Fein)
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I thank the Minister for his reply, although most of the information it contained is already known to us. I accept his point that efforts are being made to enhance ongoing activity in upskilling workers and enhancing educational output. Given the outflow of manufacturing jobs in particular, however, my request is that the Minister initiate an assessment by sector and geographical region to identify and target those that are most vulnerable. Targeted upskilling of workers in these sectors should then be provided. A fruitful exercise to begin this initiative would be to talk to some of the companies involved. Such an approach might yield a significant amount of information.
We must act in the face of various announcements of redundancies, the selling off of jobs or whatever it is called. We should at least be grateful that we are on the other side of the task force phase where numerous groups talked a lot but did nothing. Action must now be taken. The economy is doing well but there remains a continuous flow of jobs leaving the economy. Each of these job losses has a major impact, particularly in rural areas. The consequences are huge not only for the worker but for his or her family and community. An initiative such as I have outlined would mitigate the impact of such losses.
Micheál Martin (Cork South Central, Fianna Fail)
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Such action is already being taken. We have a broad idea of the sectors that are in difficulty. A recent Forfás report pointed out the decline in certain traditional areas of manufacturing, including textiles, leather and electrical machinery. On the other hand, however, we have made gains in engineering, medical devices and pharmaceuticals. Those areas in which jobs are being lost are generally characterised by low utilisation of technology, high density of labour and corresponding difficulties in terms of cost base.
The One Step Up initiative, which we launched in 2004 through FÁS, is an attempt to do what Deputy Morgan suggests, that is, provide upskilling to the existing workforce. Some €40 million was provided under this scheme in 2004 and it was expanded in 2005 and 2006. In addition, the Skillnets programme, an industry-led upskilling initiative, has €62 million to spend between now and 2009 on upskilling and training within companies and particular sectors. Companies within a range of diverse sectors have drawn down funding under the Skillnets scheme and the feedback is positive.
The national skills strategy, which we are close to finalising, will involve a ramping up of efforts in terms of upskilling the existing workforce. This is the significant challenge facing us in the coming decade. We must move the emphasis from acting only when people become unemployed to providing training before that happens. I do not disagree with the fundamental point Deputy Morgan is making.
Arthur Morgan (Louth, Sinn Fein)
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We are close in our position. I acknowledge that some investment has been made. All I ask is that it be more focused and that the assessment I suggest should take place. I have read the Forfás report. My point is that efforts in this area must be more specific. Recent job losses include 140 in Waterford, 85 in Rooskey, County Roscommon, 30 in north Donegal and 92 in Youghal. There is also the prospect of job losses at Motorola in Cork, although that company has at least given some notice which may allow for some degree of upskilling of staff.
I ask the Minister that specific investment be made in vulnerable sectors of the economy. A detailed assessment must be made to pinpoint those sectors accurately.
Micheál Martin (Cork South Central, Fianna Fail)
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Deputy Morgan might list some of the job gains in the Dundalk-Drogheda area in the past six to nine months. The Minister for Foreign Affairs, Deputy Dermot Ahern, is busy doing so. Deputy Morgan might make a similar acknowledgement.
For the information of the House, I wish to clarify a statement I made earlier. The Taoiseach's letter to Deputy Rabbitte has not yet issued.
Ruairi Quinn (Dublin South East, Labour)
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I am devastated and surprised.
Pat Carey (Dublin North West, Fianna Fail)
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I am anxious to accommodate the two remaining Deputies who have Priority Questions. We are running out of time.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 125: To ask the Minister for Enterprise, Trade and Employment if he has a view on the impact on Irish business of an increase in Government and regulator-controlled charges of 55.5% between the end of 2001 and October 2006; and if he will make a statement on the matter. [2753/07]
Micheál Martin (Cork South Central, Fianna Fail)
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I emphasise the important priority I attach to business costs and the broader issue of competitiveness. There has been an increase in business costs in areas where statutory and independent regulators have to respond to international price movements, for example, in energy markets. These have undoubtedly contributed to increased business costs, but these increases are also a burden on all economies. More broadly-based increases in world commodity prices have also increased raw material and component costs for business.
