COMMITTEE of PUBLIC ACCOUNTS debate -
Thursday, 17 Feb 2000

Vol. 2 No. 6

1998 Annual Report of the Comptroller and Auditor General and Appropriation Accounts.

Vote 34 - Department of Enterprise, Trade and Employment (Resumed).

Vote 5 - Central Statistics Office.

Vote 40 - Department of Social, Community and Family Affairs.

Mr. E. Sullivan (Secretary General, Department of Social, Community and Family Affairs), Mr. P. Harran (Secretary General, Department of Enterprise, Trade and Employment) and Mr. D. Murphy (Director General, Central Statistics Office) called and examined.

Chairman

The Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons identified in the course of the committees' proceedings. These rights include the right to give evidence, the right to produce or send documents, the right to appear before the committee either in person or through a representative, the right to make a written and oral submission, the right to request the committee to direct the attendance of witnesses and the production of documents, and the right to cross-examine witnesses. For the most part, these rights may only be exercised with the consent of the committee.

The committee is resuming its consideration of the report of the Comptroller and Auditor General on three Votes - the Department of Social, Community and Family Affairs, the Department of Enterprise, Trade and Employment and the Central Statistics Office. We are further considering the divergence between the quarterly national household survey and the live register of unemployment. We have already established that these are not measures of the same thing. At the same time, the committee is concerned to identify exactly why there are so many more people receiving full unemployment payments each week than are recorded as being unemployed by the quarterly national household survey.

There have been some changes in the figures in the last year or so. I want to ask the three Accounting Officers to bring us up to date. I then propose to take submissions from eight interested groups who have responded in the following order - the Irish National Organisation of the Unemployed, the Irish Hotels Federation, ISME, the Civil Service Commission, the Small Firms Association, the Construction Industry Federation, IBEC and the Galway Chamber of Commerce. In each case we will allow an introductory statement of about five minutes, followed by questions from Members to each group in groups of three.

I welcome the Secretary General of the Department of Social, Community and Family Affairs, Mr. Eddie Sullivan, and ask him to introduce his officials.

Mr. Sullivan

Thank you, Chairman. I am accompanied by John Hynes, director of social welfare services, Cyril Havelin, regional director, Sean Halpin, Colm O'Neill, Ann Tynan and John Bohan.

Chairman

I welcome Mr. Paul Harran, Secretary General of the Department of Enterprise, Trade and Employment and ask him to introduce his officials.

Mr. Harran

I am accompanied by Patricia Curtin, director for programme developments in FÁS who is an expert on the employment action plan, and Paraig Hennessy and Frank Doheny of the labour force development division.

Chairman

I welcome Mr. Donal Murphy, Director General of the Central Statistics Office, and ask him to introduce his officials.

Mr. Murphy

I am accompanied by Gerry O'Hanlon, Director responsible for demography and social statistics, including the labour force survey and the live register.

Chairman

Mr. Sullivan, will you bring us up to date with a brief opening statement?

Mr. Sullivan

I will give some up to date figures from the end of January 2000 where there were just over 176,000 people on the live register, a decrease of about 38,000 on the previous year. About 146,000 of these people are on payments which represents about 83% of the live register. There are about 14,000 people on credits and nearly 16,000 people on other claims. This makes up the 176,000.

Chairman

The 16,000 people are what?

Mr. Sullivan

Other people.

Chairman

Including people not decided upon yet?

Mr. Sullivan

Correct, or in the system in one way or other, suspended or whatever. I will give a breakdown of the 146,000. We estimate that between casual and part-time workers there are about 24,000 to 25,000 people - I am rounding off some of these figures. This leaves a balance of about 121,000 people. An interesting statistic is that about 40,000 of these would be of a duration of less than three months and about 81,000 are more than three months.

Chairman

That is 121,000 people receiving full unemployment payments?

Mr. Sullivan

Correct. A total of 40,000 are of less than three months duration and about 81,000 more than three months duration. The total number in payment is 146,000.

Deputy Rabbitte

What is that as a percentage?

Mr. Sullivan

That is 83%. Sorry, Deputy, 146,000 are in payment of which 121,000 are full payment.

Chairman

Of that 121,000, 40,000 are on the register for less than three months?

Mr. Sullivan

Yes. I will give a regional breakdown. The Border, midlands and west area accounts for about one-third of the total live register. The Dublin area accounts for about one-quarter. I will give any other figures I can.

There are a number of dimensions to the live register as far as we are concerned. We are in the business of processing and managing people's claims to unemployment payments and doing so as efficiently and effectively as we can. Clearly a second dimension is the control of fraud and abuse and we have an extensive and comprehensive programme for checking and monitoring claims, and for interviewing and testing people. We have various units in the Department, there are systematic reviews and we use information technology wherever we can.

