Tuesday, 20 November 2012
Action Plan for Jobs: Statements
Perhaps I will just make a few brief opening comments in order that Senators will have more time to offer their own observations.
The first point I wish to make relates to why we brought forward the action plan for jobs. I need not inform Senators that the background to its introduction lay in the sheer economic mayhem that impacted upon employment in recent years. In the space of three years some 16% of jobs in this country were simply wiped out. The tragedy is that the vast majority of these related to young people who are under the age of 30. While we know that we must consolidate the position with regard to the banks and our public finances, the main purpose of the work we are doing is to fix people's lives. In that context, the most important consideration is getting them back to work. It was for this reason that the Taoiseach decided - I am a key player in this regard - to put in place an action plan for jobs which seeks to span the entire Government. In other words, it involves bringing the expertise of all Government Departments to bear on the challenge relating to employment. This is not just an issue for one or two Departments - every Department has an role to play.
The second purpose of the action plan is to bring a sense of implementation and action to the orientation of Government in respect of this matter. Learned reports have been compiled over many years in respect of the need to reform the health service and our system of public administration. However, a large number of such reports are usually left on the shelf. When one reflects on them years after their publication, one can see that very little has been done. The opposite is the position with regard to the action plan, the purpose of which has been to ensure that actions which would make it easier to create employment would be taken within 12 months of publication. That is what has driven our work in this regard. Quarterly targets were set down and had to be met. By and large, this has happened. For example, the completion rate for the first and second quarters was 95%. The rate for the third quarter was somewhat lower. Anything that was missed in the first two quarters, however, has been delivered in the third and fourth quarters.
Setting deadlines is a new concept within the public service. I cannot recall many policy initiatives which imposed deadlines for implementation on the system. The laying down of targets and deadlines has had an impact. In practical terms, we have brought forward things which many people had sought but which had been long delayed. I refer, for example, to the microfinance initiative and the loan guarantee scheme and the establishment of the first-time exporters division. We have, through ConnectIreland, reached out to the diaspora and others who are friends of this country in order to supplement the admirable work done by IDA Ireland. We are beginning to see the impact of this. Our problems have not been solved but last year was the best for international investment in a decade. IDA Ireland delivered its best figures for employment in some time, with a net expansion of almost 6,000 in the number of jobs. The gross figures in this regard were very positive.
Enterprise Ireland saw two years of very strong double-digit export growth, as Irish companies have built on improved competitiveness and won back markets. We are seeing a transformation occurring in the economy. We are seeing the new sectors that will build our long-term economic future emerge. We are seeing a hugely strong performance in export-oriented sectors, not just the ones under my remit but also tourism, to be fair, is doing well, having been very weak. In net terms, in the three years before we were in government those export-oriented sectors lost approximately 70,000 jobs, and they have gained 20,000 jobs in the past 18 months. In terms of those key sectors which are critical to our long-term future, they have turned a dramatic corner. Overall, private sector employment continues to fall but it is pretty much plateauing at this point. The strong growth in the export-oriented sectors is being weighed down by losses in traditional sectors. Construction continues to lose employment, as does retail, although not as rapidly as was the case. Domestic banking continues to go through a difficult correction.
There are grounds for stating that the strategy is working. We have a balance of payments surplus, which means that as a country we are paying down our debt. However, there is a huge distance to go. Most Members who are in business will be aware that fixing the banks is not a question of just recapitalising them. They became re-oriented away from the challenge of a small open economy, businesses and exporting and they got into the business of property and selling on commission. There is a big challenge in re-orienting them away from that world to the new economy we must build. The measures we have introduced will be useful but we need the banks to correct themselves also.
The Credit Review Office is doing great work. I do not know whether Senators are using that office but it is a valuable tool. If they come across people who are having problems with getting loan approval from their bank they should use that office because it has turned over more than 50% of the cases that have been brought to its attention. Currently, up to 60% of the cases that come for adjudication are turned over. Much useful work is done before the cases ever come to adjudication. It is a really useful office that is making an impact. To be fair, it was established by the previous Government. I am not being partisan about the issue.
It is a useful office and its impact continues to be important because the banking system is not fixed.
What is strong in the action plan for jobs is that we have looked to other sectors. For instance, the health sector set up a health innovation hub to examine how it could bring in innovative companies to get their first sales within the Irish health system which would then be a reference sale for them to export. We have set that up on a pilot basis in Cork. It already has six very strong projects being test-bedded within the Irish health system which gives them a reference sale. I could go through numerous examples of other areas where other Departments, not with any remit directly related to jobs have become partners in trying to create an environment that is more friendly to job creation.
It is clear that a significant amount remains to be done. Action plan 2013 is now in preparation. I would welcome submissions and ideas from Senators. We have had a consultation period which started towards the end of the summer. I met with a lot of groups and we also received many individual submissions. Much of the work from last year will carry on, for example, the audit of licences, which was conducted as part of last year?s action plan for jobs. The result of the audit will shortly be available. That material will be important in deciding whether we can simplify regulation, which is a theme that is very much on the lips of those involved in the small business sector.
We can report good progress in what we are doing but it is a work in progress and there is a long way to go, as anyone who views the Irish economy is aware. There are headwinds coming against us with the downgrade of growth prospects in all of our trading partners. That does create difficulties for exporting companies. Equally - I have been on 12 trade missions at this stage ? one can sense that our companies are much more competitive and are in a more innovative space.
They can win markets in places such as Japan, Canada and China. We are seeking to open up new markets.
I welcome the input and comments of Senators.
I welcome the Minister for Jobs, Enterprise and Innovation and compliment him on the energy and passion he is putting into his role.
