Vol. 427 No. 3
2 Mr. Barry asked the Taoiseach if he has studied the National Economic and Social Council's report on The Association between Economic Growth and Employment Growth in Ireland, issued in December 1992; if its findings contained any hope for the 302,000 unemployed; if the council has made representations to him about the report; and if he will make a statement on the matter.
I welcome the preparation of this report which reviews the relationship between economic growth and employment growth in Ireland.
I note that, when account is taken of the role of agriculture over the past 30 years, Ireland's non-agricultural employment record is substantially better than the average for the EC. There have been significant variations in the relationship between output and total employment growth in that period. These reflect the impact at various times of: (i) decline in agricultural employment; (ii) the increasing share of output from manufacturing industry during the eighties which was associated with very high productivity growth, and (iii) the expansion of public sector employment in the seventies followed by a reduction in the eighties as a result of necessary fiscal correction.
While Ireland did not experience the increase in employment intensity which occurred in Europe in the eighties, reflecting an increased share of output from services and a reduction in productivity growth in the services sector, the rate of employment growth here was the same as that for the EC as a whole. This reflected a higher rate of output growth in Ireland in the late eighties.
The report concludes that Ireland's pattern of economic growth in recent years is less employment intensive than in the past. While rates of employment growth have been as good as the EC as a whole, non-European OECD countries have sustained a significantly better employment performance. Ireland needs to maintain high rates of output growth and to increase the employment impact of that output particularly in view of our high labour force increase. I note also that the council, in conjunction with the EC Commission, will be examining policies to increase the employment intensity of growth.
Finally, last week's budget represented the first step towards implementing new measures for jobs contained in the Programme for a Partnership Government such as: the implementation of the recommendations in the Culliton report; development and strengthening of the State enterprise sector; a new national development plan to draw down our receipts of about £8 billion under the EC Structural and Cohesion Funds; a jobs fund with initial resources of £250 million to accelerate public investment in major capital projects; a community development programme for the long term unemployed; targeted wage subsidies for those over a year on the live register; new apprenticeship, vocational, education and training schemes; and major development programmes for our national resources, such as food, tourism, farming and the marine.
Could the Taoiseach indicate what his Government has in mind by way of policies "to increase the employment intensity of growth", to use his own phrase, whatever it means, and if the Government has any plans to implement any of the proposals made in the NESC report?
In response to the first part of the Deputy's question on our policies to increase the employment intensity of growth, I am sure Deputy Dukes would be the first to agree with me that although we had very high rates of growth over the past four to five years, averaging at about 4.5 to 5 per cent, we did not achieve the increase in jobs that we would normally expect with that level of growth. On a close examination it is clear that what has happened in the Irish economy is that as far back as 1965 approximately 35 per cent of our workforce was engaged in agriculture but by 1992 this was down to 11 per cent. Quite clearly there has been a fall-out in agricultural employment; in addition, the numbers employed in the public sector were reduced and most important of all we did not capitalise on the large investment in manufacturing industry over the past ten to 15 years because approximately 25 per cent to 26 per cent of the goods and services requirement of large investment in this country are being supplied internally and the rest are being imported.
Clearly, there is a gap in the linkage between large investment and the jobs related to it. We are not getting the added-value in this economy and that is what we have to strive for. The Deputy asked about the NESC and what our policies are and I should like to tell him that NESC is already engaged in planning how to increase the labour and employment intensity from output. They are considering two specific areas at the request of the Government: the maximum feasible rate of growth for Ireland and whether we are under-achieving in present circumstances. It has been asked, in view of the present large balance of payments surplus, whether we are under-investing in the economy.
It was a large balance of payments surplus before the Central Statistics Office copped on to itself.
The Deputy should look at this matter again because in the last two years the balance of payments surplus was as stated. In 1986 and 1987 when the Deputy's party were in Government mistakes were made. The present situation in relation to the balance of payments is on the record and the Deputy should not try to change that. The EC Commission will also provide additional assistance for these projects and, indeed, will provide the finance to achieve policies in that regard.
It is clear from the Taoiseach's response that, whoever wrote that answer for him produced pure gibberish. The NESC report was not read. That report debunked the self-delusion we have been engaged in. Does the Taoiseach know that the whole purpose of the NESC report is to examine the phenomenon of transfer pricing by multinationals? Does he know that the output on productivity to which he referred has been grossly artifically inflated by the multinational sector in order to boost their profits within this tax jurisdiction and that this helps to partially explain why the normal relationship between jobs and growth does not exist in this economy? When taken together with the phenomenon——
Let us have brevity.
Does the Taoiseach acknowledge that when taken with the phenomenon of the CSO revelation last week in relation to our balance of payments——
We are not having brevity.
We are having gobbledegook.
Yes, from the Opposition side.
To stay unduly long on any one question is to the detriment of all the questions on the Order Paper. We must make reasonable progress.
