Interim Report of Task Force on Long Term Unemployment: Statements (Resumed).

Minister of State at the Department of the Taoiseach (Mr. G. Mitchell)

We have to come to grips with the term "local development". Deputy Harney made the point that all employment issues should be dealt with by the one Department. Local development is co-ordination and is rightly located in the Department of the Taoiseach which is where co-ordination properly takes place given that the civil servants in this Department chair many interdepartmental committees. Local development is a means of creating local employment but it also has greater implications.

I will announce 35 disadvantaged areas throughout the country. They have been scientifically chosen based on data compiled by bodies such as the Combat Poverty Agency. In each area there are problems associated with long term unemployment and social structure problems. In each area a partnership company will be established comprising the social partners — businesses and trade unions — the local community and State agencies. It will have a local office and manager. It will consult widely with the community to determine its needs under a number of headings and produce a plan which will be submitted to an umbrella a company called Area Development Management Limited, ADM. Each company could receive, on average, up to £400,000 per year for up to five years. This figure was arrived at by dividing the amount available by the number of areas designated. An area as big as Donegal could expect to receive more than could a small segment of the city if it submits a plan to justify this. I am giving an indication of the magnitude of the assistance available.

In addition each company will be able to avail of the services of mentors, professional and business advice, advice from State agencies, information and advice on how to plug into mainstream services and to identify vulnerable school-leavers who become the long term unemployed. The Department of Education will also allocate an education co-ordinator to each area who will consult with the partnership company and produce a menu of items covering such matters as teaching people computer and other skills. Assistance will be provided for preschool facilities and in certain categories more generous community employment training will be provided.

Community integration is not just a matter of employment, it is a matter of tackling poverty and disadvantage in the poorest areas. It is also about empowering local communities aware of their own needs to tackle their problems. Local development is targeted and integrated and there are 12 pilot partnership area schemes from which we can learn. If it works according to plan, which I think it will, it will be one of the most successful schemes ever introduced here.

One of Fianna Fáil's newest recruits, a former IDA chief executive, said on radio recently that his partnership company has placed 600 people who were long term unemployed in employment in north Dublin during the past 12 months. It is to be commended for this. I am not interested in the political hue of those involved; the only question I ask is whether they can be effective and I look for a positive answer in each case. Similarly in Tallaght a significant number of people who were long term unemployed have been placed in employment during the past 12 months.

This is not about making announcements; rather it is about informing the local community in disadvantaged areas of the opportunities available, giving them the tools with which to do the job, real power and, in turn, asking them to take responsibility. In giving them a budget, a manager, an office, back-up advice, assistance and encouragement the approach is to find out why young people are leaving school and what can be done to prevent it. Each community will have a different answer. That is the reason a menu will be supplied by the Department of Education from which local partnership companies will be able to choose the best solution for their areas.

The interim report of the task force on long term unemployment proposed the establishment of an all-in-one combined service for the long term unemployed. This service which is currently operated in 12 pilot partnership areas offers guidance, counselling, career path direction, education and employment placing, the net intended effect being to break the cycle of self-perpetuating long term unemployment. The operational programme for local urban and rural development is expanding the number of partnership areas from 12 to 35. These areas, which meet certain disadvantage criteria, will now be supported in the creation of small local enterprise; the establishment of projects to enhance the local environment.

In recognition of the link between poverty, unemployment and early school leaving, innovative measures will be taken to reduce the incidence in disadvantaged areas of school drop-out at a young age. In one part of Dublin 35 per cent of all those who leave school do so at the age of 15 or younger. In one of the areas covered by this scheme in Dublin the unemployment rate is 45 per cent; it is as high as 70 per cent to 80 per cent in parts of this area.

Community employment which is intended to act as a bridge between long term unemployment and eventual reentry into the labour market may be extended from one to three years for certain participants, mainly those over the age of 45. All these measures are dependent on and should ensure the participation of local communities in the forging of their own future. Up to £10 million will be provided to identify early school-leavers and assist pre-school centres in disadvantaged areas together with a programme to help vulnerable early school-leavers who usually become the long term unemployed.

