Wednesday, 23 February 2005
Employment Policy: Motion.
That Seanad Éireann:
—welcomes the very positive labour market figures and notes that the level of employment in Ireland is now at a record high level of almost 1.9 million;
—notes that Ireland continues to perform exceptionally well in comparison with our European partners with employment and labour force growth being ahead of the EU average by a factor of three or four and with one of the lowest rates of unemployment in the EU and being considerably lower than that in the larger European states;
—commends the Government for a continuing strong performance in employment terms with the number of jobs in Ireland growing by more than 1,000 per week;
—congratulates the Government on these very positive figures which clearly show that current Government policies are working extremely well and are further vindication of its economic strategy;
—maintains that the Government is well on its way to achieving its ambition to effectively eliminate long-term unemployment, which is continuing to fall;
—acknowledges the unprecedented commitment shown by the parties in Government since 1997 in tackling unemployment which has resulted in historic in-roads in reducing joblessness, particularly for people who have been without a job for a long time;
—urges the Government to continue with the thrust of this successful approach and to continue to bring forward policies specifically targeted at tackling unemployment and providing jobs, while recognising that continuing high priority must be given to those areas which have fallen behind the national employment average; and
—welcomes the measures in the most recent budget which will build on the Government's economic and social strategy of focusing on getting people back to work by investing in employment and education.
The employment level of 1.9 million is dramatic. It is a level that all parties sought to achieve when in Government but never thought they would achieve it. However, it was achieved in 2003.
I was previously a Minister of State at the then Department of Industry and Commerce with responsibility for exports. The major investment made in the 1960s by the then Government of Seán Lemass, which included Donagh O'Malley as Minister for Education, led to the creation of the economy we enjoy today. We have the best educated workforce in the world, produced by the best teachers and the best second and third level education system.
Ireland offers investors a stable, profitable English speaking base to service world markets. Over 1,000 overseas companies have made Ireland their location of choice. Ireland has positioned itself as an attractive location for inward investment companies seeking to locate within the European Union. There are many incentives in this regard and they include our corporate tax code, employment law and a strong corporate regulatory regime. Ireland's competitiveness is based not on tax benefits and costs alone, but on knowledge, innovation, flexibility and connectedness in how everything works together. Ireland has demonstrated the ability to adopt, and adapt to, changes in a unique way that connects innovation, knowledge, people and enterprise to meet the fast evolving demands of world markets.
Ireland's fostering of highly qualified professionals in technological skills is the key factor in the success with Intel, which is based in Leixlip in the Kildare North constituency where the by-election will be held on 11 March. The company employs 3,800 full-time employees and 1,200 long-term contractors, many of whom have technological qualifications. What a success story for the people of Kildare North as they go to the polls on 11 March to ensure the continuity of a quality Government that supports industry.
Research and development in Ireland is growing at a phenomenal rate, signifying the Government's vision of Ireland becoming a knowledge economy with leadership in the areas of life skills, medical technology, software and information technology. This vision is becoming a reality due to the Government giving high priority to funding research and development. The national development plan commits the Government to expenditure of €2.48 billion on research, technological development and innovation.
The Finance Act 2004 provided for a tax credit of 20% in addition to a tax deduction at 10% to 12.5% for research and development expenditure in Ireland. The tax credit is available to Irish tax resident companies engaged in in-house research and development. This gives a potential tax write off for incremental research and development spending of up to 32.5%.
Since 1 January 2003, the corporation tax rate on trading income has been 12.5%. This is one of the lowest corporate tax rates in the European Union and one of the lowest onshore rates in the world. A low rate of corporate tax of 10%, known as manufacturing relief, has traditionally applied to deemed manufacturing activities and certain international financial services activities carried out in the International Financial Services Centre in Dublin, and a broad range of activities carried out in the Shannon Airport zone. Members should note that corporation tax applies to all enterprises, indigenous and foreign owned.
On reflection, the Opposition should not move its amendment which states that Seanad Éireann:
—notes the low rate of Corporation Tax that led to a huge increase in the number of foreign owned companies and thus employment; and [recognising the contribution of the Government]
—calls on the Government to adopt a similar low tax strategy for the indigenous sector" [which it has done].
We have complied with the Opposition amendment to this motion. The Opposition should not move the amendment but should agree to the Government motion.
I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, to the House and compliment him on his excellent work. He has fought the good fight for Ireland, particularly when abroad, where he has assisted the good performance of Enterprise Ireland and the marketing of Irish goods.
We have a proud record. Our trade is expanding dramatically and jobs are developing as a result. Ireland is well placed given the expansion of the EU to 25 countries. As the responsibility for passing the Nice referendum was ours, it is a good selling point abroad to the new EU entrants that Ireland was the country which gave the green light for their entry. Our trade has expanded in those countries. Irish enterprise is developing in all the applicant countries and those which have joined. This trade will create jobs at home and abroad and will provide further opportunities for our people to develop abroad.
We have a proud record in north County Kildare and County Meath. I am satisfied that as a result of Government policy the results will be very positive on 11 March. I wish our candidates every success. They are standing with great confidence, knowing that the Government introduced the policies we have pursued. It is no accident that 1.9 million people are at work, the highest level of employment ever in the history of the State.
My experience abroad as Minister of State with responsibility for trade was that Irish products are well regarded and of a good quality, particularly in the food sector where there is complete traceability. Exports continue to rise. It is important the image of Ireland as a green, wholesome, healthy nation is maintained at all costs. We must ensure that the policy decisions made by Government will enhance this selling point. We are fortunate that Ireland is regarded throughout the world as a country that produces good quality products and, therefore, sales have increased.
The Minister, Deputy Martin, and the Minister of State, Deputy Michael Ahern, continually lead trade missions abroad. I take this opportunity to wish the Minister every success in his difficult portfolio and am glad he has the support of his experienced Minister of State. I congratulate the Tánaiste and former Minister for Enterprise, Trade and Employment, Deputy Harney, who was exemplary in her role at that Department from 1997 to 2004, during which time she tackled the high cost of insurance, working with the members of the Joint Committee on Enterprise and Small Business, under the chairmanship of Deputy Cassidy, who worked with the Department-——
That is very profound, a Chathaoirligh. I sympathise with the Opposition because it is grasping at straws. The Government is one of the best in the history of the State, with Fianna Fáil and the Progressive Democrats working together as a team in the interests of the State.
I move amendment No. 1:
To delete all words after "Seanad Éireann" and substitute the following:
—condemns the Government for the continuing deterioration in employment in the manufacturing sector;
—regrets the low level of growth in the number of indigenous companies;
—notes the low rate of corporation tax that led to a huge increase in the number of foreign owned companies and thus employment; and
—calls on the Government to adopt a similar low tax strategy for the indigenous sector.
The back-slapping nature of the Government's motion is typical of the motions we have come to expect from the Fianna Fáil benches in Private Members' time. Contrary to what Senator Leyden stated, there are a number of issues with which I must take exception.