Today, I will address the issue of youth unemployment. On 8 November we were addressed by a Nobel laureate, Professor Christopher Pissarides, who raised some very important points on youth unemployment.
Professor Pissarides expressed concern that one third of young workers in Ireland are unemployed. He urged us to address the situation urgently to avoid a lost generation which will prompt negative implications for economic growth and employment for many years to come. His point is that job creation is the best help that unemployed persons, young or old, can receive during a recession.
I acknowledge that the Minister is doing his best, but the problem is immense. The CSO figures show that unemployment is still at 14.8% and long-term unemployment has increased to 8.8%. A further point made by Professor Pissarides, with which I wholeheartedly agree, is the need for young people to secure a role in a line of work in which they are interested. I have just come from the Joint Committee on Jobs, Enterprise and Innovation, where I made this point. A person derives pleasure from studying and having a career in a subject in which he or she is interested. I think it is a gift from God to have an opportunity to study what one is good at and to develop one's potential, which is all important. Having a job as a result of it is what it is all about. The best labour markets enable young workers to experiment in different jobs, which helps them discover their true potential and ultimately thrive in that role.
Two recently published articles in the newspapers highlighted the prevalent problems that are directly linked to youth unemployment. The first article reveals that the number of workers, including IT specialists, hired from outside the EU has risen to almost 2,300. This is a further indicator of how important it is to identify specific current and future skills that are relevant to areas of the economy if we are to assemble an appropriate skilled workforce for the future. The number of work permits granted by Google Ireland rose from 49 in 2006 to an alarming 148 last year. Facebook has the same problem. It is fine that we have diversity and people from abroad coming to work in Irish companies but we want to get jobs for our own people. The Nobel laureate stressed in his response that the EU is encouraging people to move to other countries if they cannot get a job in their own country. Our effort should be directed at providing opportunities for people in their own country. We know that many people want to go abroad. Members of my own family want to go abroad and travel. That is natural, but at the same time a true judgment of our own country is that we can provide jobs for people who want to stay here.
In response to criticism regarding PayPal's recruitment strategy, the head of PayPal, Louise Phelan, was quoted in the Irish Independent calling for people to "get past" the high number of people from overseas on her staff. I agree with her. We may be attracting the major multinational corporations to Ireland, but they are certainly looking abroad for appropriately skilled personnel to fill their vacancies.
We had a presentation from the Forfás expert group on future skills needs and our attention was drawn to an analysis carried out in 2011 of the job vacancies over the previous 12 months.
There are approximately 8,500 job vacancies in sectors such as ICT, engineering and utilities, accountancy and finance, production manufacturing and materials. There is something radically wrong in the mismatch when at the same time so many people are unemployed. I refer to an excellent presentation from the presidents of DIT, Dundalk Institute of Technology, Cork Institute of Technology and the HEA which Senator Clune and I attended. They are to be congratulated on their tremendous work in educating young people for the economy. I know the Minister is completely committed to this policy. However, any mismatch of skills should be rectified urgently by a change in policy.
I welcome the Minister to the House. We have discussed the action plan for jobs on previous occasions. The plan has set targets. Quarterly and six-monthly reports have been issued which have been effective in measuring progress. There has been an emphasis in this House on the need to support small businesses. I welcome the changes such as the establishment of the local enterprise offices. These will include a one-stop shop to provide support for existing and new businesses. The expertise provided by local authorities and Enterprise Ireland will be important supports. Small and medium indigenous enterprises are the backbone of the economy. The action plan for jobs was established against the background of a significant loss of employment over the past years. The unemployment rate is currently 14.8%. The retail sector has suffered because people have less money in their pockets.
I note that the Digital Hub Development Agency focused on the online opportunities for Irish retailers. Consumers spend in the region of ¤4 billion on online purchases but 75% of that money goes out of the country. The retail sector is changing because people's shopping habits have changed. The online marketplace needs to be taken seriously by Irish retailers. The retail sector survives by changing to keep up with changing markets and consumer habits and needs. For example, a traditional shoe shop in Cork closed down because it was not offering the product or type of service that consumers wanted. By contrast, 20 yards down the street, a bright, modern shop is offering that shoes can be sent in the post within a week. Shoes can be ordered online and the shop will deliver them. That is the kind of service which customers expect.
Retail can do better and the online sector can be exploited by Irish businesses. The Digital Hub Development Agency report produced in the summer estimated that Irish people will spend ¤20 billion online each year, and most of that will be on sites outside the country. The message for retailers from that is that if they can develop some sort of Internet presence there is a massive opportunity for them to capitalise on the online shopping trend that will undoubtedly grow.
The gaming sector is another area identified in the action plan and one on which we had a report produced last week on the way it is expanding. There are now 83 companies in the gaming sector in Ireland; there were only 21 in 2009. There has been a surge in the creation of indigenous jobs and the development of new businesses in this area, and it is an industry that is worth approximately ¤2 billion. As the Minister said, it is about changing the emphasis in terms of the type and location of jobs and that is one sector, and the health sector, he mentioned.
As Senator White stated, the job opportunities and skills shortages in the IT area is an issue we have discussed in the enterprise committee of which we are both members. We just had a meeting with the representatives of the Higher Education Authority, the universities and the institutes of technology. We were discussing the ICT action plan and it was encouraging to hear that the conversion programme has expanded. We are in the middle of a course whereby graduates can convert to the ICT area and, based on the success of that programme, an expansion of the courses available was announced last week. We look forward to the results of that programme and all the indications are that those who graduate from that conversion course early next year will find employment. That is a welcome development.