The third aspect is our role in assisting, facilitating and activating people to get back into the work system through a variety of schemes or services that we have. The most significant part of that is the employment action plan which Paul Harran mentioned. That has been very successful and involves a high degree of co-operation and work between ourselves and FÁS and some of the results have been very good. Overall we try to have a balanced approach to our management of the live register, trying to help people who are unemployed and helping those on the live register. Over the last while we have found that, as the live register has decreased, we are down to a hard core of people who we feel would need more assistance, more activation and more hand holding than previously. There are issues in there for us as well.

On the last occasion I mentioned that we have started a study to look at the whole issue of the skills of people on the live register to see what kind of new responses might be required to help those people. I will try to answer any questions from the committee.

Chairman

What is your understanding of the total labour force numbers you work off? What is the size of the labour force at the moment?

Mr. Sullivan

I would use the figure the CSO would have. I would not have a figure separate to that.

Chairman

You are using the CSO's figure?

Mr. Sullivan

Absolutely.

Chairman

Mr. Murphy would you address that question in your opening remarks?

Mr. Murphy

We published the figure for the third quarter of 1999, June to August, and the total labour force as estimated by the national household survey was 1,770.3 thousand.

Chairman

What was the figure for the previous year?

Mr. Murphy

The figure for June to August 1998 was 1,688.6 thousand.

Chairman

So it increased by 82,000 up to September 1999?

Mr. Murphy

Yes. Mr. Sullivan explained the position in regard to the live register. We emphasise that the claimant count does not measure unemployment, as has come out clearly in your report. Our measure of unemployment is the labour force estimate based on the ILO definition.

Mr. O’Hanlon

The figures to which Mr. Murphy referred related to the summer period and, to some extent, reflected a seasonal high in the numbers at work. Coincidentally, within the context of the quarterly national household survey, they also result in a seasonal increase in the numbers unemployed as a result of students coming out of education being included in the figures for the first time. Notwithstanding that, it is probably relevant to look at the changes in employment and unemployment figures over the year. Up to the third quarter, the numbers in employment increased by almost 110,000.

Chairman

In one year?

Mr. O’Hanlon

Yes. The figure was slightly higher than that recorded in other quarters but it seems that over the course of three or four quarters, the increase in employment has been running at the 90,000 to 100,000 level. The 110,000 figure reflects the seasonal influx of a greater number of students than in previous years.

Deputy Ardagh

To how many years does the 90,000 to 100,000 figure relate to?

Mr. O’Hanlon

One year. In tandem with that, the numbers unemployed, as measured by the survey, which stood at 101,000 in the third quarter of 1999 were down by just under 28,000 compared with the previous year. The most notable feature there is that the vast majority of the decrease related to the number of long-term unemployed, which may have fallen by approximately 23,000 in the year. One can see over successive quarters that the number of people unemployed for short periods is beginning to level off at about 3% of the labour force. That may reflect the turnover which would pertain in periods of full employment with people changing jobs and others coming into the labour market for the first time. The number of people who indicated that they had been unemployed for more than one year is currently just over 2% of the total labour force. That is the area in which the decline has been most dramatic. If one adds the number of people employed and unemployed, there was an increase of approximately 82,000 in the year. Mr. Sullivan has pointed out that the live register figures for January are now available and we would expect to be in a position to release the results for the last quarter of 1999 at the beginning of March.

Chairman

What percentage of the workforce is represented by the 101,000 figure?

Mr. O’Hanlon

At that stage, it was 5.7%.

Chairman

Of which you say 3% would be people changing jobs——

Mr. O’Hanlon

Yes, people who were unemployed for over a year represent 2.1% of the workforce so people unemployed for less than a year represented 3.5% of the workforce approximately.

Chairman

Okay. From the point of view of having comparative dates, does Mr. Sullivan have live register figures for September?

Mr. Sullivan

The September figure was 186,000.

Chairman

How many of those were long-term unemployed?

Mr. Sullivan

I do not have that breakdown with me.

Chairman

So there was a decrease of approximately 10,000 between the September figures and the latest figures.

Mr. Sullivan

Yes.

Chairman

The live register figure was 186,000, of which approximately 155,000 were long-term unemployed whereas the survey showed a figure of 101,000. Are those the ball park figures?

Mr. Sullivan

Yes, they are about right.

Chairman

Thank you Mr. Sullivan. I call on Mr. Paul Harran from the Department of Enterprise, Trade and Employment to make an opening statement.

Mr. Harran

Thank you. We have witnessed extraordinary employment growth and a dramatic decrease in unemployment figures. It is relevant to look at frictional unemployment, namely, short-term unemployment with people coming and going from jobs and the fact that there is still a significant cohort of long-term unemployed even though the number of long-term unemployed has fallen dramatically.

Our information on overall vacancy levels is quite scant. We carry out surveys on an annual basis and the figures for the 1998 survey revealed a 6% vacancy rate. Within that, there was a significant level of difficulty in particular industries where higher vacancy levels existed.