The motion is yet another attempt by Fianna Fáil to claim credit for the Celtic tiger, something it inherited and which was due to the good policy of several previous Governments, most notably the rainbow Government, and was built by the hard work and sacrifice of the people. The Government parties have a brass neck in tabling this motion given that 160,543 people are now on the live register, which represents an increase of almost 2,000 in January of this year. Some 63,000 redundancy notices were issued between May 2002 and the end of September 2004, including 12,719 in metal manufacturing and engineering and almost 8,500 in the banking, finance and insurance sector.
The rainbow Government left the incoming Fianna Fáil-Progressive Democrats Administration with an economy that was creating 1,000 jobs a week, a record it subsequently fumbled and is only now beginning to regain. The rainbow Government was the first Administration to record a current Government surplus since 1972 — a record since lost despite 34 stealth tax rises since the last election. Moreover, the rainbow Government left office with a 1.5% inflation rate whereas we all know the current Government's record on inflation since the 2002 general election.
It has been much higher than 1.5%.
The Government parties table this motion within weeks of several high profile lay-offs, including 220 job losses at Sercom Solutions, Clondalkin, Dublin, 70 at Smurfit Paper Mills, Clonskeagh, Dublin, 54 at Parian China, Ballyshannon, County Donegal, 250 in my own constituency at the Greencore sugar factory, Carlow town, 350 at Allergan, Westport, County Mayo and 200 jobs at APW Enclosures, Tallaght, Dublin. In addition, the loss of 150 jobs was announced yesterday at Castlemahon Foods, Limerick, with which you will be familiar, a Chathaoirligh. Perhaps Senators on the Government side would care to speak to these 1,300 people about Ireland's exceptional performance, which is referred to in the motion.
Despite an increase in export sales of €1 billion among Enterprise Ireland's client firms, there was a net job loss of 1,317 in 2004. While there has clearly been a drop in unemployment since 1997, the Government cannot claim all the credit for this. It was the Fine Gael-led rainbow Government that introduced the low corporation tax rate and increased foreign direct investment, and it was this decision that led to the number of foreign companies rising from around 20,000 Forfás-assisted companies in 1994, to 70,000 today. This represents a 250% increase and is the area where the vast majority of new workers are employed.
However, the number of indigenous companies has remained almost static since Fianna Fáil and the PDs came into office in 1997. The Forfás 2003 annual report states:
Ireland's economic expansion in 2003 was led by growth in domestic consumption, infrastructure investment and house-building. This meant that the employment growth took place in the public sector, private services and the construction industry, rather than in the more export-oriented industrial sectors supported by the enterprise development agencies. This is reflected in the employment levels in agency-supported companies, which stood at 297,500 in 2003, a decrease of almost 7,500 on 2002. 2003 was the third consecutive year where there has been a net decrease in employment in agency-supported companies. This resulted in 19,000 fewer jobs in manufacturing and internationally traded services compared to the peak of 316,500 in 2000.
The same report states:
The manufacturing sector accounted for all of the net decrease in agency-supported employment in 2003. Within the internationally traded services sector job gains and losses were in balance with 8,500 of both. In contrast, there were 14,000 jobs created in manufacturing, but these were more than outweighed by losses of 21,500. The computer and electronics sector accounted for almost half of the net decrease. The textile sector and the paper and printing sector also witnessed significant net decreases, with approximately 1,000 jobs lost in each.
Perhaps this is explained by Jim Power, the leading economist, who stated that Irish competitiveness has been seriously eroded by a sharp increase in the overall cost base, which will not be reversible. He went on to say that to ensure the future prosperity of the Irish economy it is absolutely essential that investment in education to upskill the workforce and a correction of the very damaging infrastructural deficit are given immediate real priority and not just lip-service.
The point here is that the Government has reaped the rewards in the private sector, now mainly foreign-owned and encouraged by low corporation tax while it has completely failed to generate homegrown business by allowing out of control, untargeted spending that ultimately had to be paid back through higher taxes and stealth charges, increasing our cost base significantly.
The message, though the Government parties do not wish to hear it, is that they have inherited a foreign jobs boom from their predecessors thanks to a low corporation tax rate. They have completely failed to help the indigenous sector to reach its potential.
Senator Leyden referred briefly to the amendment that has been proposed in the name of the Fine Gael Senators. I will explain it briefly. Large-scale multinationals have the ability to absorb the various increases in stealth taxes that have occurred since 2002. Economies of scale alone ensure that such firms are often not seriously hurt by such increases in their cost bases. Indigenous firms, usually of a much smaller scale, have great difficulty in absorbing these costs. In calling for a similar low-tax strategy for the indigenous sector we simply ask for an end to taxation by stealth and a reappraisal of the way small-scale Irish business people are treated. For instance, self-employed people are ineligible for the family income supplement, an issue that has been raised several times.
Let us look at the way a total lack of tax strategy has led to stealth tax after stealth tax, disproportionately impacting on indigenous businesses. In 2002, VAT was increased in the budget after the election; motor tax rose by 12%; bank charges and bank card charges by 108%; bin charges by 29%; and ESB charges by 13%. In 2003, development levies were introduced, adding greatly to costs, and motor tax increased by a further 5%. In 2004, there was another 9% increase in ESB charges and in January 2005 another 3.5% ESB price rise was given the green light by Government.
In tandem with the low-tax strategy we want a pro-small business banking and insurance agenda. Banks appear to have little interest in attracting small business people at the moment, but put all their energies into attracting large companies. Economic consultants Compecon say the lack of competition in the banking sector is costing small businesses €500 million. We call on the Government to ease the unnecessary burden placed on them by raising the audit level in line with our EU partners to €3 million of turnover, to raise the threshold level at which VAT is collected to €100,000 and to ensure the reduction in charges by profitable, monopolistic State utilities so that the Government can play a practical role in reducing inflation instead of being a part of the problem.
In seconding the amendment I recognise that there have been some positive features in employment over recent years, especially the construction boom. The boom, however, is creating certain difficulties as there are people from new EU member states such as Poland who are not being paid at proper rates. When contractors for these countries quote for contracts in Ireland, as they are perfectly entitled to do, is it pointed out to them in their cost estimates what type of labour rates prevail in this country in construction? It is important for them to know this before they enter the State and not to repeat the situation experienced by Polish subcontracting workers or Turkish road workers outside Ennis, although I do not know if the latter case has been proven. It has become a feature of working in this country that joint ventures and subcontractors from abroad must fuel their activities in the construction boom in this way.
My concern surrounds indigenous industry. This motion is personally timely because, for a long time, I have felt that west Limerick has done well on an economic level in terms of the degree of activity it has experienced. However, four industries have been lost within a radius of five miles in a rural location over a period of three weeks. One such industry was the Kerry Group plant in Kantoher, which operated as Kantoher Products for over 100 years before Kerry Group took over in the early 1990s and sustained the production of chickens. One would have anticipated that, under the Kerry Group banner, it would have been extremely successful, but the group said that the plant was not competitive. At the same time that it announced the closure in Kantoher, Kerry Group announced a €20 million investment in south-east Asia. I was saddened to read of this occurring in my area.