The food and drink sector and the need to focus on the type of skills that are required in that industry have been discussed. A 2009 Forfás report by the expert group on future skills needs identified particular skills shortages and recommended that a joint initiative between the third level sector and industry be established, led by the Department of Agriculture, Food and the Marine. I understand from questions I asked that that has not happened yet but it may be something that will be very useful. The link between the third level sector and the needs of industry arises frequently. They are represented on the expert group on future skills needs but there appears to be a lack of engagement at the coalface.
An issue that arises frequently in our committee is that employers and industry are not getting the skills they need. That is not taking from the fact that education must be broader than pure skills but when we have an unemployment level of 14.8%, skills that are directly required by industry should be developed and would be very welcome.
In terms of the construction sector there are opportunities in the green energy area in refurbishing homes. There are many ageing properties in the country and there is an untapped potential in that respect. The construction sector is probably down at about 5% now when any economy should have a construction sector of the order of 9% to 10% but there is a potential in that area. That raises the old chestnut about refurbishing and insulating old homes and so on but there is great potential in that area and we should continue to focus on it.
The area of languages should be examined. There are job opportunities in that area but we do not have the necessary skills.
I mentioned this morning on radio that the next EU budget will contain a substantial package for the Erasmus programme. We need to leverage that money to ensure our students acquire the necessary skills.
The action plan on jobs was welcome, especially the milestones it contains against which we can measure progress. I look forward to engaging with the Minister next year.
I wish to share time with Senator Zappone.
I welcome the Minister and I thank him for attending. He is bathing in flattery but he has been doing the most amazing job for us all. I agree with Senator White about his personal commitment and passion. He must be exhausted from all the trade missions he has been on. He has been proactive and innovative with the microfinance fund, the credit loan guarantee scheme and the action plan for jobs and through his close collaboration with the Minister for Social Protection on the jobs activation measure.
However, this brings me to the issue I wish to raise. Will he collaborate further with the Minister because I am concerned about her mad, crazed proposal to transfer the cost of sick pay to employers? Why do employers pay PRSI? If a company has a sick pay scheme, logic and precedence dictates that absenteeism will increase if someone is out sick. It will double the cost for a company such as mine because if someone is out sick, someone else has to be hired to do his or her job. Business costs will increase and our competitiveness to win tenders against savage, aggressive competitors, mainly in Europe, will be dangerously eroded, potentially resulting in the loss of millions of euro worth of business. While the Minister is collaborating with the Minister for Social Protection, will he pay a call on the Minister for Health to discuss the medical profession's blind nonchalance, which aids and abets the malingerers who take advantage of the easy sick pay certification system we operate in Ireland? I am as passionate as the Minister and his Department about creating a fertile environment for all businesses to flourish in these troubled times but we cannot allow the sick pay proposal or any increase in PRSI to go through.
I acknowledge how well the Minister has done in attracting foreign direct investment. These companies engage in due diligence as they consider where they will place their business globally. The sick pay scheme will not do us any good in the eyes of foreign investors. It is profoundly depressing that we are discussing an action that will prevent job creation, lead to job losses and make businesses less competitive. More Members should be present because the businesses the Minister is supporting are, in turn, supporting the economy. If we all went down the street now to meet retailers, they would say the scales are fragile and one little push will send them over the edge. This proposal is a push too far and it will prevent companies from employing people in the future and it might even serve to put some of them out of business. I acknowledge the Minister for Social Protection needs to make savings but if she examines the business strategy of Ireland Inc. and the bigger picture, she will recognise that this will have drastic results in the future for small businesses.
She says it will not affect small businesses. Let us take a business like mine, a small to medium-sized enterprise, SME, with 120 employees and a turnover of just under ¤20 million. I know for sure, having discussed the matter at length at management meetings and board level, that the proposed sick pay arrangements would have a disastrous effect on our company?s competitiveness. I am one of the great stories in the exports sector, as are many of my colleagues in the food industry. It is not just the little retailer or the hairdresser but the Minister?s clients who admire him who are concerned about how this proposal could affect them. I implore him to collaborate with his ministerial colleague to ensure this arrangement is not implemented.
I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his positive update on the Action Plan for Jobs. One fact that I notice he has left out of his positive update relates to the job creation exchange he has had with Washington State, from where I come. The Minister hosted the state's governor, Ms Christine Gregoire, in the summer and has been on a trade mission to Washington. I compliment him on this work and the jobs that have resulted from these exchanges. I hope he continues to operate in this way.
The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, has implemented substantial reforms in public sector procurement since taking office. We see reforms in public procurement in the centralisation of many of these functions in the National Procurement Service. There are many benefits attached to this system, including savings to the Exchequer. Are we fully utilising the job creation possibilities of this system, or are we pursuing a short-sighted cost-saving exercise? For example, next summer mandatory contracts for stationery supplies for non-commercial public sector organisations will come on stream. I have been approached recently by a school in Tallaght that falls into this category. It is concerned that it will have to cease the purchase of stationery supplies from a local supplier from whom it has purchased its supplies for the past 18 years at competitive prices. Instead, it will have to purchase stationery supplies from the company the National Procurement Service chooses. The local supplier employs three people and I am one of his clients. Their jobs may be at risk as a result of the introduction of centralised contracts. The head of the Small Firms Association recently told the Oireachtas joint committee on jobs that many small and medium-sized enterprises were having difficulties under the new procurement system because a central procurement system tends to favour the larger business and much of the process is focused on price. I am aware that the Department has several initiatives that focus on assisting SMEs in competing for contracts, including informing them how to submit tenders and breaking down contracts to make them more accessible. However, a complementary approach could be taken by requiring procurers to make provision for social benefits when awarding contracts. This is permitted under EU law and in place in many EU member states. Deputy John Lyons has introduced a Bill on procurement that would require a percentage of tender assessments to consider the social benefits. Many EU member states not only allow but require public procurers to take potential social benefits into account in a variety of circumstances. According to European Commission research, over half of member states have references to the promotion of social responsibility in public procurement. However, Ireland is not among them.