We would be worried about the overall impact of the tightening labour force and we are trying to find ways of responding to and activating potential sources of labour supply in society. That involves systematically addressing the group of unemployed people in an attempt to find pathways for them back into the active labour force. FÁS serves as our implementation agency in this regard. Clearly, we would have an interest in the income tax and social welfare systems in so far as they have in-built incentives which can affect people's participation rates in the labour force.

Migration is another area of activity which affects the labour force. There is now a significant reversal of what happened in the 1980s, with many more people coming into the country. Although people are coming into the country and filling jobs here, a significant number is still leaving. Last year, more than 11,000 young people went to Australia. This is probably a reflection of people's confidence in the Irish economy in that they feel they can go and work in other economies and return here to share their experiences.

On the activation of the unemployed group, the key element here is the employment action plan. FÁS and the Department of Social, Community and Family Affairs are working closely together to interview individuals and assess their capacity to find their way back into the labour market. The LES is involved in developing mechanisms and interventions to bring people back into the labour market.

The overall outcomes are quite startling. The work is currently carried out on a prevention basis because of the level of resources. When people pass a certain threshold, we intervene and refer them to FÁS for interview. When the under 25 age group crossed the six month threshold, 83% of the group signed off the live register following the intervention. FÁS's data suggest it has tracked other people and that this intervention is a key ingredient in signing off. A large percentage of people also sign off before they have been to FÁS and some sign off the live register once they are referred to FÁS. On reaching the 18 month threshold, 72% of the under 25 age group sign off. As more resources were devoted to the programme, 68% of people in the 25 to 34 year age group signed off.

The deficiency in the European guidelines and policy is that we are dealing with the flow rather than the stock of unemployed. As resources become available, we intend to devote more people to the stock of unemployed. However, there are two pilot projects——

Chairman

Will Mr. Harran explain that to me?

Mr. Harran

"Flow" means that we only intervene when a person crosses the six months threshold or the one year threshold, depending on the age group. If the person is already two to three years in the threshold, the employment action plan does not engage with them at present. It is a question of catching people before they go into long-term dependency. The idea was that, given the scarce resources, it would be better to try to prevent the problem getting very bad and intervene early. However, there is a significant group of people for whom intervention is necessary and relevant. There are two pilot projects to deal with this group, one in Kilkenny and one in Ballyfermot, where we interview everyone in these areas. These projects are relatively new but the outcome looks good at the moment. People do not just sign off and not turn up, as in the case of the younger age groups; most people turn up, we intervene on their behalf and FÁS is trying to devise a strategy to help them get back into the labour market. There is a positive response to this approach.

We have restructured some of our individual activities. Community employment has been directed more at the long-term unemployed. The most recent statistic for CE outcome indicated that 72% of the 1997 group, which was surveyed in 1998, had left the live register and had gone into training or taken up jobs. We are trying to improve and streamline our work permits regime. We are trying to make it easier for people coming from abroad to gain access to labour. This is a constant issue and we must radically increase the number of work permits issued. The restrictions have been eased in some places.

FÁS has been asked by the Tánaiste to increase its activity level with the long-term unemployed. Previously approximately 11% of the total FÁS client group were the LTUs. This has now increased to more than 20%. There has been a dramatic increase in the level of apprenticeships as a means of addressing the labour market problems. Bottlenecks have been occurring both in FÁS's capacity to deal with out-of-work training and the vocational education committees and the Department of Education and Science have difficulties in providing the infrastructure.

Chairman

When you say bottlenecks, do you mean you have not enough places to train people?

Mr. Harran

Yes, but the number of places is increasing. The annual intake has doubled to approximately 7,000 at the end of 1999. There was a dramatic increase in the last two years.

Chairman

What is the total number in apprenticeship places?

Mr. Harran

The total population was 21,000 at the end of 1999.

Chairman

What was it four or five years ago?

Mr. Harran

I will get the correct figures later but it would be less than half that. There has been a dramatic change in the last two years. We have also tried to work with groups such as FIT and Fastrack in the information technology areas, trying to get the long-term unemployed back into the labour force. We have worked with the education and university sector to try to reprofile the types of places available to address what are called skills deficiencies in certain areas rather than a labour market shortage per se. In other words, there is a view that the output from the university sector did not necessarily match as closely as it should the requirements of the emerging jobs. An additional 5,400 third level places were provided in the IT and electronics areas and an extra 730 in FÁS. Our goal is to mobilise as best we can the various elements of the labour force. Female participation rates are increasing dramatically.

Chairman

What is the latest figure for female participation?

Mr. Harran

It is approximately 46% now. To compare it to EU averages, we had to go back a year or two and we were 2.9% behind the EU average in 1987. It has increased by over 2% since then. We are higher than the EU average in the 20 to 24 and 25 to 29 age groups. We only start to drift below in the older female age groups. We are getting a lot of response from females. We can expect a limited capacity in this group. As the groups in work get older, we will move up the league table, given the aging effect of this group of people. There is an increase in female participation rates which is on a par with the best European norm.

