Professor Christopher Pissarides:

I will respond now. Some very useful points were made and I should respond to them quickly before we take questions.

Senator Healy Eames asked what Ireland can do with the Presidency. It is a unique opportunity. The biggest benefit to the economy and all unemployed people, in particular the youth unemployed, would be to persuade the powers that be in the EU, the troika-type powers, to split the budget between recurrent spending and investment spending. Investment spending costs money now but gives revenue and return in the future. It is not right to include it with recurrent spending such as salaries of civil servants and whatever other Government consumption there may be. Even if the powers decide to impose austerity on the investment budget it should still be kept separate. Putting all the money that has been put aside to rescue and bail out countries in need into one fund, and looking at that budget only to see what economies can be imposed before handing over the money, is wrong. The money should be split in a way that is more akin to offering Structural Funds, which can then go into investment. Another part of the money could go where it now goes, as with the EFSF money that goes into the bailout funds. That would help enormously. It would create jobs through investment projects and would bring numbers of youth unemployed back to work. I get the feeling there is a positive leaning towards that measure in Brussels so it might be a good time to propose it.

There were questions about the jobs and skills we should have and points were made about self-employment. I envisage certain sectors creating jobs in the future. This is where job creation will come from and will apply to both young and older workers and especially to women who are coming into the labour force in bigger numbers. There will be a fairly small number of highly qualified jobs in information and communications technologies, ICT. There will be green jobs, for example, how to convert our buildings into more environment friendly ones. The big numbers of jobs will be in health education, the social care type of occupations and retailing. Retail is a big sector that will employ more people.

In terms of the skills needed for these jobs we need to train people differently. There is a different mentality than previously. An apprenticeship that trains a person for industry is a good training but either there will not be any jobs in that sector or they will be so few that the training will have to be forgotten. We have to retrain. That is where conflicts occur in the many vacancies that come onto the market - people do not have the right skills. We are in recession now. I do not know the exact numbers in Ireland but in the EU as a whole there are some 25 million unemployed and only 2 million vacancies. The numbers are obviously distorted but the fact remains that there still are vacancies but they are not being taken up because the relevant skills are not present.

Training in ICT at school level and training how to convert buildings using a more green technology will help but there must also be training in care. What does it mean now to enter the health or retail sectors? Language ability will be very important, particularly in the retail sector, as will teaching person to person skills, how to deal with other people. That is something we are not used to doing because it was not needed in manufacturing. If one is on an assembly line or doing machine repairs one is essentially working on one's own, not communicating with others. The big numbers of jobs in the future will be in sectors where interpersonal communication will be needed.

In the sectors I mentioned, company size will be smaller which emphasises the importance of small and medium-sized enterprises and the self-employment sector.

We know that ever since the Schröder reforms in Germany, the policy of encouraging self-employment in the form of start-up grants for the unemployed in particular has proved very successful. Under this policy, people can collect unemployment benefit for a limited period. If they start their own businesses, however, they can collect it for longer in the form of a grant.