Drum Engineering in Drumcollogher closed with very little fanfare or publicity, amounting to a loss of 30 jobs. A very successful entrepreneur, Mr. John O'Reilly, closed his vegetable business with a loss of another 30 jobs. O'Kanes has reduced its workforce in Castlemahon Foods by 150. I equate this loss of 350 jobs overall within such a small rural area as a devastating loss on a par with 1,000 or 1,500 job losses in Dublin businesses such as Packard Bell. Whenever an industry closes, there is an immediate call to form a task force. If a question were asked in the other House on how many task forces there are around the country, one would be staggered by the answer.
I remember that Giro was the last overseas company attracted to west Limerick. That was in 1991. It vested itself of the assembly unit and currently has a marketing unit calling itself Bell Sports. There were advance factories and economic buoyancy in the area, but then the factories began to close. One does not ordain the headlines in newspapers such as in the Irish Examiner of 22 February 2005 which stated "Finucane attacks Shannon Development". I was critical of the organisation. If one decides to develop an industrial unit into a series of retail units, and one later decides to allow another unit offering repair and maintenance to the county council, in the case of Newcastle West, to move from one location to another, by definition one is saying that industry cannot be attracted into these areas. A factory that lies idle does not provide Shannon Development with a revenue base, while renting out development and retail units does so. With regard to the sort of gloom that exists in our area, what signal is being given regarding the possibility of attracting alternative industry? I would like to see the Minister for Enterprise, Trade and Employment, Deputy Martin, visit the area and say that an effort will be made to find alternative industries. We may be buoyant regarding developments in the chemical, pharmaceutical and health care sectors, but we are losing out on the indigenous side.
I know that global forces currently predominate and that with regard to chicken processing we have imports from France, Holland, Denmark, Brazil, Thailand and many other countries. I noticed recently that if one bought an Irish chicken the producer's name and address were on the front of the packaging. Some of the chickens coming into this country are being packaged here but originate from outside the EU and are being passed off as Irish produce. It all comes down to traceability. The sooner that is introduced the better, so the consumer knows if the product is Irish or not.
Regarding the Industrial Development Authority, I wonder if its vision is confined to the main urban areas. There was a commitment given in Government policy that it would try to move outside the greater Dublin area. I would like to see part of that office dispersed in the mid-west region. The IDA has an opportunity to at least make a statement. It regularly made statements in the past to the effect that it was committed to seeking alternative industries for areas. I no longer see such statements coming from State agencies because in many cases they themselves become part of the task force. I would like to see a more positive drive towards establishing industries, which is why the issue before us is timely.
In recent times we have had changes in the status of Shannon Airport, a pivotal tourism area which is also important in terms of the employment it creates around it. If one wants to attract more people to that airport, the major problem is a deplorable road from Ennis to Galway. Infrastructure must be there in order to open up the west. There is a very good road from Limerick to Shannon and a reasonably good one to Ennis. The Ennis bypass will be built but currently one has to continue on that road. I hope the bypass will be a priority over the next few years. It is fine for Ryanair and other airlines to go into Shannon and create the buoyancy required there but one needs the infrastructure in order to attract people to that area.
I make the following point constructively. If one were considering a business, would one know to go to local Leader groups or to the county enterprise board? When would one go to Shannon Development? Would one approach the IDA? Where does one go in this regard? It struck me a long time ago that a one-stop-shop is needed because so many bodies are involved, though as a member of the county enterprise board for many years, I have seen a lot of good work done by it with regard to small industry.
I extend an open invitation to the Minister, Deputy Martin, even in the context of this laudable motion, to visit my area and see what is happening on the ground. He might then realise that the Celtic tiger is beginning to pass some of us by.
The past is another place, and when we talk of the economy in Ireland we are certainly talking of a different place. The Buchanan report of the 1960s, which dealt with the economy, the demographics and the trends, showed an economy largely dependent on agriculture. It showed demographics out of synch with the rest of Europe. Many children were being born yet the number of people who remained in the country after the age of 21 was very low. Many females were unmarried. There were many older people. Our demographics were skewed and our economy was mired by the fact that we had not developed. We had not developed economically at that stage but we set about it then and we have made a very good job of it. Indeed we have become an example for parts of the rest of Europe and our European colleagues now come to us to ask how we succeeded. The success story probably stems from the 1980s and great credit is due to Fianna Fáil and the Progressive Democrats for their work in this area.
I welcome the Minister of State, Deputy Michael Ahern, to the House and compliment him on the work he is doing to ensure growth and to make us a shining light in Europe. One can only be described as such when compared to the people about one. The nations around us are not growing at the rate at which we are growing. They do not have the net inward migration we have. They have not got our growth rates. We are dealing with the difficulties of growing an economy with regard to people's lifestyles, trying to get everything right, improving our infrastructure and the way in which people can do their work in order to advance as an economy and as a people. A nation is much more than an economy.
Unfortunately the Opposition tends to give the impression that we are not doing as well as we are. One can of course point to areas which have, perhaps, suffered in recent times but our policy is for regional growth. That is well stated and clearly followed through. We have spatial policies to prove this approach. We have gateways and hubs, and decentralisation. They are all geared towards ensuring that every area of the country moves forward.
The strength of our economy is our effort to ensure that everyone who wishes to be involved gets involved. Our next challenge will probably be in the child care area because in many homes, both parents are now working. That challenge will also be met by the Government.
In economic terms, 2005 has begun on a very upbeat note. The December budget was exactly what we needed in order to keep moving forward. The economy is growing at a steady and sustainable rate. Our rates of growth are the envy of our European partners, many of whose economies are effectively stagnant. In a report published just before Christmas, Standard and Poor's, the world's foremost provider of independent credit ratings, affirmed Ireland's top triple A long-term and A1-plus short-term credit rating. Standard and Poor's states that the ratings, the highest achievable, are supported by the diversified and flexible nature of the economy, strong general Government finances, favourable demographic structures and future pension liabilities. In other words, we are getting it all right.
Standard and Poor's emphasises Ireland's strong economic growth and sizeable foreign direct investment inflows which are still continuing. That is a clear indicator of how people see us from the outside. An article on Ireland in The Economist covered a wide range of issues, including our economy, and stated that Ireland was the best place in the world in which to live. It came first out of 130 countries and as I said in this House before, The Economist is no mean production.
Standard and Poor's highlights the fact that the general Government balance has been in surplus for four of the past five years and that Ireland has reduced its debt burden from approximately 90% of GDP a decade ago to approximately 30% of GDP at the end of 2004, giving it the secondlowest debt burden in the euro area.
One would need to have lived through the 1980s, a time when interest rates were at 22% and when one held on for dear life, until one's knuckles were white, to any job that one got. Having lived through that, one would realise how well off we are now and how good we have it. One would want to remember the time when Structural Funds could not be drawn down from Europe. One got 90% of a Structural Funds grant but had to come up with 10% and Ireland could not come up with that 10%.