Chairman

To summarise, we have been dealing with figures at the end of September last year. The quarterly national household survey suggests 101,000 people who were not employed for more than one hour in the reference week, whereas at that time approximately 155,000, this is the ball park figure, were receiving full unemployment payments. Does Mr. Sullivan agree with that?

Mr. Sullivan

That would include part-time and casual workers.

Chairman

No, it would not. You told me earlier that 186,000 were unemployed.

Mr. Sullivan

Yes, 83% of whom would be on payment. You are talking about a figure of 70% and 86,000.

Chairman

The present full unemployment payment figure is 121,000. If you add, say, 9,000, this brings the figure to 130,000. We are talking about a difference of approximately 25,000 to 30,000. This committee, which is responsible for looking after the public finances, wants to know why is this the case. There are subsidiary questions but the main question is why are we paying full unemployment payments to up to 30,000 people more than the national household survey indicates are fully unemployed.

Deputy Bell

I was a member of AnCO, the forerunner of FÁS. At that stage there was a policy of training apprentices with 100% intake into FÁS centres for training in the various crafts in the building industry in particular. That was subsequently changed by FÁS; apprentices would have to be sponsored by companies within the building industry or within any of the craft sectors. The result was that with the downturn in the building industry over a long number of years, employers were reluctant to sponsor apprentices for the first year with no productivity for them. Would you agree that was the main cause for the downturn in the numbers of apprentices and the chronic shortages now of fully trained craft workers in the building industry, which represents a very large proportion of the figures supplied by the Department of Social, Community and Family Affairs? What does the Department intend to do to redress that situation?

Mr. Harran

We rely on employers to sponsor apprentices. On balance of policy, it is probably a good system as the employee becomes integrated into the marketplace by an employer rather than the State. There are two different attitudes to the type of job they are getting. Most of the training takes place within the labour force. The reluctance of employers to take on apprentices is one of the major causes for the shortfall. Employers in the construction industry did not anticipate the extraordinary take-off which took place. With hindsight they should have invested more heavily and wisely. It is easy for me, as a civil servant, to have hindsight as I am not putting my own money at risk though I am responsible for State resources. Had the employers had more foresight and recruited more people in the mid-1990s when there was an abundance of people available for work they would not be experiencing such acute labour shortages now.

Deputy Bell

Is it true that no incentive was given by the Department or any State agency to employers in the building industry and allied industries to subsidise the training of craft workers employed on behalf of the State? What financial incentives were offered to employers to encourage them to take on apprentices during that period?

Mr. Harran

FÁS would have provided incentives for training off the job. People were subject to apprenticeship rates while on the job. It was not policy to provide employers with incentives apart from those offered by schemes such as job-assist or PRSI reductions. Those type of generic schemes were available to the construction industry at the time. It was not our policy to subsidise the employment of people in this area. The view was taken that they would receive the benefit of labour from these individuals and they would also have the benefit of a skilled workforce.

Deputy Bell

Would Mr. Sullivan agree that there is a great deal of part-time and casual employment in the construction industry due to the policy of sub-contracting? The builder is no longer doing any work but is sub-contracting to other companies who only employ people on a casual basis. Workers in the building industry do not have continuity of employment. That is the reason for the high level of unemployment in the construction industry even though there is a chronic shortage of workers in that area.

Mr. Sullivan

I am aware of the tendency of builders to sub-contract work. I am unable to comment specifically on the construction industry. I am not sure of the extent to which the question of casual employment relates to the shortage of workers. The live register is very volatile; 300,000 people come on to it every year. It has a huge turnover level which may well be reflected in the construction and other industries. I am unable to comment on specific practices within the industry.

Chairman

Did you say that 300,000 people come on the live register every year?

Mr. Sullivan

Yes, 300,000 new claims are made to the Department every year. There is a change in the numbers every month.

Chairman

Is there an average duration people stay on the live register?

Mr. Sullivan

I am unable to comment on the specific practices in the construction industry.

Deputy Bell

Very often we are approached by people from our constituencies - I am sure my colleagues would agree - who are only obtaining casual work in an industry short of workers. I visited a site where 16 of the 17 workers were non-nationals while local people tell me they cannot get full-time work in the construction industry. The Department should undertake some research in this area. I feel that much of the abuse of the social welfare system is caused by sub-contractors and agents on building and construction sites. They are not remotely interested in that industry and have imported racketeers from the UK operating the type of rackets which were prevalent some years ago when I worked there.

Deputy Durkan

Can you throw some light on why we cannot reconcile the figures between the labour force survey and the live register?

