Derek McDowell (Labour)

This is one of those motions which, on one level, one finds it difficult to argue against because included in it is a litany of what essentially are facts. It is the tone more than anything else to which one must object.

It would be churlish and foolish to say that there have not been improvements in the labour market and in the position as regards employment during the past ten to 15 years. Senator Hanafin is correct to state that there have been enormous improvements. There is no comparison between the position in 2005 to that which obtained when I graduated in the early 1980s and when a significant number of the people with whom I attended college left the country. Many of these individuals returned in the 1990s and have had children, settled down and are doing very well. There is no question that there have been major improvements.

I must again — I become blue in the face from doing so — puncture the notion that comes across in all motions of this nature, namely, that the economic boom started in 1997 and that all good derives from then and the election of the current Government at that time. As regards statistics, if one considers the labour market, it is correct to state that the numbers in employment increased by 57,000 last year. This followed on from an increase of 46,000 in 2003 and just 20,000 in 2002. However, this employment growth started in 1994. Without becoming too bogged down in statistics, the numbers for that year were 38,000 and they were 61,000, 47,000 and 51,000, respectively, for the subsequent three years. During the period in question, either Fianna Fáil was in Government with the Labour Party or the rainbow coalition was in power. All parties are entitled to take a share of the credit as a result. We do the argument no service by suggesting that this is an entirely party political achievement. Far from it. It is an achievement of the Irish people over 15 years and has manifested itself in much improved employment numbers during the past ten years.

Senator Finucane made an interesting and important contribution and pointed out a major weakness in the overall picture. It is true that employment numbers have increased dramatically but we have developed a reliance on certain sectors which is worrying and which may be temporary. The most recent Central Bank report highlights the fact that some 220,000 people are employed in the construction sector. This represents 12% or one in eight of the total number of people employed in our economy. That, in a sense, is a measure of success because the construction industry is in some ways a weather vane for the economy. If the economy is doing well, construction will typically do well and that is good. However, it can also be temporary and is certainly not the basis on which economic growth into the future should be built. A total of 80,000 units of housing will be constructed this year but that compares to only 40,000 two years ago. No one knows what will be the figure two years from now. The point is that while we are employing 220,000 people now, we were employing much fewer than that two years ago and we could well be doing so again two years from now.

There is also major reliance on the multinational sector in areas such as ICT, chemicals, pharmaceuticals, etc, which is a matter of concern. Without wishing to overstate the case, this amounts to something similar to a significant failure on behalf of Irish capitalism. We have completely failed to develop a scale of indigenous industry which is comparable to the rest of Europe. The number of Irish firms employing 100 people or more has remained virtually constant for the past ten or 20 years. As Senator Finucane pointed out, many of these firms are running into difficulties or are deciding to locate elsewhere. We have not managed to develop our indigenously owned SME sector to such a degree that it is sustainable or that it is contributing, to a greater extent than previously, to the economy.

Senator Hanafin and others have stated that Government policy has produced a hugely increased level of employment. That is correct but it is largely confined to the construction sector or the foreign owned sector. That is not necessarily a bad thing. We have been successful in inducing foreign industry to locate here, largely as a base for the European market. The difficulty, however, lies in keeping such industry here. In that context, we must consider carefully the factors which drew it here in the first instance.

I agree with most of what has been said about the necessity of having a well educated, English speaking workforce. That is important and it is hoped that these advantages will remain with us into the future. I also agree that the low rate of corporation tax has played an important part. When I was a Member of the Lower House, I was one of those who argued that we could easily sustain a higher rate — 15% or 17% — of corporation tax. I and my party have always acknowledged that a relatively low rate of corporation tax is important. Low rates of corporation tax have been historically important in terms of attracting foreign owned industry into this country. What is important is maintaining that relative advantage, or at least an advantage, into the future.

We are failing to recognise the importance of the signals we are receiving from the new accession states, many of which have rates of corporation tax which are lower than that in Ireland. In one or two cases, these countries have no corporation tax at all. This is clearly a trend that is likely to continue in most, if not all, of the countries which recently acceded to membership of the European Union. The lesson which must be drawn from this is that it is in Ireland's interests to move towards a measure of harmonisation and that we should agree with our European Union counterparts — we should withdraw our veto in this regard — a minimum level of corporation tax. I am not referring to the historically high rates of corporation tax — 35% or 40% — which applied in Ireland and other countries. Such rates would be impractical, unreasonable and downright dangerous. However, we should push for a harmonised rate of 10% or 12% or perhaps slightly higher throughout the European Union. This would be very much in Ireland's interests because if such a rate is not adopted, we will continue to be undercut by countries which, as time passes, will also be able to compete with us in terms of the educated workforces they will be able to provide.