I wrote to the chairman of the Commission on Energy Regulation emphasising the competitiveness implications of large energy price increases at a time when international prices were falling. The CER agreed to my proposal for a forum, including the enterprise development agencies, at which the importance of competitiveness could be discussed with the CER in the context of its analysis of price changes.
According to the Department of Finance, over the long term the Government has contributed very little to inflation. On average in the ten years to 2006, it is estimated that indirect taxation added an average of approximately 0.5% a year to the CPI.
In the mix of business input costs there will always be variability in costs. Irish enterprises cannot be insulated from external-driven price pressures. What we can do, however, is maintain active oversight of the competitiveness agenda and internal pressure points. For example, in the last three budgets there was no increase in indirect taxation apart from the recent health-driven change to tobacco duty. These budgets were designed to limit inflationary tendencies by not increasing indirect taxation.
We are also making sure that the economy consistently maintains a level of relative competitiveness that encourages firms to invest, expand and create employment. While we cannot be a low cost economy like India or China, what we are doing — and doing well — is managing our competitiveness so that we sustain growth and prosperity.
I am not complacent about cost competitiveness. We must concentrate on areas that can be influenced domestically. It must be recognised that tackling the cost challenges requires a response from all sections of society and not only from Government. Consequently under Towards 2016, we are re-establishing an anti-inflation group to proactively address areas where costs pressures diverge from those of our competitors.
On the topic of business costs, I would also like to mention the National Competitiveness Council's recently published Statement on the Costs of Doing Business in Ireland. Looking at overall business costs in key sectors, the analysis points to Irish cities being on average 15% more cost competitive than the average of other high income cities. The research highlights that Irish cities, besides Dublin, show the greatest cost competitiveness compared with others that were looked at in medical technologies, engineering and food processing. These are important sectors for economic development and the report underlines the competitive position of a large part of our manufacturing sector. I am confident that our broadest competitive position will remain robust and particularly in those sectors of the economy which will drive economic growth and employment.
3:00 am
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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What the Minister said is absolute nonsense. Inflation has nothing to do with international trends but everything to do with domestic policy. Price increases in the domestic services sector in this country are twice what they are elsewhere in Europe. The increase in inflation is not due to higher energy prices. Energy price inflation has declined sharply since 2006 from 14.1% in the first quarter to 1.1% in the final quarter.
The Minister mentioned the cost of doing business in Ireland and in its cities. Will he consider the cost comparison between Dublin and Manchester in 2006? For waste disposal, Dublin was 100% dearer; for electricity, it was 50% dearer; for gas, it was 20% dearer; for insurance, it was 40% dearer; for IT services, it was 160% dearer; and for legal services, it was 35% dearer. It is nonsense for the Minister to say everything is great and that we have no difficulty with cost competitiveness and for the Government to abdicate its responsibility for these costs.
Will the Minister indicate the measures he will take to ensure we reverse that trend and ensure Government policy is such that there is not a repeat of the 55.5% net increase in the various services I outlined relative to the rest of the European Union?
Micheál Martin (Cork South Central, Fianna Fail)
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The Central Statistics Office does not publish separate data covering Government and regulator-controlled charges. We checked widely and the only source we can get for the 55.5% net increase is a Fine Gael press release of 14 December which is on the Fine Gael website.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The National Competitiveness Council is under the remit of the Minister's Department.
Pat Carey (Dublin North West, Fianna Fail)
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I ask the Deputy to allow the Minister to reply.
Micheál Martin (Cork South Central, Fianna Fail)
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I respectfully suggest that website is not the most robust source or reference I check for figures of that kind. The National Competitiveness Council in its report produced the data and the assessment on the cost competitiveness of Irish cities; I did not do it. I clearly excluded Dublin in my reply. I referred to Cork, Galway, Limerick and Waterford and these are important.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister mentioned all the cities.