Mr. O’Hanlon

We have examined this question for a number of years; others have examined them also. I can only repeat what the committee's consultant, Mr. Tansey, pointed out by saying we are comparing different things. One is not a sub-set of the other. The survey measures the availability of people who satisfy the criteria to be classified as unemployed. In other words, they do not have a job at the time of the survey, they are looking for work and say they are available for work. These are the three specific requirements.

Deputy Durkan

Are the three points being available for work, looking for work and in receipt of a payment?

Mr. O’Hanlon

No. The national household survey does not ask direct questions in regard to a person's status vis-à-vis unemployment benefit or assistance. When questions like that were asked in the past there was an under-statement by people that they were receiving benefit or assistance.

Chairman

Can you clarify that point? What do you mean?

Mr. O’Hanlon

Some people prefer for social reasons or whatever not to disclose that they are in receipt of State benefits. There is a similar analogy if we ask people for information about their income. They are reluctant to disclose their income.

Chairman

Why then can we rely on the survey to reveal everything else accurately?

Mr. O’Hanlon

Absolute accuracy is an ideal in respect of any survey. All we are getting in the survey on a consistent basis is an indication of the number of people who indicated they did not have a job in the previous week, who say they are available for work and are actively seeking work at present. We have no role in or means of verifying the answers.

Chairman

Are those also the requirements for getting full unemployment benefit? Why are so many more people getting full unemployment benefit than are declaring to you that they were fully unemployed in the preceding week? If it is taken into account that some of those people may not receive unemployment benefit because they do not have stamps and their means are too great, that means the difference would be even greater between the two figures. Mr. Tansey talks about apples and oranges and that is correct taken globally, but when one gets down to the question of full unemployment payments, the criteria are very close to the criteria for the quarterly national household survey - yet, there is a divergence of perhaps 30,000. If I am not mistaken, that divergence has almost halved in the year since we started our inquiries into this matter. The last time this question was asked, the figure was approximately 58,000 and now it is down to between 25,000 and 30,000. This committee is taking the issue very seriously. Why is the Exchequer paying taxpayers money when you say that only 101,000 people are fully unemployed?

Mr. O’Hanlon

Our survey provides a measure in accordance with a specific international definition. There are, for example, other measures of unemployment. Up to two or three years ago we had what was termed "a principal economic status" measure of unemployment.

Deputy Durkan

What did that entail?

Mr. O’Hanlon

It asked people to indicate what they consider to be their principal status. They were given a range of options, such as, they were normally at work, would they consider themselves normally to be unemployed, or students, or are on home duties or retired. For example, for the period corresponding to the 101,000 people, that measure turns up a figure of 123,000 people. The overlap between the two figures shows another version of the "apples and oranges" analogy that Mr. Tansey drew in respect of the live register. Only 73,000 of the 101,000 people are classified as unemployed according to both measures. When one talks about one having a unique measure of unemployment one can only say one has a measure which derives from the specific conditions and circumstances under which the question is asked. This is part of the problem.

Part of the divergence in those figures, are people we would classify as discouraged workers, in other words, people who consider themselves to be unemployed but perhaps due to their location, skills and particular circumstances at the time, are not in a position to answer in the affirmative to being available for work or seeking work now.

We include such groups under our wider "potential labour market supply" indicators. There is a potential for such groups to take up work. We indicated three such measures in table 11 of our release on the quarterly labour force survey. While the unemployment rate was at approximately 5.7% in the last survey, the widest potential supply measure about which we spoke was at 10.3%. This included categories such as marginally attached discouraged workers; people who are interested in getting a job but not immediately available to take one up and who are, therefore, not considered as unemployed even though they may be in a short time and people who have indicated they are working part time and are under-employed - under-employed refers to people who would like to get a job with more hours. Those people have been included——

Deputy Durkan

As unemployed.

Mr. O’Hanlon

No. They are part of our wider measure of "potential labour market supply"——

Deputy Durkan

Are they classified as being unemployed or employed and in receipt of a payment, for example? We discussed this at a previous meeting: in what category are the people who worked part time - a three day week or whatever the case may be - and the employer did not have alternative employment?

Mr. O’Hanlon

Within our survey categorisation they are employed. There are people who have indicated their employment is part time and of the 1.67 million people who are in employment, a total of 277,000 indicated they were in part-time employment. Of those, only 5,000 indicated that they were dissatisfied with their working hours. The vast majority of people in part-time employment are women who indicated that it suits their circumstances. The Deputy asked if there is a measure of the number of such people from the survey who are in receipt of unemployment benefit/unemployment assistance and the answer is, no. We do not have that direct connection. The figure for the number of people on the register who work part time is produced by the Department of Social, Community and Family Affairs. That figure is approximately 25,000. We have no further insight to the interaction or direct relationship between the register——

Deputy Durkan

There is not a great deal of clarity as to the message which emerges. The difference of 25,000 people floating between those who are out of work and available for work - I presume that is according to the quarterly survey - does not correspond with the number of people on the live register in a favourable way. The two should be equal unless there is a different measure——

Chairman

They should not be equal but there should be some proximation.