I am a member of the board of the Northside Partnership which is based in Coolock and which, it is fair to say, is one of the more successful of the partnership companies. Senator White's distinguished husband is chairperson of the board. I have been a member of the board for three or four years and I have watched with interest the unemployment numbers for the area. The live register numbers with which we are presented at each board meeting make for fascinating reading and present a clear picture. They indicate that the number of those who are either long-term or short-term unemployed is largely confined to relatively defined groups of people. For example, significant numbers of them are lone parents or are disabled, on invalidity pension or otherwise unable to work, either full-time or part-time. In addition, a significant number in that part of the city are former drug abusers, drug abusers or ex-offenders. These are people who are largely disconnected or only loosely connected to the labour market and they are not competing for jobs on a daily basis. In some cases — I refer here to disabled people — they are not in a position to work full-time.

These categories of people require targeted interventions. We have been slow in providing this, traditionally relying on measures such as community employment schemes which do not do the business any more. Such schemes are useful for getting certain work done in the community which otherwise would not be done. They are also useful for loan parents who want to work only part time, or for short periods of the week. Community employment has not been effective in recent years, however, as a means of getting people into full-time employment and we have relied on it too much. I am not arguing that we should cut the numbers, lest what I am saying is distorted or I am misunderstood. It performs a function, but not the primary one for which it was intended, namely, to get people into full-time employment.

We need to focus far more on the more difficult areas of training and education. The experience since the introduction in 1998 of the national employment action plan, NEAP, has been interesting and instructive in that about 50% of the people interviewed went into employment. It is probably fair to assume that a number were already in employment, and this only came to light when they were called for interview. However, about 50% went into employment, about 25% went into training and the remainder are still unemployed. We must increase the numbers of people going into training and further education because the experience since we started looking carefully at those numbers is clear-cut. When long-term unemployment numbers started to come down, the first people to get jobs were the young. Then there were people with some educational qualifications, training or apprenticeships. Next were those with some previous work experience. The people left were those without qualifications or work experience of any kind. Frequently, they included people with secondary difficulties, whether of a physical nature or otherwise.

I was sceptical about the NEAP when it was introduced, but there is no gainsaying that it has been quite successful in identifying the nature of the problem and, to some extent, dealing with it. It has been more successful in identifying the nature of the problem than dealing with it and we need to sharpen the focus, particularly in terms of getting people into training and following them through the process of re-education back into the workforce.

I want to say a few words about female participation in the workforce. The numbers increased dramatically in the early to mid-1990s, but they appear to have stagnated in recent years at around the 47% of 48% mark. The reasons are pretty clear. The participation rates for single or newly-married women are about the European average. Participation rates for mothers, however, are a good deal lower than the European average. The glaring reason for this is child care. This has been identified as far back as 1997 or 1998, so it is no news to anybody. However, we have singularly failed to produce the type of provision that makes work a viable option for women with children, whether lone parents or married.

I strongly believe there is no substitute for direct provision by the State. We have relied too much on supporting the community and voluntary sectors. This is fine where the community and voluntary sectors are doing the business. Let us by all means subsidise them if their work may not be done without subsidy. However, this is not sufficient and it leaves enormous gaps, particularly in areas of disadvantage. Rather than the State coming in to fill such gaps, it is its primary duty to provide the basic infrastructure in the first instance so we need to extend school backwards. If we can provide primary schooling as a matter of constitutional right for all children to the age of 14 or 15, we should start that a year earlier. Whether it is school, community or crèche-based is not really a matter of concern. Ideally, people should have as much choice as possible. However, it is primarily the responsibility of the State to do it by way of direct provision. Let us, by all means, provide additional assistance and subsidies to the community and voluntary sectors on top of that, but we must accept our responsibilities in the first instance.

I will leave it at that. My message is simply that the numbers are good, but they hide an over-reliance on certain sectors that are not Irish-owned, or where the jobs are not permanent or in the traded sector, which underpins economic growth. In addition, certain categories of easily defined people are not associated or connected with the labour market and they are getting left behind by current policies which need to be more direct and interventionist.