The National Procurement Service?s annual survey made two recommendations on how the promotion of social benefits consideration could be improved. First, it stated procurers should take into account factors that would contribute to the long-term sustainability of local economies when creating and awarding national contracts. Second, there could be greater participation by social enterprises in delivering public services. I have raised the issue of social enterprise with the Minister before when we were feeding into the Action Plan for Jobs. I also note that the Minister of State, Deputy Sean Sherlock, has ordered a detailed study from Forfás of the actions required to be taken by the Government to create jobs in the social enterprise sector.
Will the Minister comment on both of these issues? What is the policy of the Government on national procurement and ensuring the sustainment of local economies? Are policies heading in the direction of putting the three people in Tallaght to whom I referred out of business? When will the study from Forfás be completed?
I welcome the Minister to discuss the issue of job creation. I imagine he agrees that eight minutes is not enough and that the Seanad and the Dáil could speak about this issue for many days.
There has been a good deal of positive news, albeit slowly. However, we are moving in the right direction. Sometimes the public believes jobs are not being created, as all we hear about is job losses, but in certain sectors there is job creation, which is good.
I welcome the Minister's innovations, including Microfinance Ireland, the temporary partial credit guarantee scheme, the development capital fund and the loan guarantee scheme. Last week I met Mr. John Trethowan of the Credit Review Office and his staff to get their views on the progress of the office and how it was helping small business. I agreed totally with him that its work was progressing well. I am unsure whether he is of the same opinion of me, but when the economy starts to turn, it will not happen overnight; rather, there will be a gradual upturn and the banks must be ready for it. They should not close doors when the times comes for them to re-finance businesses. The Credit Review Office is doing tremendous work to face up to the problem where small and large companies are in trading difficulties. It works alongside the county enterprise boards in this regard. I call on all Members to encourage small start-up businesses to meet the county enterprise boards with their accountants before meeting the banks. Mr. Trethowan is encouraging them to do this also. In certain cases the Credit Review Office is not getting through, but this is not the fault of Mr. Trethowan; rather, it is the fault of accountancy bodies or the banks. The more people use the Credit Review Office, the more credit that will flow. We must get credit flowing.
At the weekend I was at the local cinema. The cinema may be a barometer of the economy because everyone goes to the cinema, whether one is a millionaire or someone who simply seeks some entertainment at the weekend. The manager commented that he had noticed how busy the cinema was. However, in recent years, coming up to Christmas, as the budget was introduced demand dropped but then picked up again as people became more confident later in the following year. If we provide confidence and certainty in the budget and do not suck any more money out of the economy, cinemas will prosper. The cinema is the closest barometer I can offer for the economy without going into technical and fiscal quotations.
I welcome the loan guarantee scheme. I read about the ¤250,000 female entrepreneur fund that was launched recently. Will the Minister circulate the details of the fund? Donegal County Council was represented at a conference held in Boston last week. One of the themes was related to jobs promotion on both sides of the Atlantic for Irish people. A group of female business people, Donegal people living in Boston, are keen to link up more with projects in County Donegal. The fund mentioned would be an ideal source of funding for them. Perhaps ¤250,000 may not be enough and we need more, but how the money is to be spent is a matter for the Department to consider.
Recently, I spoke to representatives of some small companies in the Donegal region who wanted to become involved in the health care business. Some of them have ideas which I have sent to the Minister who has acknowledged them. They want to become involved in the health care business and are relying on research and development, the funding for which must be increased.
CoLab is located at the Letterkenny Institute of Technology and comprises a small group of companies working in software, advertising, innovation, small-scale manufacturing and other areas. The companies are going global and are a microcosm for the economy at large and how we should develop. These people are working with one desk and a chair but are getting results. The research and development support they need should be more readily available.
Senator Mary Ann O'Brien spoke about the sickness benefit scheme that the Minister for Social Protection is considering introducing and I have asked business people in my own area how they feel about it. The response was - and this is something I know to be true after 25 years in business - that in private business there are very few people who take long sickness breaks. It is not because they are any fitter or healthier than others but because of the nature of private business. Absenteeism is not really a problem in the private sector but it is in the public sector. If the Government wants to make savings in that area, it should tell the public service managers to deliver the same efficiencies that exist in the private sector, where the rates of absenteeism are much lower. Having done that, the Government may discover that it does not have to introduce any sickness benefit scheme. All public service departments should be able to deliver better efficiencies because it is done in private business all of the time. I can only speak from my own experience but I do not remember any of my staff being off sick for long periods of time. Perhaps I was lucky with my staff but I believe that is the general consensus among business people. I agree with Senator O'Brien's view up to a point but there is room for the public service to step up to the plate in this regard.
I urge the Minister to be mindful in the budget of the fact that small and start-up businesses need cash in the economy and in peoples' pockets. There is no point having a nice car without a supply of diesel or petrol. We need cash in the economy so that people can go to the cinema, buy popcorn there, buy a burger on the way home and have an extra few euro to spend at the weekends. That is what will make the economy move again and until that happens, the economy will continue to stagnate. We have our own problems here but we also have our own solutions. We have a great record on the export market and if we can bring that success and innovation to the domestic market we will come out of this crisis far quicker than other countries. I thank the Minister for his time.