It often seems to me that many people cannot quite believe that we have done so well. Perhaps the economic failures of the 1970s and 1980s have left many of us feeling that our success is more a result of good luck than hard work. Strange as it may seem today, just 18 months ago the prophets of doom returned. In the middle of 2003 we were two years into an international downturn. Given that we have one of the most open economies in the world we were always likely to be dragged back by the global slowdown. In the summer of 2003 we experienced a couple of bad months with the live register. The poor figures were exacerbated by the normal seasonal adjustments yet notwithstanding warnings that we should not talk ourselves into recession, many people went ahead and tried to do just that. Opposition politicians were especially culpable in this regard. They ignored the evidence that growth was still well above that of our European peers with every chance of a marked acceleration in 2004. They also chose to ignore that the level of notified redundancies in the first six months of 2003 was 8% down on that which applied in 2002. Instead, we were treated to hysterical claims of doom and gloom. Fine Gael stated that there would be 200,000 on the live register by the end of the year and that the economy would be in recession. With obvious relish and glee, the leader of the Labour Party spoke about a job being lost every 15 minutes. This was when the economy was on the upturn. The Government stuck to its steady course and maintained control.
A notable exception to the prophets of doom was Bank of Ireland economist, Dan McLoughlin, to whom we should pay tribute for getting it exactly right. Dr. McLoughlin spoke at a meeting of the Fianna Fáil parliamentary party in Sligo and indicated that the prospects for 2004 would be good. He was correct and results have completely vindicated him.
The Central Statistics Office's most recent employment figures estimate that the workforce increased by 57,000 in 2004. For the benefit of those who like statistics, this translates into a job being created every ten minutes.
We have many people to thank for our success. We should thank the people in the 1960s who had the vision to realise that spending on education would benefit the economy. Such spending on education was a good thing in itself but it also helped encourage growth and job creation. We have got a great many things right such as our policies on taxation and inclusion. We have ensured that everyone in the economy, including the disabled and those who do not hold the same views as us on particular issues, are not discriminated against. Everybody is included and that is a tribute to the success of the Government.
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.
The Minister is welcome. I want to address the challenges facing indigenous Irish firms. My colleagues have spoken about the great success of the economy. However, since Senators Cummins and Phelan both raised the issue of closures, I want to make a few key points.
Indigenous companies in Ireland, particularly those in the manufacturing and internationally traded sectors, now face challenges which are different from anything they have experienced in the past. The combination of continuing cost increases and the ever-increasing attraction of lower-cost locations such as central and eastern Europe, China and India means that Ireland may not continue to sustain the types of businesses that were possible in the 1990s. The low-cost model is no longer an option for Ireland, but the Minister will recall Mr. Jim Power saying at the DHL awards last week that there was nothing essentially wrong with this and that it was better that wages were increasing, since we want to upscale the economy. It would be worrying if the wages had not gone up or if they were going down. It is important for Senator Phelan to get a lesson in economics and to learn why indigenous companies are in trouble. I have not heard any sound reason from the Senator or his colleague to explain why the businesses mentioned have not survived.
What is needed are high-value, knowledge-intensive activities that can support high-value jobs and relatively high wage rates. The companies that provide such jobs are intensely market-focused and innovative, providing new and proprietary products and services at premium rates. The challenge for indigenous companies, both established and emerging, is to transform themselves sufficiently quickly into innovative and productive enterprises. I can speak from my own experience, having started in Connie Doody's kitchen with our Lir chocolates brand. We employ 90 people from Christmas to Easter. Indigenous companies will not survive unless they innovate. As Mr. Jim Power said, they have to be competitive in the face of rising costs while trying to improve their margins at the same time, without putting up prices. That is a serious challenge and I would like the Minister to reflect on it in his enterprise portfolio.
The Government's role is to provide the proper infrastructure in which to do business. A proper immigration policy is necessary and this is a very serious issue. Jim Power also said that foreign direct investment will be much more difficult to get. However, I believe it is critical, as Senator McDowell has said, to develop indigenous industry. The objective should be to get it to be the cornerstone in areas that have not been touched by foreign investment, around the Wexford and Waterford regions, for example. Jim Power also suggested this approach. I suggest to Senators Phelan and Cummins that if one is taking this motion seriously, one should look at how one can develop one's own area.
We have to wake up to the fact that technology companies will outsource certain aspects of their business. Companies must make the strategic decisions to engage in marketing and research and development in order to survive. We will require high-skilled immigrants, probably with PhDs. International investors are no longer looking at whether we have the infrastructure in place. When the IDA was meeting prospective customers 20 years ago, such customers wanted to see that there was a good infrastructure. They now want to know how many PhD graduates are in a particular area and the subjects in which they completed their doctorates. That is the way industry has gone.
From my own experience in business, the bottom line is that one has to be agile and be able to react swiftly. There is no hanging around — it is not like in politics where there is no rush on some issues. I learned that lesson. To survive in business, one has to be quick footed and alert.
I am sorry. The motion has been tabled because a number of indigenous industries have not survived. They have not been able to switch markets, their products have gone out of date and they will have to develop new products. The State agencies for which the Minister is now responsible are sincerely focused on indigenous industry. It is much more difficult to develop indigenous industry than it is to bring in multinational companies.
The Government has the responsibility to implement a proper immigration policy and should not be afraid to bring in highly-skilled people. I did not agree with Jim Power's view on benchmarking. Benchmarking has prevented public sector strikes. We have had very smooth industrial relations since we brought it in. Even though it is a problem for companies and it puts more pressure on the competitiveness of business, I believe it has been a positive decision.
Starting up a business and surviving is a very difficult task. I often think that the only people who understood how hard it was for us were the buyers from Quinnsworth and Superquinn. They saw so many businesses which did not succeed. As Senator McDowell said, the development of indigenous industry has to be the challenge for the State agencies in the future. From the Minister's speech last week, I believe that is his goal.
No one can dispute the fact that we have the lowest unemployment rate for many years. We accept that fact. However, there are pockets that have been identified as unemployment blackspots. For the first time in ten years, County Galway experienced a substantial rise in unemployment last month. That is regrettable, because areas in Galway were identified for development in the past ten years. The Minister visited Ballinasloe last month. Over the past seven years, 1,300 jobs were lost in that area. AT Cross was the first to go and it was the flagship of industry in County Galway. The engineering company Square D followed two years later. Now the Dubarry shoe company has closed. These three major employers in Ballinasloe went one after the other. That occurred in addition to the fact that we had lost jobs in other areas of the town. St. Bridget's Hospital lost a further 700 jobs which were displaced from Ballinasloe and scattered throughout the county.
As far back as seven years ago, a task force was formed under the Minister's predecessor and all the agencies were called in to encourage industries to come to Ballinasloe. While they have not failed completely, were it not for the fact that the county enterprise board stepped in under the leadership of its CEO, Mr. Charles Lynch, we would not have had any input in the area of job creation. That is unfortunate.
Enterprise Ireland has invested in the area as a result of the foresight and hard work of the local enterprise group, which the Minister met on his visit to Ballinasloe. An industrial park is now to be developed. The fact is that 12 people visited Ballinasloe as an area that was suitable for development, where the facilities were readily available and where the infrastructure was ideal. It is a sad situation when the IDA cannot convince those people that Ballinasloe is an ideal place for investment. There was very little industrial difficulty there over the years. There are good facilities, including schools, a hospital and a connection to the road and rail networks. However, we still cannot attract investment.
