John Gerard Hanafin (Fianna Fail)

In researching the Fourth Report of the Expert Group on Future Skills Needs, I came across an interesting quote from an eminent philosopher, Yogi Berra. Notwithstanding his fine credentials, the quotation reads "the future ain't what it used to be." This is all too true in the context of where the Irish economy will be going in future years. We have come from an agrarian to a manufacturing assembly economy, and are now heading towards a knowledge-based economy.

Much of the wealth created in Ireland over the past few decades can be attributed to the success of Fianna Fáil policies adopted in the 1960s to ensure education and opportunities for manufacturing. The emphasis was there, and we used our contacts abroad to bring manufacturing to this country by putting in place a business and taxation-friendly environment. We were extremely successful at attracting foreign investment, and we still attract 29% of all foreign direct investment from the United States.

The future will be different, taking us on a road for which this report provides the signposts. It points to upskilling towards a knowledge-based economy. We were no doubt helped by remittances from Europe in the Structural Funds and the CAP, but by and large the results we have seen in our economy have come from the education and skills people have used and were inspired to take up during the 1960s. Now we have a different challenge, and skills will be Ireland's most sustainable competitive advantage in the years ahead. Skills are pivotal to Ireland's future economic prosperity and will be fundamental to our successful transition to a knowledge economy.

The latest report from the EGFSN reviews the future skill requirements of seven key sectors of the Irish economy. It concentrates on areas of high added value such as ICT, biotechnology, financial services and food processing. It also investigates the importance of generic skills for organisational success. Much of Ireland's economic progress over the past two decades can be attributed to the ready availability of people with the right skills. The essence of the knowledge economy towards which Ireland is moving will be the creation and commercial exploitation of intellectual property. That will require the highest level of skills across a full range of disciplines, from science and technology to business and law.

We are outlining the fact that Ireland is among the wealthiest countries in Europe. It is a wealthy economy, and that is reflected in our wage rates. Not just in the European Union, but in Europe in general, it is up there with Norway and Switzerland and very wealthy countries to which we looked in the past. Our success is in part responsible for our non-competitiveness. I support the report's principal findings. Notwithstanding the downturn in the economy and the increase in the rate of unemployment, the workforce continued to expand during 2002, although at a reduced rate of 1%. The problems in recruitment and staff retention, which were ubiquitous in the economy at the time of the third report from the EGFSN in July 2001, have largely disappeared and the labour market has loosened appreciably. Sectors as diverse as biotechnology, engineering and logistics are primed for significant growth from 2005 onwards.

If current trends in the supply of skills by the broad education and training sector are left unchecked, there will be a significant shortfall in the skills required to fuel that growth. The skills gap could be substantial in sectors which depend heavily on science and technology skills. In other words, our future lies with science and technology. That is where we must make up the deficit. We will not be competitive in manufacturing or assembly industries in future, and many say that those industries will go to eastern Europe. With the emergence of China as a major trading nation, we may see a very large percentage of all manufacturing goods made there.

The publication of this report is timely in view of the tentative signs of recovery in the global economy, particularly in the US over the last quarter. It identifies the issues that must be addressed to ensure Ireland is well placed to benefit fully from the upturn and is at the vanguard of the global move towards a knowledge-based economy. In the current climate, there is a danger that Ireland could adopt an approach of adapting to short-term demand in the provision of skills. Such a development would be short-sighted and ultimately detrimental to Ireland's future prospects. Instead, Ireland must continue to identify the medium and long-term skills needed and ensure they are available to industry.

The report outlines specific recommendations for each of the sectors reviewed. The recommendations aim to ensure that Ireland's ability to benefit from the anticipated global economic upturn is not in any way compromised by a shortfall in either the quality or quantity of skills available in the economy. The recommendations fall into two broad categories. The first aim is to increase the proportion of highly skilled workers in the labour force by improving the quality of the vocational system to facilitate upskilling and reskilling, arresting and reversing the decline in the take-up of science subjects at second level, increasing the participation rate in higher education, addressing the variation in participation and levels of attainment in education based on socio-economic background, gender and so on, and establishing a more targeted immigration policy.

The report makes specific recommendations, and I propose that this House support them.