I welcome the Minister. It is always a joy to listen to somebody with good news and certainly the Minister has brought good news today. The Minister is also hearing great things today. Even members of the Opposition are saying nice things about him. It certainly appears that there is progress and that things are heading in the right direction. We have become more competitive in recent years and because of that, we are making progress. I was delighted to read an article in The Economist this week which said that "Indicators of underlying competitiveness like unit labour costs have also turned in the right direction in most of the countries in trouble...Ireland has done the best, with a 14% improvement since 2008." We are often accused of talking ourselves down but there is good news here and the Minister has brought some of it with him today.
Having travelled around the country a lot recently, I have met some people who have talked themselves into bad news. They are just pessimists but there are others who have talked themselves into good news. It is so interesting to see some of the success stories. I have been taking an interest in the retail sector more than others and there are great success stories in that sector. I was in Malahide the other day and took a look at the new Avoca shop there.
I do not know how many are employed but I estimate that approximately 100 people work in the shop. It is doing some harm to Malahide because everybody who used to shop in the village is now going to Avoca. A chain called Carraig Donn has opened its 21st store even though it only started business a few years ago.
These Irish companies are not looking for somebody else to do a job they can do themselves. They are being innovative and the Government needs to be more innovative in its ideas. Money can be made available from voluntary pension schemes if we encourage people to use part of their funds to free up their finances or invest in house extensions. In 2009 Denmark allowed people to take a portion of their pension funds to cover immediate expenses rather than wait for retirement. Approximately 94% of those who had pensions took out some of their money and the economy was stimulated to the extent that GDP jumped by 1.4%. If we introduce a similar measure we might free up a portion of the estimated ¤100 million held in voluntary Irish savings to create confidence in the economy. Germany deregulated self-employment and cut back unemployment benefit. One may say that sounds like bad news but the intention was to encourage people to work more. The unemployment rate has fallen almost every year since 2005. Sometimes one must do uncomfortable things or take steps that may not be popular to create jobs.
We regard Sweden as a socialist and left-wing country but many changes have been introduced in that country. State handouts have become less generous and it has become more difficult to qualify for them. The Swedish Minister for Finance, Anders Borg, surprised himself when he introduced a tax cut on that basis. Grocers know that they sometimes sell more and increase their profits by reducing their prices. It is possible to do this if one is smart enough but governments have not thought this through over the years. Sometimes we can take in more money by reducing the tax rate. Further innovation is required in this area. When Charlie McCreevy announced a reduction in the betting tax from 20% to 10%, there were howls that he was helping his friends in the horseracing business. The following year he announced that as he took in more money at 10% than he did at 20%, he was going to reduce the rate to 5%. There were more howls that he was helping his friends in the horseracing business but the following year he was able to announce that he took in even more money at 5%.
The Swedish Minister for Finance firmly believes that job creation and economic recovery start with entrepreneurs. Although unpopular, he believed it was necessary to cut taxes for certain rich people. He argued that in most cases a company would not be created without its owner. There would be no Ikea without Ingvar Kamprad or a Tetra Pak without Ruben Rausing. Both individuals moved out of Sweden. Sinn Féin proposes a wealth tax, which is a sure way of losing a large number of people who would otherwise be willing to invest in Ireland. A high wealth tax and an inheritance tax cause people to emigrate because it becomes too costly to own a company.
Ownership is a production factor. Entrepreneurs are a production factor. These people are indeed rich and one can argue that we want to encourage social cohesion but it is also problematic if entrepreneurs are driven out of the country because they are the source of job creation.
In terms of social protection, we must think of other innovative ways to get people back to work. I have spent some time looking at what Sweden has been doing. It introduced a credit for hiring household help. This innovation was designed to spur demand for low wage workers. We think of Sweden as a very liberal country, but it has now reformed its system so that union membership dues, in contrast, no longer qualify for tax relief. Thus, Sweden is encouraging lower skilled people to work and is not ashamed to introduce measures such as a credit for household help. This is something I had never considered.
In Belgium also one can claim a large part of the cost of household help. We should consider some of these steps. I believe local authorities in Denmark are responsible for ensuring the local availability of day care facilities, including child minding. Childminders are supervised and often co-ordinated by the local authorities. Back to Sweden, the combination of lower taxes and fewer benefits there is intended to encourage people to work. The Swedish Minister for Finance says the new system is encouraging more people to take jobs and is the key, not only to faster growth, but also to keeping inequality very low. The Minister for Finance there believes that in the long term, Sweden's reforms will raise the country's employment rate by 5%. We seem to forget about this here. We need to get people into any sort of employment.
Senator Mary Ann O'Brien made a point about something that is threatening jobs, namely, the issue of sick pay payments. She has made such a strong case that there is little need for me to touch on it. However, I believe a huge amount can be done in that area. If we turn a blind eye to the issue and allow what has been suggested to go ahead, we will create a huge gulf in job creation.
I have a personal interest in the Construction Contracts Bill and cannot believe it has got stuck somewhere along the line. The Bill was introduced two years ago and has gone through this House and has passed Second Stage in the other House. However, the Minister of State, Deputy Brian Hayes, is having great difficulty moving it on from wherever it is currently. This is a Bill that will help create jobs. Many jobs were lost when the State paid for big construction contracts, but where the contractor did not pay the subcontractors. I believe we can do a lot on that and would love to see this Minister move on this and help the Minister of State get it off the ground.
I welcome the Minister to the Seanad. Everybody has been praising him here, but we who are in the same party tend to work him to the bone.