There are 302,000 people unemployed and this goes to the heart of the matter. The Taoiseach is answering questions and the answer we got is pure gibberish.
You have said that, Deputy.
I would like to repeat it and ask the Taoiseach if his advisers have read the report. Will he comment on the very disturbing findings for our economic performance and the nonsense that our economic fundamentals are sound? That is pure nonsense based on the facts that have been revealed.
That should be adequate.
The report has been analysed and I have given my views on the matter. Deputy Rabbitte, as usual, likes to make statements denigrating multinational investment which is providing thousands of jobs here. He fails to recognise that Irish industry, particularly small industry, has not grown and taken the opportunities that exist in linkage and value-added.
That is right, that is the question.
The real problem of growth in this economy in terms of jobs is added-value. If Deputy Rabbitte does not accept that he is talking gibberish.
I have to congratulate the Taoiseach on an exceptional tour de force in regurgitating the rubbish his brief contains. It did not mean anything. May I ask the Taoiseach if, on the basis of his answer, I can reasonably come to the conclusion that the only thing that is happening about the NESC report is that the NESC is planning to have discussions with the European Commission? Would the Taoiseach agree that this is yet another case where the Government is simply totally ignoring the little fundamental research work that is being done here in relation to our employment crisis? Does he think it is time we saw some action instead of the kind of nonsense he has come up with today?
Deputy Dukes, as usual, comes into the House with verbiage in relation to theory. I am talking about the reality in the Irish economy and where the job opportunities are. I have listed a range of them.
The Taoiseach should fire whatever manager produced that answer for him.
I do not need the NESC report. I know exactly what is happening in the Irish economy.
The Taoiseach should do something about it.
The Deputy thinks miracles can be worked but I have always said there is no quick fix in relation to this matter.
The only miracle would be if the Taoiseach made up his own mind about a single thing.
If Deputy Dukes would listen for a change and stop lecturing he would realise that Governments cannot do everything, that people's decisions are just as important as the climate created by Government in relation to fulfilling the linkage.
On budget day the Government can do everything but today it can do nothing.
It is people who have to make decisions, people who create jobs, and if Deputy Dukes does not want to accept that he is living in a world of unreality.
Since questions are asked of the Taoiseach the replies should be listened to with respect. I will tolerate no more of this. A brief question from Deputy Rabbitte.
I take your admonition, Sir. May I ask the Taoiseach if he is aware of the table in the NESC report, for example, that shows that by comparison with our European partners productivity here was, on average, 150 per cent greater than that of any company here in the multinational enclave? Will he accept that that is manifest nonsense? Is he aware that the report highlights what has become known as the Coca Cola phenomenon whereby one plant here is exporting more coke than would feed the entire United States, which is manifestly a distortion of the statistics? Why does the Taoiseach continue in self-delusion and why do we not face up to these facts?
I have always faced up to the facts. I have never denied that transfer pricing has an effect on our statistics. If we want to talk about transfer pricing and talk about real job creation, I am in the business of talking about job creation. Quoting statistics such as Deputy Rabbitte has done will not create a single job. We want to know what are the deficiencies in our economy. We have performed as good as any country in the EC, leaving aside what is happening in relation to agriculture. As everyone knows no country suffered the fall-out from agriculture in the past 30 years that we did. The Deputy should not ignore these facts. Of course there has been transfer pricing in this economy but we have to put that aside and get down to the root cause of why we have not the jobs.
That is what the report is about.
OECD countries with a similar growth to ours have better employment intensity from the growth than is the case here. It is quite clear that our added value is not sufficient and we have not taken up the opportunities of linkages. If we had, we could have produced thousands of extra jobs in the electronics sector alone — this matter relates to events of last week in Digital. Opportunities for the supply of £300 million worth of components in the electronics industry were not taken up here and until we get the linkage aspect right we will be deficient in jobs.
That is a separate matter.
I can understand the Taoiseach's irritation when questioned about the problem of unemployment. However, since he has stated that people create jobs, does he agree that measures taken by the Government can prove an obstacle to the creation of those jobs? For example, will he explain why he has terminated the employment subsidy scheme and what proposals does he have for a replacement of that scheme in order to encourage job creation?
That is a matter worthy of a separate question.
It is about private people creating jobs.
No. 3 please, Deputy O'Malley's question.
If the Deputy was listening she would have heard me list a whole range of cases.
The Taoiseach does not know about the scrapping of the employment subsidy scheme.
I know them off by heart. There are many schemes such as the PRSI free scheme for two years which is the answer to people who claim that if we reduce PRSI we will create many jobs. Why, since under the scheme people do not have to pay any PRSI for two years, are more people not taken on? Perhaps some members of the Opposition will consider that matter and give us the answer when they have it.
That was fixed in the budget.
Ninety per cent of the job-creating services industries are on the low or exempt rates of VAT.
The employment subsidy scheme was scrapped.