I am convinced that the only way that confidence will be restored to Ballinasloe is if the Government takes the lead by way of investment or incentives. I ask that the town of Ballinasloe and the middle Shannon area are designated for tax incentives. I know the Minister will claim that we cannot give tax incentives to certain areas as Europe will stop us. The important thing is that we are talking about a catchment area of 6,000 people who always depended on Ballinasloe as the focal point. It is probably the only town in the west of Ireland in which there is a declining population. The numbers on the register of voters declined between 2002 and the last local elections not because people were not included but because fewer of them live in Galway East. I call on the Minister to acknowledge that unless the Government leads by creating an incentive to restore confidence, those who currently live in the constituency will also leave. It is important to provide leadership.
We hear regularly about the various factors which lead to job losses, but there is no doubt that the west of Ireland is disadvantaged in many ways. Transport costs to move goods between Ballinasloe and Dublin Port, whether importing raw material or exporting goods, are high. We are at a disadvantage because of our location. While the IDA has done tremendous work in certain areas, a 1996 ministerial directive aimed to ensure the authority delivered an even distribution of industry through the regions has not been implemented. There has been a mindset within the IDA over the last number of years which leads it to consider Dublin, Cork, Waterford, Limerick, Galway and Athlone while Ballinasloe has been left isolated between the last two centres. It is a difficult scenario.
The proposal to decentralise represented an ideal opportunity to demonstrate confidence in the town and we should have indicated that a worthwhile Department would be moved there. The uptake for the proposed decentralised NRA office in Ballinasloe was poor. If a serious effort were made to decentralise a reasonably significant body, it would demonstrate the confidence of the Minister for Enterprise, Trade and Employment in the area. I acknowledge that the Minister is not responsible for decentralisation and has enough blame on his plate without being blamed for the many failures within that process.
It is not too late to take advantage of the opportunity presented by the identification of a development triangle among Athlone, Mullingar and Tullamore. I ask the Minister to consider this. Ballinasloe is only 14 miles west of Athlone and could easily be incorporated into the development area to bring it to the attention of the IDA. Despite protestations to the contrary, the IDA has failed miserably to support Ballinasloe as evidenced by its failure to convince 12 potential inward investors who presented with proposals for the area. What is wrong? The infrastructure in Ballinasloe is sufficient as is its tradition of industrial employment. A Minister of State from the area has served for seven years in various Departments, especially the Department of Enterprise, Trade and Employment, but he has failed to deliver for Ballinasloe. The Government has reneged on its commitment to the town.
We must bin the global figures for the country as a whole as they ignore the black spots which exist. I urge the Minister to recognise the need for the Government to take action to restore confidence to people in areas like Ballinasloe.
I welcome the opportunity presented by the motion to discuss the overall performance of Ireland in recent years in the areas of employment generation, economic success and the objective of maintaining our success going forward. I am also pleased to have the opportunity to discuss the key issues we must address to maintain our competitiveness and the premier status we enjoy among our European neighbours in terms of economic performance.
The extent of international media interest and the number of inquiries from countries across the globe in the Irish story are difficult to comprehend at times. As Minister for Enterprise, Trade and Employment, I meet on a weekly basis at home and abroad with people from different sectors internationally who want to find out about the Irish experience and the methods we have used to create so much additional employment. We should acknowledge the tremendous success Ireland has enjoyed over the past ten years but that is not to say we do not continue to face challenges or that there are not difficulties in certain areas. The bottom line is that we have transformed the country in terms of economic and employment growth and are the envy of Europe.
People talk about the role of Government, which Senator Ulick Burke attacked regarding Ballinasloe. Interestingly, a key reason cited for the success of Ireland in attracting inward investment is the agility and responsiveness of Government to the needs of multinational companies. Only last week, the directors of Yahoo, which is to set up its European headquarters here, said they felt there was a pro-enterprise approach in Ireland and that we could knock heads together among various interests including the trade union movement, local authorities and Government. We can remove barriers and obstacles and people feel the timeframe they are given within which they can successfully establish an operation in Ireland is reliable. Intel and Dell say they could never have established as rapidly elsewhere in Europe the operations they created here.
Our economic growth has been significantly stronger since 1997 than that of our EU partners. The outlook for the future is benign and we expect growth to continue. It is forecast that the economy will grow by 4.7% of GNP in 2005, which is twice the average rate across the 25 member states of the EU. This positive scenario has been recognised by the Commission which acknowledged in its commentary on Ireland's Stability and Growth Pact 2005-07 our strong growth and sound public finances. Strong economic growth has led to significant job increases. Since 1997, the numbers in employment have grown by almost 450,000. According to the unemployment register and notwithstanding blows to the local economy through the closure of traditional industries, Ballinasloe, which I visited recently, has 1,000 more people in employment than a number of years ago.
The nature and profile of employment has changed. While we are under pressure in low-cost manufacturing in certain sectors, the services sector has experienced significant growth. Announcements are no longer made about the creation of ten jobs here or five jobs there. We must analyse events. While we acknowledge regional development issues, the additional 450,000 jobs created since 1997 must exist somewhere. They are not all in Cork, Galway and Dublin, the last of which I should have mentioned first.
Senator Ryan is keeping an eye on me. The number of unemployed people has fallen by almost 80,000 from 10.4% to 4.4% in 1997, which is half the average rate among the 25 member states. The number of long-term unemployed persons has dropped by nearly 60,000 from 5.5% to 1.4%, which is approximately 33.3% of the EU average.
While unemployment has remained consistently low, it remains necessary to provide for those who are unemployed and find it difficult to secure positions. Following my recent review of FÁS employment schemes, the Government has decided it will continue to operate and provide 25,000 places annually. Senator McDowell commented on the social economy programme and the jobs initiative. We have given certain opinions on the matter and we are in discussions with the Department of Community, Rural and Gaeltacht Affairs to see how we can transfer social economy into a proper community context in order to give a satisfactory underpinning and guarantee, particularly in areas which have experienced difficulties.
I recently visited Northside Partnership as part of the Tesco and FÁS initiative which provides retail skills for people who have left education and the workforce. I presented awards to the young women and men involved, which was an uplifting experience. Tribute is particularly due to Northside Partnership and to Senator White's husband, Padraig White, who, together with Senator McDowell and others, provides a first class model of social partnership, making a difference in an area with high unemployment and low skills, etc. The social economy figures were quite high and it made no sense to me to pull them out if we are to be focused and consistent in terms of our employment policy and trying to make a difference in areas which experience difficulties.
The emphasis in these schemes will be on developing the quality of intervention by introducing a greater training element with a view to ensuring greater progression to mainstream employment. Our end goal is to assist all those who are unemployed, as best suits their needs, so that they can move into employment.
The latest figures for last year show that there were 1,893,600 people in employment, which represents an increase of 57,200 or 3.1% on the previous year. Full-time employment accounted for the majority of the increase. The current employment rate of 67% compares very favourably to the EU 25 rate of 63%. This means a higher proportion of our people are actively involved in the workforce and we are steadily approaching the EU employment rate target of 70%.
The outlook is for a considerable expansion of employment and thus the demand for labour. This will mean both increasing the skill levels of our labour force as well as the numbers in it. Given the falling number of young people coming into the labour market, there will be a need to mobilise labour supply from other sources which will mean encouraging more Irish-based people into the labour market. Reference was made to child care initiatives which are an important factor in that regard. It will also mean the adjustment of economic migration policy in Ireland to address identified labour shortages and skills needs. In recent years, the work permit system has been mainly vacancy driven, reflecting demand from employers.