The budget is coming up soon and we are doing well in the export market, but we are not doing so well in the domestic economy. Does the Minister have some job creation projects in mind to boost the domestic economy? Senator White mentioned that we had the Nobel laureate economist, Professor Pissarides, here and he spoke about boosting the domestic economy through public investment projects. For example, in the 1970s one such project was installation of central heating, but now such a project might concern the greening of public buildings. Anything that will boost the domestic economy is welcome. As the Minister knows, the construction sector is flat, as is the retail sector. The Minister should consider this. Aligned to this is the suggestion made by Senator Quinn to release pension funds. I do not know if we have got a definitive response on this yet. In these straitened times, we need to help people find more funds to invest in their local economies.
The Minister mentioned a health innovation hub in Cork. This will be useful. I do not know what it will do, but I know that we need to look at the area of health and the potential for jobs. A concept I have been looking at for some time is that of over-reliance, particularly by young people, on being employed. This is a flaw in our education system. We need to educate more for self-employment and for entrepreneurship. I would like to hear the Minister's views on this. I believe we need to run our children on twin tracks, both the academic track and the self-employment track.
Has the Minister considered the concept of an entrepreneurship hub which would help our young people to turn their qualifications into job creating outlets?
I would like to support fully what Senator Mary Ann O'Brien said about sick pay. Job creation starts with entrepreneurs. The Minister must not kill entrepreneurship. We rely on entrepreneurs to create jobs. I will not say much more on the issue because the time available to me is limited. I fully support what Senator Mary Ann O'Brien has said. I have made this point to the Minister, Deputy Burton, previously. We have to consider all of the stakeholders in sick pay - the State, the employer and the employee, who must take more responsibility for his or her health or sickness.
Some of the schemes of financial support for Irish businesses are wonderful. Yesterday, I met a quantity surveyor who had been out of work since 2008, but in the last year has hired 15 people on various small construction jobs. To take 15 people off the live register is a considerable achievement. He did not know about any of these schemes. His accountant did not inform him. I believe the accountants of this country are not sufficiently well informed about schemes like the revenue job assist and seed capital schemes.
I will conclude by speaking about the need for flexibility in the labour market. One of the things we learned from Professor Pissarides was that job subsidies which offer work experience are better than unconditional unemployment compensation. Sweden has a successful scheme which subsidises the hiring of unemployed workers to replace those on maternity leave and other types of leave. The authorities then pass the unemployment compensation to another unemployed person and pay a wage that is higher than the compensation. National insurance contributions are paid by both the employer and the employee. This form of subsidy is ultimately cheaper than supporting people on unemployment. A similar scheme in Germany has also been successful. I ask the Minister to work with the Minister, Deputy Burton, on this concept. We need to give young unemployed people an opportunity to gain experience and feel purposeful, rather than sitting on their you-know-whats while getting unemployment benefit, which is not good for the State or the young person.
I welcome the Minister to the House. We sometimes suffer from groupthink in this House. A great deal of positivity is being directed towards the Minister this afternoon. Some positive things are happening. I assume the Minister accepts the reality that we have a substantial job to do to create the jobs needed to reduce the current standardised rate of unemployment, which is 14.8%. Over 300,000 jobs were created between the first quarter of 2007 and the first quarter of this year. There has been a seismic shift in the whole economy of this State due to job losses, etc. Obviously, the Minister is conscious of that. He is not responsible for the mess he inherited, but he is responsible for trying to work through it. Collectively, we all need to do our best to create jobs for the people of this State. The Minister has my support in that regard.
Three big issues are facing the State in this regard. First, we need an economic stimulus and a proper employment plan that creates the jobs we need. Second, we need a fiscal strategy that is about fair budgets, as Senator Harte said, rather than taking money from people's pockets. When we are framing our budgets, we have to be conscious of the impact of budgetary decisions on the domestic economy. Third, we need a bank deal. I do not believe we will create the jobs we need until we get these three interconnected pieces of the jigsaw right. Sinn Féin has presented a real and detailed job stimulus strategy that would involve an investment of ¤13 billion in job creation and retention. It would be funded by the National Pensions Reserve Fund, the European Investment Bank and the private pensions sector. I remind the Minister that innovative ideas are being proposed by Opposition parties, trade unions and business organisations.
I would like to make a point about regional disparities. The Minister will accept that the south east, where I come from, has an added problem because it suffers from a high level of unemployment that is 5% above the national average. There is a focus on short-term measures that will create as many jobs as possible in the short to medium term, but we also need to show some long-term thinking on the basis of where our economy came from over the last 30 to 40 years.
The south east is a good example of a region which was over-dependent on manufacturing, where students left school early and people were not inclined to be innovators and entrepreneurs because they were able to take up employment in big factories such as Waterford Crystal, Bausch and Lomb, The Foundry and so on. The entrepreneurial drive was non-existent because of an over-reliance on manufacturing. However, that is now gone, leaving a whole swathe of people, aged between 30 and 50 years of age, with no jobs and needing to be reskilled, which is only one problem.
Aside from the short-term immediate policy decisions which need to be made to create jobs now, we need to consider how we can foster a new culture of innovation among young people, in particular in areas which have under-performed, of which the south east is one. I genuinely believe that this needs to be addressed at primary and second school level. I have previously made the point to the Minister that in the case of the Young Scientist of the Year award, we need to be looking at incentives for the business sector which will encourage creativity, a thinking outside of the box and an entrepreneurial spirit. We also need to ensure people see entrepreneurship as an opportunity and are encouraged to avail of it.
The ground has shifted. We are in a completely different situation because of the economic crisis. Out of the ashes of any crisis comes opportunities. Those opportunities will only be grasped in the long term if we ensure that we are genuinely fostering creativity at primary, second and third level and that people have equal opportunities to be entrepreneurs, thus creating the jobs we need. I am asking the Minister to think long term as well as short term.