Deputy Durkan

They should be close together.

Chairman

I will ask the Secretary General of the Department of Social, Community and Family Affairs to outline the criteria for full unemployment payment - your figure is 101,000. What questions are asked?

Mr. O’Hanlon

The sequence in which the questions are asked——

Chairman

What are the criteria?

Mr. O’Hanlon

——will probably indicate how it occurs. The first relevant question people are asked is if they had a job of at least one hour's duration in the last week, yes or no.

Deputy Durkan

One hour?

Mr. O’Hanlon

Yes, one hour's duration last week, yes or no. If they answer yes they are classified as employed.

Deputy Durkan

In connection with that——

Chairman

No, no questions yet. Criterion number one - go to number two now.

Mr. O’Hanlon

People who answer yes are classified as employed. People who answer no are then asked if they are seeking a job, yes or no. If they say yes the next question is whether they are available to take up work at this point in time. If they therefore satisfy the three conditions of not having a job, are seeking work and are available for work, they are classified in line with the international ILO classification as unemployed. The two of those categories combined, people who are employed and those deemed to be unemployed, constitute what we define as the labour force.

Chairman

Mr. Sullivan, will you tell us the criteria of the Department of Family, Community and Social Affairs for making full unemployment payments?

Mr. Sullivan

There are basically three conditions. One is that the person must be capable of, available for and genuinely seeking work and within all of that there are guidelines for determining availability for work and the whole question of genuinely seeking work - for instance, genuinely seeking work suitable for a person having regard to their age, education, physique, location and family circumstances. There is a whole range of guidelines which are set out to help deciding officers decide, within the meaning of the legislation, whether a person is seeking employment.

Chairman

So they are the three criteria?

Mr. Sullivan

Yes, at a broad level.

Chairman

Capable of, available and generally——

Mr. Sullivan

I just emphasise that below that there are a lot of issues.

Chairman

I know, but this is the net point. We could get lost in sub-issues and there are lots of sub-issues regarding part-time work.

Mr. Sullivan

I think this is a definition issue. We have mentioned the matter of marginalised people——

Chairman

I will come to that later. If there is a discouraged sector, we can go into those issues of whether there are people on the register who should be on some other social welfare payment, but that does not affect the fact that the criteria for full unemployment payment are very close to the criteria the CSO is using, yet there is a divergence at the moment of approximately 30,000 people, which was a great deal higher a year ago.

Mr. Sullivan

To make one point, without labouring it, about discouraged workers, I have no doubt there would be discouraged workers on the live register.

Chairman

We will come to that in a few moments.

Deputy Durkan

I have one or two essential questions. The question as to whether the person had achieved one hour's work in the last week - is that a fundamental determination as to their availability for work?

Chairman

It is an ILO definition.

Deputy Durkan

Do you ask the person to qualify whether it is insurable employment, for example?

Mr. O’Hanlon

No, there is no specific question asked to determine the insurability.

Deputy Durkan

How would a student who would have a job working in a bar, either in insurable or non-insurable employment - wiping the counter or whatever - be categorised in that survey?

Mr. O’Hanlon

The basic categorisation is to say that someone working for one hour or more for payment or profit is employed; and so the student cleaning up a bar would be included - even the student who does babysitting - can be categorised as being in the workforce if they themselves deem that to be sufficient reason for them to answer yes to the question.

I refer you to the reply and observations we gave on your draft report where we provide a table which gave a breakdown of the numbers in employment according to the hours being worked. From a total of over 1.55 million people at work, less than 25,000 indicated that they worked for less than ten hours in the previous week and of those, only approximately 500 indicated they were dissatisfied with the number of hours they worked. In the overall context it is a relatively small number.

Deputy Durkan

As regards the disparity that exists between your figures and those of the Department of Social, Community and Family Affairs regarding the live register - do those people, in your opinion, fall into the category to which you have referred? Does the disparity arise from the question of one hour work per week?

Mr. O’Hanlon

Undoubtedly some of them are. I would not suggest that the majority of them fall within that. Mr. Sullivan was explaining that one finds significant numbers of them falling outside the labour force - in a statistical sense, discouraged workers or various others who may not be, for example, at the particular point of the survey, indicating their availability.

Deputy Ardagh

Specifically on the question of the difference between the labour force survey and the live register, if we just look at the long-term unemployed, it might be easier to get some correlation between the figures on the live register there and the labour force, as it is a more solid base and grouping. Looking at the question Mr. O'Hanlon asked in the quarterly household survey - if a person has worked before, if they are available and capable - if one was a dispirited, long-term unemployed person, surely there is a different emphasis one would put on those questions in answer to a household survey than in answer to the local unemployment officer down in Werburg Street. I think Mr. Sullivan said there were 80,000 people more than three months unemployed on the January unemployment or live register figures. Do you have a figure for the long-term unemployed in the labour force?