With the enlargement of the European Union, it is expected that employers in Ireland will be able to fill the majority of their labour needs from the European Economic Area. Consequently, work permits are now only being granted for non-EEA nationals, by and large, in respect of highly skilled and higher paid positions where no suitable personnel can be sourced within the EEA.
Legislation is currently in the final stages of drafting to put the existing employment permit schemes on a sound legislative footing. The proposed Employment Permits Bill 2005 will also include provision for a more managed economic migration policy, including a formal and continual assessment of skills and labour needs. Research carried out by FÁS and the expert group on future needs and skills will continue to inform Government policy in this area.
This legislation will also give stronger statutory protection to employees. It will empower those who come into the country, especially those who are highly skilled and needed in specific areas, such as research and development. Science Foundation Ireland places a considerably increased emphasis on attracting world-class researchers into the country. There are other sectors of the economy where, from time to time, we will need high skills, such as information and communication technologies. The legislation will enable the Minister of the day to be flexible and adaptable to emerging skills and respond quickly to those needs as they arise.
In addition to increasing the numbers at work, increasing the skills level of the workforce will also be crucial if the economy is to continue to grow. The pressure of globalisation means that Ireland must move up the value chain to become a knowledge-based, innovation driven economy. The emphasis in the past has been on those outside the workforce in terms of skilling and training. However, there is a clear need for a rebalancing of our efforts towards those at work. The report of the enterprise strategy group emphasised the importance of this, particularly for the low skilled.
The past 20 years have seen a dramatic acceleration in the growth in educational achievement in Ireland. There is a €27 million increase in this year's budget in company training in order to concentrate on those at work, especially in low skilled employment. There is a significant challenge ahead for business, Government and FÁS in terms of how this will be done. We must incentivise low skill employees to take up programmes of training and courses because they are vulnerable in terms of change. We must also encourage companies to buy into the upskilling of their own employees, which can be difficult because they might fear mobility of employees after the upskilling. However, it is essential for future economic performance and competitiveness.
In terms of educational achievements, the completion rate at second level has increased dramatically in the past 20 years, from approximately 60% to more than 80%. The national qualifications framework is important to facilitate the increase in completion and achieve a broader definition of completion. It is not just about getting one's leaving certificate, but about the completion of certified programmes in areas which enable people to take up employment in key sectors.
Third level participation has dramatically increased in the past decade. We ramped up the numbers quite considerably in the late 1990s, particularly in software engineering and technician training, etc, to meet the needs of industry and the economy. This is all necessary in terms of increasing the employability of Irish people and attracting investment into the country. On the other hand, the task force on lifelong learning reported that there were still approximately half a million people who had not reached leaving certificate level. This needs to be addressed in the context of in-company training to which I referred earlier.
People will need to upskill and re-skill throughout their working lives. Some 80% of people currently working will still be working in ten years' time. They cannot stand still and must therefore participate in the skills programme. We provided €27 million in the last budget, specifically for this area, which was additional funding from the national training fund. Particular emphasis will be placed on delivering a framework for the training of the employed and FÁS will be the main driver in that respect. We will work with companies to help them participate effectively in the programme.
Our overall economic development strategy is now aimed at developing a more dynamic, enterprising and innovation-based economy which can sustain higher living standards for all. This involves maintaining an attractive taxation regime and prioritising policies in the fields of research and innovation promotion, entrepreneurship, enhanced competition and consumer policies.
Regarding corporation tax, it is important to note the error in terms of the reference to low corporation tax.
It applies to both indigenous and foreign direct investment. It is crucial to the success story of foreign direct investment. I am only at the Department of Enterprise, Trade and Employment since December, but as Minister for Education and Science and also as Minister for Health and Children I dealt with multinational companies. From my experience, the message is clear — without the corporation tax rate we would not make a shortlist of three. Skills, infrastructure and a range of other issues must be satisfactory. Countries outside the European Union are offering zero tax rates. To my knowledge, no country inside the EU offers this rate. Romania's rate is approximately 16%.
A survey by one of the major financial magazines still listed Ireland as having the lowest rate, although I will check that fact. However, we are speaking of countries such as Switzerland, Puerto Rico and Singapore as the real competitors in terms of attracting foreign direct investment. Many companies will go to eastern Europe for a range of strategic reasons anyway, but we should not get too paranoid or upset about that fact. There are opportunities for Irish companies to go to eastern Europe as suppliers. Irish companies, now skilled in servicing multinationals, should welcome investment in eastern Europe, get over there and play a role in terms of servicing companies across the board. It is acknowledged that we have built up a lot of expertise in that area.
I still have some reservations about harmonisation. I am not too sure if all of Europe, and particularly central Europe, acknowledges the importance of a low corporate tax regime. In the context of the Lisbon Agenda, Europe needs to reflect continually on global competition. Europe does not have a pre-ordained destiny that means it will always be prosperous and wealthy. It will have to compete. Sometimes I feel that Europe is too inward looking and needs to look outside its borders at the emerging competitive forces.
Having said that, however, without the EU we would not have transformed our economy, including access to new markets and a significant reduction in our dependency on the UK market.
Without the EU we simply would not have been in a position to transform ourselves. We are perceived by many multinational companies as a gateway to the European market. During Ireland's EU Presidency, the Tánaiste sought to reinvigorate the European economic agenda by repositioning the Lisbon Agenda as a centrepiece for the future, as well as concentrating on employment and growth in Europe. That remains our agenda going forward.
We have a recognised international reputation as regards our capacity to attract foreign direct investment, as evidenced in recent decisions by Yahoo, Bell Labs, Wyeth and CenterCorps.
Approximately 129,000 people are employed by 1,050 companies, half of which are from the United States, so the American dimension is very important. These US companies are responsible for nearly 70% of the value of investments here. US investment is crucial to Ireland's economic success story — it is the largest source of inward investment and accounts for the biggest exporting sector in the country. Nearly one third of all manufacturing inward investment in Ireland comes from the US, as does nearly half of all software investment. Ireland continues to be the leading location in Europe for electronics and is the world's largest exporter of software. As Senators are aware, Ireland is also one of the key locations for pharmaceutical and medical device companies.
I do not accept Senator Ulick Burke's comments on the IDA. It is harsh to say the IDA failed to bring some company to a particular town. The IDA organised the 12 itineraries for Ballinasloe. If the IDA was genuinely not interested it would not have done so.
It is unfair to say it is the IDA's failure. The bottom line is that we must win against stiff competition. We then try to regionalise and the IDA has a regional mandate. The IDA is busily developing infrastructure in Ballinasloe with Enterprise Ireland. I had a good meeting with a company that came to Ballinsloe through foreign direct investment. I have also met some indigenous companies there.