Micheál Martin (Cork South Central, Fianna Fail)
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Given our regionalisation policy, when an analysis is done independently of Government and of everybody else in this House, it is important to put on record——
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I put it on the record——
Micheál Martin (Cork South Central, Fianna Fail)
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——that, compared to other developed cities across Europe, some of our cities are significantly better in this respect. That is all I was doing and it is important to record that.
I agree and have articulated for a long time that we need to become more competitive in our domestic economy. When we took a decision in the retail sector to do that in terms of the removal of the groceries order, Fine Gael again reverted to type, played to the gallery and opposed that measure in the House.
Shane McEntee (Meath, Fine Gael)
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We know the prices of groceries now.
Micheál Martin (Cork South Central, Fianna Fail)
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The track record of the Deputy's party is that people talk a good talk but when it comes to taking on some sheltered sectors of the economy, which is the key to making our domestic sector more competitive, its members pull back and revert to the old electoral political game.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Fianna Fáil does that.
Micheál Martin (Cork South Central, Fianna Fail)
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Fine Gael does not have much credibility in terms of resolving some of the pressures in the domestic economy that have given rise to some of the cost issues, which we need to move to address. There is no question that costs are a fundamental issue in any developed economy. We are conscious of that and it is the reason the Minister for Finance, Deputy Cowen, took a clear premeditated decision in the last three budgets not to facilitate any increases and not to increase indirect taxation in any way.
Ruairi Quinn (Dublin South East, Labour)
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The problem is indirect service charges.
Pat Carey (Dublin North West, Fianna Fail)
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The 30 minutes allocated for priority questions have expired but I am prepared to allow some latitude.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I acknowledge what the Acting Chairman is trying to achieve and I have no difficulty with it. In respect of all the sheltered and regulated sectors the Minister spoke about, it is interesting he did not dispute the figures I gave. That is because he has failed to do anything to address issues in regard to waste, electricity, gas, IT and legal services, although I acknowledge there has been an improvement in terms of a reduction in insurance costs. According to the Central Bank, inflation is an increasing risk to the economy's export competitiveness with the re-emergence of an inflation differential with the rest of the euro area. Does the Minister disagree with the views expressed in several reports by the National Competitiveness Council, the Department of Finance and the Central Bank or does he believe everything is okay?
Pat Carey (Dublin North West, Fianna Fail)
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I ask the Minister to be brief in his reply.
Micheál Martin (Cork South Central, Fianna Fail)
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In terms of the anti-inflation position, as part of the social partnership process, we are establishing an anti-inflation group to deal with inflationary pressures on the economy, but the broad macro statistics for Ireland are strong. We had a very high economic growth rate in 2006 and that is also predicted for 2007. In terms of a quality of life index and the UN human development index, we are doing particularly well and are ranked very high on it. We are ranked eighth in the OECD group and third on the National Competitiveness Council's benchmark. In terms of pro-employment taxation policy, we are number two behind South Korea in regard to a pro-employment taxation policy in the context of personal taxation and corporate taxation. In terms of ease of doing business and an education system that is most responsive to the needs of enterprise and industry, we are number one. The Deputy can go through indices and there is quite a range of positive indices. Insurance costs in terms of motor and household premia have significantly decreased because of the establishment of the Personal Injuries Assessment Board and direct action taken by the Government. We acknowledge there are other pressures on the economy and it is incorrect of the Deputy to dismiss the external impact over a period of oil and energy pricing.
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The figures speak for themselves.
Micheál Martin (Cork South Central, Fianna Fail)
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It flies in the face of reality. We will continue to focus on making sure we can take steps to maintain our cost competitiveness. It is a challenge——
Phil Hogan (Carlow-Kilkenny, Fine Gael)
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It is a major challenge.
Micheál Martin (Cork South Central, Fianna Fail)
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——in an economy that is no longer at the stage it was ten years ago. It is much more advanced and developed. We will never have an economy like China or India, therefore, we must play to our strengths and work on certain sectors.