Dáil debates

Wednesday, 18 February 2009

1:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 37: To ask the Minister for Finance his views on whether there could be 400,000 people or more on the live register by the end of 2009 and that living standards are set to fall by 10% to 12%; if he proposes fiscal incentives or other measures to get people back to work; and if he will make a statement on the matter. [6514/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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The Taoiseach's statement regarding prospects for the live register and for living standards are consistent with the projections contained in the addendum to the stability programme update, published in early January.

In this document, projections for the public finances, and in particular for public expenditure, are based on the assumption that the numbers on the live register reach 400,000 by the end of this year. The January figures, which have become available since the addendum was published, show a seasonally-adjusted 326,000 persons on the live register. This figure points to a considerable worsening of labour market conditions and is of concern and my Department is monitoring the position closely.

In terms of the potential decline in economic activity, the addendum forecast that GNP would decline by a cumulative 8.5% over the period from 2008 to 2010. Taking into account likely population developments over this period, living standards — as measured by GNP per capita — could decline by between 10% and 12%. Ireland is clearly in a very difficult economic environment, but so is virtually every other country in the developed world. This is a global recession the like of which has not been seen for a very long time.

The Deputy will appreciate that the potential for substantial new fiscal incentives is severely limited by current budgetary circumstances and by the pressures on our existing delivery systems due to the surge in unemployment numbers. Notwithstanding these constraints, a range of measures have been taken to help the unemployed back to work. This is done through the expansion and re-orientation of training, education and employment programmes and by ensuring that the greatest possible number of the unemployed are facilitated and incentivised to engage in these programmes within existing resource constraints.

I understand that FÁS and the Department of Social and Family Affairs are working together so they can respond quickly to the rising live register numbers. In this context, I understand the following initiatives are being driven by FÁS: the establishment of a training fund to enable a speedy response to identified re-training needs for low skilled and redundant craft workers; gearing up its employment services further to provide increased capacity for expected increased referrals from the live register; providing a range of certified, short, flexible, modular programmes designed to upskill redundant workers so they can enhance their prospects of securing employment. A number of programmes are already in place and the frequency and range of these will be expanded in the coming months.

Additional information not given on the floor of the House.

Also, in response to the construction slowdown, I am informed that FÁS is focusing on providing retraining opportunities for redundant construction workers in emerging areas within the construction sector and that these include retraining in the following areas: the installation of sustainable technologies, environmental activity and compliance and regulatory work. I understand that FÁS will also assist individuals in seeking employment abroad in construction in other EU countries and that FÁS has held European construction jobs fairs for employers from other EU countries.

In addition, the Government is maintaining capital investment at very high levels, which in itself is a short-term stimulus to the economy and to employment. This investment will also help raise the future productive capacity of the economy. More generally, the priority being given by this Government to stabilising and bringing sustainability to the public finances is an essential part of its strategy to provide the basis for long-term investment and job creation in this country. The framework for sustainable economic renewal, which was published in December, also provides a context and strategy within which employment can be sustained in the medium term.

In light of what I have outlined, it is clear that despite severely constrained resources, the Government is giving the highest priority to ensuring that those losing their jobs are best placed to secure future employment as soon as possible, while supporting those in employment to the maximum extent possible.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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I thank the Minister for his reply. Does he agree that the situation outlined by the Taoiseach in his speech of 400,000 people being unemployed later this year is a doomsday scenario for those 400,000 people and their families? I asked the Minister whether he has any proposals to incentivise businesses and individuals to get back to work and in particular whether the Minister has any proposals on job retention? Does the Minister agree with the Taoiseach's figures that every additional 100,000 people on the live register will cost approximately €2 billion? Is the Minister aware that in a more recent statement IBEC suggested that the figures could climb above 400,000 towards 500,000? In the event of these figures being reached do we require emergency measures to retain jobs such as job-sharing? Where people have lost jobs, does the Minister have full confidence in FÁS as the lead agency to get people back to work, to education and to training in view of the difficulties that have emerged in recent times in this agency?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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Certainly I agree with Deputy Burton that this is a very serious position. With regard to the IBEC figures I know that recent forecasts in the Department predict a figure of 400,000 for the end of this year. In January, the seasonally adjusted number was 326,000 and while there was a large increase in the month, some of this was anticipated given sectoral developments in recent months. January's figure was disappointing. However, it must be borne in mind that this is just one month. If the January monthly rate of increase continued, the year end figure would be significantly higher. At this stage we do not expect this as the reactivation and retraining programmes begin to have their desired effects as we go through the year.

With regard to the question of protecting existing jobs, the Cabinet committee on economic recovery is examining this issue. FÁS has a vital role to play and the Government is working to ensure FÁS refocuses its energies from training those already in the workforce to training those who find themselves outside it.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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In the retail sector and in business parks in our large cities and towns, many firms are literally hanging on by their fingernails. The January sales are over. Valentine's day, which showed a very small consumer upsurge, is also over. We have a long road to St. Patrick's day and then Easter. I fear for many firms because there has been no action — or perhaps there has — from the Government to address the difficulties caused by people going to shop in the North. The Minister spoke about a Cabinet sub-committee on a strategy to retain jobs. Is it addressing the issue of people marching with their feet and shopping in the North?

In his earlier reply, the Minister suggested that the Exchequer figures for tax receipts in the first two weeks of February are a little better than those for January. The overall figure he gave for the year was a profile of €37 billion. I have not seen a report from any analyst who expects this figure to be realised. Does the Minister have a revised figure for tax receipts? Is it €34 billion or €33 billion?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As I indicated in reply to Deputy Bruton, the final figures on the particular heads and monthly breakdown will be given later this month. With regard to the question of shopping in Northern Ireland, I never suggested it was unpatriotic to shop in Northern Ireland. However, I did suggest that it means a substantial loss to the taxpayer in this country and if people are concerned about reductions in services and other reductions which the Government must implement they should bear this in mind when they purchase goods and services in Northern Ireland. It is a free country and a free market within the European Union and I know Deputy Burton is well aware of this. The Government is examining methods of ensuring that the sterling differential, which should make products originating in the sterling zone cheaper in this jurisdiction, can be passed on to the consumer.