I will mention some other points quickly because I am aware of the time constraints. Research and development is a key agenda for my Department. The programme for third-level research and education, which I was glad to initiate as Minister for Education and Science, and Science Foundation Ireland, which the Tánaiste initiated, have resulted in a change in the level, scale and quality of investment in research. From 1995 to 1999, €500 million was spent on research and development by the State, whereas from 2000 to 2006 some €2.5 billion is being spent on research and development. Over the next six years, we want to achieve the Lisbon target of 2.5% of GNP. I am chairing an intergovernmental committee on research and development. We set a task to prepare the road map and blueprint by mid-2005 by which we will achieve that 2.5% of GNP target, which involves both business and State expenditure. I want to know the physical incremental steps we must take to do things such as doubling the number of PhDs by the end of this decade.
It is a challenging agenda for us but not one that can easily be achieved. I acknowledge that it is easy to set the target but I want to get the blueprint as to how we go about achieving it. I am satisfied that research and development is the crucial agenda for Ireland if we are to remain competitive in future.
The centres for science, technology and engineering that come under the aegis of Science Foundation Ireland have brought world-class research to the country, including medical therapy, software engineering and nano-technology. Ultimately, they will have an impact on future products and services. A key element is the external peer review, whereby colleges must now submit strategic research to external review by panels. There is no favouritism or an inside tack — one must survive on the strength and quality of one's submission. That has brought about a change in the way universities prepare their submissions and thus organise themselves for future benefit.
On the indigenous side, our main objective is the internationalisation of Irish companies, to which Senator White referred. We need to grow quickly the number of small and medium-size Irish companies. Enterprise Ireland, in particular, sees that as its agenda. The enterprise strategy group has provided clear recommendations on how that should be done, which the Government has endorsed. Enterprise Ireland is restructuring itself to give greater strength to its section that deals with internationalisation.
Indigenous enterprise has had much success in the past ten years. Some of the criticisms of its performance have been rather harsh. According to a number of global measures, entrepreneurial activity in Ireland is probably the highest in Europe. Currently, one in 12 people working here is engaged in entrepreneurial activity. In the next ten years, we must bring that rate down to one in six, given the way the world economy is changing.
Enterprise Ireland sees its remit as assisting and facilitating companies to grow and develop. A recent review of Enterprise Ireland's start-ups recorded that 76% of the 470 companies started since the early 1990s are actively trading today. They are achieving sales of €1 billion and employ approximately 7,500 people. There are measurable successes from the Enterprise Ireland stable of client companies and we see that as being particularly important. It is of equal importance to Science Foundation Ireland's future agenda.
I referred to the approximately 130,000 jobs created by American investment here but Irish investment in the United States is creating up to 80,000 jobs. That fact is often overlooked.
I will now conclude by thanking Senators for their tolerance in facilitating my contribution. Senator White referred to a lunch at which her company was one of those nominated for an award for being the meat on the bone in terms of what we have all been discussing here.
Her company is recognised for innovation, research and development, scaling up to create more jobs, and operating successfully in export markets. We all know the quality of Lir chocolates, if I am allowed to say so.
I had great difficulty in deciding whether to vote for the motion or the amendment. If I have to vote for one, I think the motion is slightly better than the amendment. We need to examine a number of issues.
The Minister spoke at length about research and development but if he was in his previous job and examined the OECD report on third-level education, he would have seen that in recent times our investment in research and development is still way behind the European average. Two thirds of investment in research and development in third-level institutions comes from foreign-owned companies. That is a major problem. The Minister said our future is in added intellectual value, and I agree with him completely. The OECD report showed that Ireland has the lowest level of doctoral students in the EU, which is a matter of concern. It is also a major indictment of the Government that there is no university in the State north of a line between Dublin and Galway. I spoke in the House yesterday about the lack of vision in the OECD report. Senator Ormonde was in the House at the time. One of my concerns related to the complete lack of any discussion on e-learning and e-universities. The Minister agreed with me. The first advertisement I heard this morning just after the 6.30 a.m. news was one for the OU business college.
I did not hear it later. It was aimed at people in the business community who get up early. It came on again just before the business news on RTE. That is how far behind the times we are. It is that easy. Somebody needs to be kicked around on that one. That is a seriously important issue that we must examine.
I appeal to my Fine Gael colleagues in regard to one issue. We should look carefully at the deterioration of employment in the manufacturing sector for one reason. Is anyone regretting this? I do not know anyone who looks forward to having his or her children work on the assembly lines of manufacturing industry. Those jobs are no longer in this country; they have all either been exported or else immigrant workers are coming here to do the jobs.
I agree with the point in the motion on indigenous industry, raised by Senator John Phelan in particular, regarding the low level of growth in indigenous companies. I was interested in the Minister's final comment on that issue. He stated that a large number of foreign companies are now investing here. That is hugely important. There is a lack of doctoral level study and a lack of investment by indigenous companies in research and development at third level.
I look forward to the employment permits Bill to which the Minister referred. It is crucial. We need to be firm on that. We should not be driven by any side of the argument except the need for skills in our economy. Whether we need forklift drivers, plumbers or university professors, they are all units of employment. We must look at what we need and bring in people to do it. There should be flexibility. We do not want to be embarrassed any further by the likes of today's newspaper headlines about the exploitation of Polish workers in the port tunnel. We saw enough of that happen to our own people in the past 100 years. We should not be involved in that kind of behaviour; neither should we allow any unscrupulous employers to take advantage of decent employers by allowing them to undercut through not paying their workers. Everybody loses in that scenario. Unscrupulous scoundrels should not be allowed to get away with wrongdoing. We need a controlled but flexible permits structure that will help us along the way.
I was in a hospital ward today where every single person working there was non-Irish. I spoke to three or four patients who were completely happy. One does not find racism among hospital patients who are meeting and dealing with foreign workers. We have a great amount to do in this regard.
I would have liked to see reference in the motion to the question of infrastructure, which is quite appalling. I take issue with the Government about the slow roll out of broadband. I do not care how many speeches the Minister makes. I live 17 miles away from here and I make the journey into the city several times every week so I can stand up here and have a go at someone when the opportunity arises, as it now does. I cannot get broadband 17 miles from here. What chance would I have in Achill or Belmullet? I might have a better chance in some cases. The reality is that there is no roll out of broadband and we are losing out to a significant degree. Areas which have broadband are in a position to develop. We must look at this issue as a matter of urgency.
This is not about manufacturing industry; it is about intellectual added value. We need to think cleverly. We need to be able to operate companies from Ireland which might be manufacturing in Asia. We need management supervision from here. We need intellectual added value from here. That is how we will win. We should remember that we got ahead of the rest of Europe, not by accident but by a series of factors, one of which was our educational levels. We are being caught out in that now. Yesterday's figures and those to which I just referred about the need to have people at doctoral level are important, not because we need doctors but because we need people at that level to be the anchors for design, research and development. That is the reality. It is not a made up thing because we want to keep people in college for longer; it is a requirement. If we do not address the issue now we will start paying the price.
In the same way as manufacturing industry, particularly the heavy manufacturing industry, is moving from this part of the world to the less developed part of the world, similarly, within a short period of time the top jobs that are currently here will also migrate to another part of the world.
The consistently positive news on employment in Ireland each quarter is no surprise given the favourable economic environment which the Government has created for economic growth and employment opportunities. Over the past seven years, in excess of 500,000 jobs have been created. The total number of persons employed is just short of a record 1.9 million. This equates to one person working for every two people in the economy.