I am aware of the Minister's views on the small and medium size enterprise sector, which comprises approximately 190,000 businesses. I have previously said in this House that if only 60% of them created one additional job it would make a difference.
The sick pay issue was mentioned. I have previously raised this issue personally with the Minister. I believe, and I hope the Minister agrees, that requiring SMEs to meet the cost of the first four weeks of sick pay would be a further imposition on the sector at this time. It is hoped no further tax will be imposed on this sector in the forthcoming budget. This sector will in my opinion play a significant part in our economic recovery.
Many SMEs are devastated and vulnerable, with some totally broken. Many are operating on a shoestring trying to maintain their small workforce and themselves in jobs for as long as possible. Local people are working together to keep their businesses afloat. Several small business owners who were unable to handle the pressures - of which there are many - have, unfortunately, taken their own lives. Two men, whom I knew, who ran small industries for up to 30 years took their own lives because they were no longer able to cope with their problems.
The small and medium enterprise sector is unaware of the good news which the Minister announced today. Perhaps he would consider blowing his own trumpet and bringing this good news to more people.
I welcome the Minister, Deputy Bruton, to the House. It is always great to see him here. I was involved in the Culliton report which provided previous Governments with advice on this problem. As stated by the Minister, a great deal of progress has been made. The Nobel prize winner in economics, Professor Pissarides, from Cyprus who spoke in this House recently was keen on flexible labour markets, internships and not giving young people money for doing nothing by having them stand in for staff on maternity leave.
One of his themes is that something other than just the dole should be available for young people. We will obtain a full copy of his speech and forward it to the Minister and his officials.
I accept that the reorientation of the banking system is necessary. Between 1998 and 2008, the level of credit advanced by Irish credit institutions rose from ¤66 billion to ¤392 billion. Only 1.9% of this went to either agriculture or industry. I have tabled a measure in this regard to which I hope the Minister will give consideration. I refer to the Mortgage Credit (Loans and Bonds) Bill 2012, which advocates that we should adopt a system of mortgage provision similar to that which obtains in Denmark. If we can get Irish banks out of lending to those who wish to purchase homes - which still accounts for 75% of their business - and encourage them to lend to industry instead, this would provide a terrific boost. Apparently, the Danes have pension funds which are willing to invest in mortgages. I understand that at one point IDA Ireland had plans to bring the Danes into the IFSC. If we moved to the model to which I refer, there would be a different way of financing housing and we could free up the money the Minister needs for the microfinance programme, etc.
There is also a need to reorient the education system, particularly in the context of languages and maths. Too many language departments in Irish universities have been put under pressure. As Senator Clune indicated, approximately 80% of maths teachers do not possess qualifications in maths. This is not of assistance when there is a mismatch between the jobs being brought into the country and the qualifications of those who are unemployed. I understand the Minister of State, Deputy Sherlock, is interested in changing the position in this regard.
On the efficiency of sheltered sectors and the McLoughlin report on local government, Limerick had twice as many local authority staff per head of population as south Dublin. It is a good idea to amalgamate the authorities involved in this regard. All the sheltered sectors must be addressed. Industrial policy is not just the responsibility of the Minister, there is an issue of total competitiveness here. There is also a need to examine upward-only rent reviews and the practice of lobbying for tax breaks which do not result in jobs being created.
I have run out of time but I wish to state that those of us on this side of the House will support the Minister in respect of any action he proposes to take.
I wish to strongly support my colleague and friend, Senator Mary Ann O'Brien, who is an extraordinary example of someone who is an entrepreneur and who has created a significant business interest. She and her husband used their entrepreneurial genius in order to launch the Jack and Jill Children's Foundation. These are the people to whom we must listen. They are not crazy, they have experience.
I have been approached by the organisation which represents small and medium-sized enterprises, ISME. These enterprises, of which there are 9,000 or so, employ 250,000 people. They already pay PRSI in respect of their employees and for replacement staff and they are now being whacked again. Is there going to be a reduction in the PRSI they pay in order to compensate for this?
Sickness schemes help to create sickness. On radio in recent days an employer recounted the story of meeting an employee who was out sick from work and who was returning from a skiing holiday. I do not understand how a doctor could have examined someone who was in Switzerland. The average number of sick days taken each year by people who work for small and medium-sized enterprises is three. The figure for the public service is 12 or more. I do not want to cause a breach between the public service and those in the private sector. However, it is intended to whack those who are putting their own livelihoods on the line for the sake of their businesses. These people get sweet damn all from the State if those businesses get into difficulties. They have no insurance but they are obliged to pay it for others. In 2011, 185,000 days were lost to sick leave in the Civil Service. Some 72,000 of these relate to staff in the Department of Social Protection, where Deputy Burton is Minister. That is extraordinary. A total of 5,000 employees of the HSE call in sick every day. This is not the case among those who work in what I refer to as the real world.
My final point relates to what will be the impact on crèches and child care facilities, which are already on the margins. The Government is aware of the position in this regard. Some 37% of child care facilities have indicated that they will be obliged to make staff redundant and a further 42% have stated that they will have to increase their fees.
There is a need to reconsider this matter. The Minister for Social Protection, Deputy Burton, is a fine individual. The Minister before the House, Deputy Bruton, is also a fine individual but I do not have time to pay adequate tribute to his many qualities.
If we want to encourage industry and enterprise, then we should not kill them where they already exists by introducing particular measures. I am of the view that some explanation should be provided in respect of those measures.
The very least that could be done would be an equalisation and balancing. One cannot pay for things three times; once with PRSI, once with replacement and now this apparently mad notion.