Mr. O’Hanlon

Yes, in the third quarter of 1999, of the 101,000 who indicated they were unemployed according to our definition, 38,000 indicated they were unemployed for one year or more and 63,000 indicated that it was less than one year. I do not have any further refinement of the less than one year category with me at the moment, for example, in regard to people who were unemployed for less than three months.

Deputy Ardagh

How many were unemployed for more than one year?

Mr. O’Hanlon

Thirty eight thousand.

Deputy Ardagh

Does Mr. Sullivan have a comparable figure for the number on the live register who were on the register for more than one year?

Mr. Sullivan

Approximately 42%.

Deputy Ardagh

Is that 42% of 176,000?

Mr. Sullivan

That is correct.

Deputy Ardagh

What is 42% of 176,000?

Mr. Sullivan

Seventy four thousand.

Deputy Ardagh

So there is a difference of 36,000 between the number of people on the live register for more than one year and the number of people who classify themselves as unemployed in the household survey. Is it reasonable to assume that at least some of the people on the live register have worked for more than one hour in the previous week if that answer has been provided to the labour force survey?

Mr. Sullivan

I would not have thought so. I have some difficulty with this type of reconciliation of the figures. We are talking here about people who are discouraged and who are only marginally attached to the labour force. Undoubtedly, many of these people would be on the live register.

Chairman

As the Accounting Officer, you are telling us that you are paying people who do not meet the criteria you have outlined for us.

Mr. Sullivan

No, no.

Chairman

You have told us that people must be fit for work and seeking work, yet are being paid if they are not.

Mr. Sullivan

Increasingly we are encountering people who lack the skills and educational qualifications to obtain jobs and who end up feeling discouraged. I do not think that in itself is a criterion for knocking them.

Chairman

I will read back your comments of a few moments ago. You said: "They should be capable of, available for and genuinely seeking work". Now, you are saying you are paying people you know are not in that category.

Mr. Sullivan

No, I am not saying that.

Chairman

This comes very close to an admission by you, as Accounting Officer, that you are not applying the rules as laid down. We have had this problem in regard to the banks. If people who are discouraged are not available, the case could be made that they should be in receipt of a different type of social welfare payment. They should be assisted but they do not meet the criteria which have been outlined.

Mr. Sullivan

I am saying there are people on the live register who lack the skills, educational standards and motivation to obtain employment. I mentioned earlier that we are examining the issue of the employability and job readiness of people on the live register to see what other assistance we can provide. Many of our services are geared towards encouraging people on the live register, through the various schemes and other services and through the employment action plan, back into the labour force. We need to get a better handle on the skills level, availability and job readiness of people on the live register to see whether we need any other policy responses. We apply the rules and regulations in our offices throughout the country and there is a deciding officer structure in place. Guidelines are set out in regulations——

Chairman

Then you should not offer the fact that some of these people might not be capable of working as an excuse for the divergence in the figures.

Mr. Sullivan

I did not.

Chairman

That is how it appeared to me; I am becoming very frustrated with double-talk and people not facing up to the reality that a problem exists. Double-talk and double-think are not acceptable to this committee which is the guardian of the taxpayers interest in these matters. It appears to me that the rules are not being applied although there may be good intentions behind that. It is a matter of deep dissatisfaction to the committee that there is such a level of double-think in regard to these figures and something more needs to be done, although I admit some progress has been made in the past year.

Deputy Ardagh

May I continue with my line of questioning in regard to the difference between the numbers registered as long-termed unemployed and those people who will admit to being long-term unemployed on a form? There is a matter of pride at stake here for people who are long-term unemployed. I know a number of people who cut somebody's grass or hedge or do other small jobs out of pride. They do not get much for that work but they feel they have actually worked. They could be in the cohort of people who work for between one and nine hours a week. We must look at this issue from a social perspective and recognise that some people may have small incomes, possibly in the region of £20 or £30 per week. That may account for the divergence in the figures. Is there any way, from the questions asked in the quarterly survey, that that possibility could be confirmed?

Mr. O’Hanlon

Only indirectly, because in the absence of a question which allows us to directly relate people we know are on the live register to the answers we receive in our survey, we cannot make that connection. That was the background of the special exercise we conducted in 1996 as a once-off effort to profile the differences between the two sources. Members will recall that a small sample of people on the live register were included in the labour force survey at the time and were interviewed by having the survey questions asked of them. That exercise revealed certain profiling information. This issue was dealt with in some detail in Mr. Tansey's report in which he drew on those profiles. I must stress that such a procedure cannot be an ongoing feature of the survey.

Deputy Ardagh

It should be noted that the reduction of 28,000 in the number of people classified as long-term unemployed in the year-on-year is very significant. There again, the question arises as to whether there was a similar reduction in the live register. I am not saying anyone is to blame in this regard or that anyone has done anything wrong, but our statistical knowledge of this issue is incomplete and there is a need for further clarity.