Ireland's performance in employment terms is the envy of Europe. Our unemployment rate fell from 15.7% in 1993 to just 3.6% in April 2001. It is now 4.4%. The most recent figures for the EU member states show Ireland's unemployment rate at 4.4% compared with an EU 15 average of8%, placing Ireland second only to Luxembourg. There is no doubt that current Government policies are contributing to Ireland's strong labour market performance. The Irish economy has been growing strongly for most of the past decade and has been at the top end of the European growth league, at least in the context of the 15 countries in the EU.
There are a number of elements whose combined effect in the past decade or so has generated Ireland's exceptional employment and economic growth performance. These include low corporation taxes; the enhanced education status of the workforce; an increase in the labour force and reduction in the dependency ratio; the fiscal rectitude stance adopted by the Government and the favourable industrial development policy which successfully targeted multinationals in high growth sectors; social partnership which helped restrain wage growth in return for lower taxes; and increased competition in a number of important sectors, notably retail, telecoms, energy and air travel.
As a result of the Government's economic strategy, Ireland's GNP per capita is now in line with the EU average. It is imperative that future economic policy continues to focus on reducing joblessness and getting people back to work. There is no room for complacency in these figures. Much more remains to be done. Of the 94,000 people unemployed in July 2004, 46% were aged between 20 and 34 and a further 16% were aged between 35 and 44.
The one downside of our unemployment rate is that a tightening labour market gives rise to accelerating wage growth which drives business costs higher and results in higher inflation. However, there is some consolation in the recent population and labour force projections produced by the CSO which sees the labour force increasing by 40,000 to 50,000 per annum over the period to 2011.
As somebody who has employed foreign direct labour through the permits system, I welcome the introduction of the permits Bill. It would be a great help to small businesses if language training were provided for those people who come here. There is a deficiency in this area at present.
Despite the positive news on employment there remain weaknesses in the economy that have the potential to constrain economic and employment growth in future. Government policy needs to focus on two issues; our physical infrastructure deficit and competitiveness. We will create jobs in the economy only if firms and businesses are in a position to export to international markets. Ireland is one of the most open economies in the world. Our international players will survive if their cost base is in line with or lower than their international competitors. When one examines unemployment rates in Ireland and across Europe, one must conclude that a socialist Europe is an unemployed Europe.
I welcome the Minister of State to the House. This motion refers to the level of employment in Ireland; Ireland is a success story since there is very little unemployment. In comparison with our European partners, Ireland is a first-class model country, which fact is well established. There may be black spots but ten years ago, when I was dealing with young students' transition from school to work, we had difficulty finding jobs for them. However, having discussed the matter with colleagues in the world of work, there is now no difficulty getting jobs for people.
I am delighted our strategy is working. Government policies are working in tackling unemployment. Nonetheless, I agree there are black spots which must be examined. The Minister has referred to these and to how we can best move forward by upskilling and reskilling people in this situation. This must be achieved through programmes such as the FÁS programme. I am glad the Minister referred to the research which is under way to discover how best the Government can ascertain the future skill needs. The Government's aim is that by 2010 Ireland will have a very good knowledge-based economy and we are moving in that direction.
The House had a very good debate yesterday on the OECD report on how we can best interdepartmentalise to effectively bring forward education and training, to know where are the black spots and be ready when a business closes down so that we can move jobs from one area to another with little difficulty. The Minister has referred to this approach and the budget for this year acknowledges it. The Department is focusing on areas in which there is a lack of skills upgrading.
I am glad that legislation will be introduced regarding work permits for immigrants because it has been very loosely applied. It is far better to introduce legislation to impose a structure on the system so that skills can be assessed when people arrive in Ireland to see how best they can be allocated to jobs suited to their education and skills. The Minister of State should take from this debate the fact that there is insufficient collaboration between the Departments of Education and Science and Enterprise, Trade and Employment. There is a variety of programmes at leaving certificate stage and vocational leaving certificate stage and one wonders how they are complemented in FÁS programmes. There are also issues in regard to lifelong learning. There are black spots in how we go about our work but we have a good story; let us sell it. This is a first-class country which is the envy of our EU partners. I am delighted to endorse this fine motion.
Where we have to upskill and reskill, perhaps we should talk to industry and the business world to see how we can move forward on research and development, about which issue I could come into my own. It is in research and development that we will succeed in future, to which the OECD report referred. We must commit ourselves to it.
On behalf of Fianna Fáil and the Progressive Democrats, I thank the Minister for Enterprise, Trade and Employment, Deputy Martin, and the Ministers of State, Deputies Parlon, Michael Ahern and Seán Power, for their presence in the House for the debate on this important motion tabled by Fianna Fáil. I strongly recommend that the main Opposition party reflect on its faulty and inaccurate amendment to the motion. For the party's own sake, I do not wish to be too helpful——
The Mullingar heifer accord has broken down. The Labour Party is not associated with opposing this motion, neither are the Independent Senators. Fine Gael is on its own; as it was in the past. It will have a difficult task to gather a rainbow coalition of any size if it cannot get this motion right in this House.
I thank the Senator for raising that matter because I have a very good brief on County Roscommon. I welcome the new jobs which have been recently approved. If I had more time, I would elaborate on them but in fairness to Senators on this side of the House, I do not want to personalise it.
The motion has been well presented and prepared and the Minister has given a tremendous account of himself in the House. I thank him for his excellent work and congratulate him on his new position which he was given last year. He is an excellent Minister who is doing his utmost on behalf of the people.
—— of serving in the Department of Enterprise, Trade and Employment, in which I served between 1989 and 1992 when we had the highest record of exports from this country, then he can talk. I am very proud of my record in that Department and pleased with the motion which has been tabled. I appeal to our colleagues on the other side of the House that in the interests of unity and harmony and the best interests of the State, I recommend the Opposition does not move its amendment.
I reiterate our motion and seek the full support of the House for it. It states quite clearly that 1.9 million people are at work in the State. We are proud of the Government and its unified approach with its Progressive Democrats colleagues. I again appeal to the Minister of State, Deputy Parlon, to expedite decentralisation to Roscommon because we are looking forward to it occurring shortly.
I commend the motion to the House and seek a unanimous statement of support from all sides.
The Dail Divided:
For the motion: 12 (James Bannon, Paul Bradford, Fergal Browne, Paddy Burke, Ulick Burke, Maurice Cummins, Frank Feighan, Michael Finucane, Brian Hayes, Joe McHugh, John Paul Phelan, Sheila Terry)
Against the motion: 28 (Michael Brennan, Peter Callanan, Margaret Cox, Brendan Daly, John Dardis, Timmy Dooley, Geraldine Feeney, Liam Fitzgerald, Camillus Glynn, John Gerard Hanafin, Brendan Kenneally, Tony Kett, Terry Leyden, Marc MacSharry, John Minihan, Paschal Mooney, Tom Morrissey, Pat Moylan, David Norris, Labhrás Ó Murchú, Francis O'Brien, Mary O'Rourke, Ann Ormonde, Kieran Phelan, Shane Ross, Eamon Scanlon, Mary White, Diarmuid Wilson)
Tellers: Tá, Senators Cummins and J. Phelan; Níl, Senators Minihan and Moylan.