Written answers

Tuesday, 18 September 2012

Department of Jobs, Enterprise and Innovation

Labour Market Flexibility

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Jobs, Enterprise and Innovation his policy on tackling labour market costs; and if he will make a statement on the matter. [37430/12]

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Jobs, Enterprise and Innovation his policy on increasing labour market flexibilities; and if he will make a statement on the matter. [37431/12]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 584 and 585 together.


Employment policies that promote labour market flexibility together with tax and benefit systems that reward work and provide a pathway to employment, education and training opportunities for those who have lost their jobs are a necessary prerequisite for progress. The measures in the Government’s Action Plan on Jobs together with those to support the unemployed to return to the workforce in Pathways to Work are consistent with the approach in the European Union’s guidelines for national employment policies to help to create conditions favourable to job creation through enhancing, at the same time, flexibility and security in the labour market.


The Employment Performance Monitor 2012 endorsed by the EU Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) in June 2012 identified the continuing rate of decline in nominal and real unit labour costs as particularly positive outcomes of Ireland’s recent labour market performance. The decline in unit labour costs means that productivity has increased faster than earnings – thus indicating an improvement in competitiveness. While the rate of growth in Irish unit labour costs significantly exceeded the OECD and euro area averages between 2005 and 2008, unit labour costs in Ireland have been falling consistently since then. Unit labour costs are improving faster in the internationally trading manufacturing sector than in more closed sectors of the economy. In its recent European Economic Forecast for Spring 2012, the European Commission noted an improved performance in Ireland’s export sector and also growth in Ireland’s indigenous firms due to competitiveness improvements and the continuing fall in unit labour costs on the back of productivity improvements and wage moderation. Irish labour wage rates – when adjusted for productivity – are becoming more cost competitive.


The enactment of the Industrial Relations (Amendment) Act 2012 allows for a reduction in the number of Employment Regulations Orders (EROs) and in the number of minimum wage rates that can be set in each ERO, and excludes conditions of employment covered in other legislation such as Sunday premium rates. The overall effect of reforms in the legal framework for the Employment Regulation Orders and Registered Employment Agreements will be to make minimum wage setting mechanisms more responsive to changing economic circumstances and to enhance competitiveness and preserve jobs in the affected sectors.


Ireland’s labour market flexibilities are acknowledged as a valuable accompaniment of our open economy, high level of human capital and business friendly environment. The quality of Ireland’s labour market ranks highly in international comparisons. In the 2012 IMD World Competitiveness Yearbook, Ireland is ranked first in terms of availability of skilled labour and first for the flexibility and adaptability of people.


The Action Plan for Jobs identifies the scope for reducing the cost of business and easing new recruitment through a series of initiatives, including: simplifying and extending the Employer Job (PRSI) Incentive Scheme, which exempts employers from liability to pay their share of PRSI for certain employees. The scheme has been extended to cover the first 18 months of employment; the National Internship Scheme provides internship opportunities of 6 or 9 months for unemployed individuals in organizations in the private, public and community & voluntary sectors; the Revenue Job Assist Scheme provides incentives to employers through a double deduction and for employees through additional tax allowances for those unemployed for at least 12 months; the incentive scheme to encourage foreign mobile talent (SARP) will allow multinationals and indigenous companies to attract people to create more jobs and facilitate business expansion in Ireland.

High unemployment remains a difficult challenge and requires resolute action through the transformation of labour market activation policies along the lines outlined in the Government’s policy statement Pathways to Work.

Comments

No comments

Log in or join to post a public comment.