Mr. O’Hanlon

If I could make one observation on that. Twice a year, a special analysis of the live register is carried out on the basis of the length of time people have been on the register. The most recent figures relate to October 1999. At that stage, the total number of people on the register was 177,300, 75,000 of whom were on the register for one year or more. In October 1998, there were 211,000 people on the register, 95,000 of whom were on it for one year or more. There was thus a decline of 20,000 over the one year period in the numbers on the register for one year or more. I mentioned already that in the QNHS series there was a decline of about 23,000 in the numbers who indicated they were unemployed for more than a year. The trends are in the same direction but obviously they are not exactly measuring the same thing.

Chairman

We will now move on to the groups who were good enough to respond to our request for submissions.

Deputy Rabbitte

I wish to ask a brief question. Mr. Sullivan hinted that new measures were being contemplated to further reduce the long-term unemployed cohort and to give people an opportunity to get a toehold in employment. Can Mr. Sullivan or Mr. Harran tell me I am wrong in saying the anecdotal evidence is that the LES has not been the success we thought it might be?

Mr. Sullivan

I was referring to the range of measures taken by the Department to help people back into the labour force. I was thinking more of the job facilitators around the country who encourage people and convey their options and entitlements, such as the back-to-work allowance, to them. As the live register has decreased, we have been able to case manage some of the people on the live register and spend more time encouraging them. We have also been proactive in displaying job vacancies in our offices. I was talking about those kind of activation measures which we undertake, quite apart from what we do with FÁS on the employment action plan where people meet a placement officer. We are looking at what other kind of measures we might adopt. That depends on the outcome of our study of people's requirements.

Deputy Rabbitte

Is it true the LES is not producing the results one might reasonably have been persuaded it would have?

Mr. Sullivan

I do not have the figures on the LES here. I understood it was working satisfactorily. The National Economic and Social Forum is looking at it at the moment and a report will be issued. I think it is generally positive in relation to the LES.

Mr. Harran

I have some statistics which might be useful. In the year to date December 1999, approximately 3,000 were job placed. Currently active at the end of that year, for that year, were 4,500. The activity would have been about 3,000 in mediation, 1,000 in CE and others in sub-categories. The experience with the LES is that some areas are stronger than others - some are up and running more quickly, some are better led and others have a different relationship with their partnership group. We are concerned they would not have the same throughput rates as the employment action plan. The number of staff and resources devoted to it would not be going through the same quantum. I do not have any qualitative analysis - are they doing a better job and dealing with a more difficult grouping of individuals? The LES grew out of an environment of social exclusion and alienation from State support structures. Although I do not have any qualitative analysis, it seems the LES was successful because it was accessible to people who felt let down by the State. At that stage, I do not believe the service provided by FÁS was at the level where it could systematically intervene with individuals.

The current policy is to integrate welfare activity, the FÁS employment action plan and the LES as an outreach into the community areas. Some LES schemes have apparently had a higher job placement rate than others. Hopefully we can learn of successful interventions within the LES schemes and propagate them in other areas. It would be wrong of me to damn the LES because it provides a useful function in certain areas. I do not have the hands on understanding of each scheme to say anything on the basis of job placement. On the surface it may not look very strong but in reality there may be a reason. The policy view is that there is a need to integrate the LES with FÁS to provide a more streamlined service and to use resources more effectively. A significant stock of people still need support.

Deputy Rabbitte

We have received submissions from a number of organisations, the employer organisations in particular, pointing to the labour shortage and it is not only a skilled shortage. Are changes being contemplated in the process of trying to extract work permits for migrant labour? We have migrant workers here and we seem to be happier to pay them social welfare than allow them earn their keep.

Mr. Harran

The Government decided to facilitate asylum seekers who have been here for more than a year, at a particular date and time. They were issued with letters which basically authorised them to look for employment. FÁS will open an office in Tallaght in March to provide a service to help that group of people gain access to employment. A second office in another part of the city will be opened to work with this group of people. An interdepartmental group is also looking at the wider issues of immigration, work visas and how labour market deficiencies and shortages might be alleviated by a more liberal policy of welcoming workers who are non-nationals. It is interesting to note that about 80% of immigrants are from the EU or EEA region, which is a common travel area so there are no constraints on them. However, there is an issue of visa and non-visa countries and changing the policy. This is being looked at. It is an area of active policy.

Within the Department, in the narrow area of work permits, there is a move to change procedures and put them on a statutory basis, recognising the fact that the former function of the work permit regime was to protect the scarce number of jobs here and to broaden the area to be more responsive to existing economic concerns. We are trying to reduce the need for work permits in certain categories of workers. We have increased staffing in the Department and reallocated resources to try to increase the turn-around time which was not satisfactory as the numbers increased. Ultimately we will be looking at the level of immigration and whether a work visa system can be put in place.