Senator Mary White raised the issue of 8,500 vacancies even though we have high emigration and high unemployment. The action of the Minister for Education and Skills, Deputy Ruairí Quinn, to double the output in the ICT area is an important response. Senator Clune referred to conversion courses. Equally, students and parents must take note. At the start of this decade 9.5% of students did ICT courses. By 2007 the percentage had dropped to approximately half the amount. People voted with their feet to move their study away from the skills that drove an open economy into the skills that drove the property sector. Unfortunately, it is not just the banks that collapsed; but our choice of career went astray. That is an important issue.
Senator Clune made an important point, which is worth reiterating, that approximately 50% of businesses are online but less than half of those trade online. That is shooting themselves in the foot. The statistics show that companies that go online double their rate of turnover growth. It is important to get people to switch. The CEBs have been doing work in this area, as have companies such as Google. More could be done. The Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, is very interested in the issue.
I thank Senator Clune for her work on ICT skills. Real issues arise in that regard. She also spoke about other areas that are not as big as ICT but should be examined. The plastics sector is giving out about lack of skills. It is eminently possible to fill such positions. We must build more connection between our industries and our educational institutes. Dare I say, business must think a bit more long term. We do not have the tradition, as they have in Germany, of traineeships, where people commit to provide places to bring on the next generation of expertise. We need to see more of that approach.
Senator Mary Ann O?Brien raised the issue of sick pay. I acknowledge that could be a problem. Senator Harte referred to the much higher level of sickness in the public sector at approximately 5% compared with 2% in SMEs. We must be careful about anything that would increase the cost of employment. That said, there is a genuine issue in that we seem to have a very high level of long-term dependency under sickness headings on the social welfare system. It is similar to people drifting into long-term unemployment. We have a system where people drift into long-term sickness dependency. We must think of other ways to deal with the issue. Employers must consider how to bring such people back to the workplace rather than accepting that such people drift into receipt of invalidity pension. That is a more important issue to be examined.
Senator Zappone raised procurement policy. There is clearly a conflict between the need to get best value, which largely means centralised contracts and cheap price, and diversity of supply. I accept we must find savings in procurement, which is the lowest hanging fruit. There is no point in us paying 50% more for paper because we scatter it across thousands of contractors. That is madness. We must ensure that innovative companies get the opportunity to bid for business and that, as they do in the United Kingdom and elsewhere, we encourage innovative companies. In the action plan we have a number of good models such as the ESB and several others which do not come to mind. They work with innovative companies to get the first sale and get the company to have a reference sale and the ability to sell beyond that. We can commit to such an approach. We must engineer procurement to favour it but I do not think we will be able to say that there will be a stationery provider in every village in the country. It does not make sense to cut front-line health care in order to support that level of inefficiency or waste.
There are different pressures we have to accommodate. Social enterprise comes under the action plan and will be delivered on before the end of the year. There is scope for social criteria to be included in tenders, which the Minister of State, Deputy Brian Hayes, is examining. Taking someone off the live register in the area where the contract is being awarded, for example, is legitimate under EU rules. Some other points suggested that would favour local suppliers would not be legitimate.
Senator Harte raised the important issue of how small businesses prepare their credit requests for their banks. The banks are at fault for the very high refusals for credit. However, Mazars?s and other studies show applications from small businesses are sometimes not just good enough. They are also not using the appeals mechanism internally in the bank or in the Credit Review Office. We need better support for small businesses to present their case well and be willing to pursue it after the first refusal.
The first competitive feasibility fund for female entrepreneurs, coming to ¤250,000, was oversubscribed. We got 100 applications when we expected between 30 and 40. We are offering another fund, coming to ¤500,000, which will close on 4 December. Hopefully, it will be equally successful.
Senator Quinn raised the matter of voluntary pensions. That issue is beyond my pay grade. There was an incentive where voluntary pensions got a special dispensation in not paying tax to provide for long-term pensions. There are issues as to what funds would be let out of this. It is a matter for the Minister for Finance to consider. In the past, I have noted the Revenue Commissioners being uneasy about this. Senator Quinn also raised the point about a low-tax system for entrepreneurship. Senator Healy Eames?s brandishing of our little leaflet is our answer to that. If people want to establish a company, they can get ¤600,000 from their previous PAYE tax to put into their company. There are generous tax reliefs to get people to switch into entrepreneurship. These are the sorts of incentives we need to create and get more take-up of them. The truth is that only 70 people take up these schemes every year when the Global Entrepreneurship Monitor, GEM, points out nearly 2,000 businesses are set up every month. There seems to be some breakdown in communication which we are seeking to address by having this information available through the Companies Registration Office, county enterprise boards and local enterprise offices.
Senator Cullinane and others asked if we could make big and bold public investments. The Ministers for Finance and Public Expenditure and Reform are trying to get public investment off the balance sheet. A bold stroke is setting up funds for innovation, infrastructure and small and medium-sized enterprises, SMEs, which are off the balance sheet and are renewable which can help to drive investment. For example, these include using the capital from the national lottery to fund the national children?s hospital and water charges for funding investment in the water system. Those are the ways one drives investment when one is fiscally constrained. We have to think smarter than just calling for big spending on public investment.
I support education for entrepreneurship in whatever way we can use it. We will be using the local enterprise offices to promote it. Revenue job assist is a generous subsidy to fill vacancies. Again, maybe we can smarten up the ways these are oriented. This is a double tax relief for three years against wages for the employer plus a tax relief for the employee taken on. It is worth ¤30,000 to a sole trader to take on someone over three years who is long-term unemployed.
The sheltered sector is always with us. Reforming the legal area and local government is very important. However, I do not believe we are at the end of this.
I thank Senators for their input.