Thirty-five companies will be created locally, made up of the social partners, State agencies and the local community, with a budget of £89 million over the five year period. The objective will be to enhance the local environment so as to attract enterprise to areas of greatest need. We are empowering local communities to have a real and substantial say in creating job opportunities. The programme will facilitate training in local authority estate management as the environment in which we live has a direct relationship to education and employment opportunities.

I have long believed that there are two primary ways of creating an opportunity for equality in society, access to third level education and to decent housing. Even if people have access to third level education, how can we expect them to study in some of the local authority flat complexes in this city and in some local authority estates around the country as the environment in such housing is completely wrong? Not only is access to third level education and, in many cases, second level education completely cut off to those people, but the environment in which they live marks them out as people who have a hill to climb. There is a direct relationship between education, environment and employment opportunities.

The programme will provide a framework agreement between each partnership company and FÁS, within the partnership area locally. Plans will be agreed between the company and FÁS to ensure that the FÁS schemes are those needed in that area in terms of their priorities.

It is easy to denigrate and be critical but it is not so easy to be hard working, to research and to ascertain the facts. Many people in the House who advocate certain economic policies from time to time do not live in the real world of the unemployed or the unemployable person living in a local authority flat in inner city Dublin or in many of our rural areas. This local development plan will give hope to local communities and provide them with the tools to do the job. It will also cut through the patronising nonsense which has emanated from State agencies for years by acknowledging that local communities know best and must do the job. However, local communities cannot continue to ask what the State will do for them. The people to whom we give this type of responsibility must shape the future of their own communities. If they do that, I have no doubt that the target which I set of creating 8,000 jobs through local partnerships over the next five years will be realisable. If the Northside partnership is anything to go by, that target certainly can be achieved in those 35 partnership companies. The £89 million will considerably help that process but, equally important, is co-operation between the communities, the State agencies and the business, trade union and farming organisations involved with these companies.

As a former Lord Mayor of Dublin and a member of Dublin Corporation's Housing Committee for 16 years until I resigned on my appointment as Minister of State, I am not satisfied with Dublin Corporation's record in regard to estate management. That probably applies to other local authorities also but I can only speak about the one with which I am most familiar. This is an important point in any debate on employment in our community. If people do not have the right environment in which to study and evaluate their own worth, they are starting out in life not just with a bad address but with a millstone around their necks.

It is not good enough to simply spend money on refurbishing local authority flat complexes. In Fatima Mansions, in my constituency, approximately £10,000 per unit was spent on refurbishment. That is a substantial amount of money which obviously incorporated work on the exterior of the flats and the gardens. However, having refurbished the flats Dublin Corporation did not put in place any type of proper estate management, by that I mean management which involves the tenants and requires them to take some of the responsibility for the maintenance of their estates.

Some of these flat complexes contribute to bringing down these areas. Businesses will not locate in a community that looks derelict or which has dark, dank stairwells on which people shoot up drugs. They do not want to be associated with those areas. If we are serious about tackling unemployment in our blackspot communities, we must be serious also about removing decay and dereliction.

In one flat complex in my constituency — not the one to which I have just referred — 2,000 people are living almost on top of each other in a series of tower blocks. That is equivalent to a fairly large village in any part of rural Ireland and yet, there has not been any attempt to encourage proper estate management or a system whereby there is control over who enters those flat complexes; anybody who wants to enter them to ply their illegal trades can do so. I believe estate management is central to preventing urban decay which takes from the possibility of attracting industry to local areas.

Under the programme local communities will be provided with a budget and a local office. Communities will be consulted on their plans which will be evaluated. Early school leavers will be identified and the pre-school situation will be examined. A menu of educational opportunities will be identified and consultations will take place with the local communities on a framework document for training through FÁS. These measures are an important part of an integrated plan to tackle disadvantaged and unemployment in those areas of our community which have suffered greatly for far too long.

I ask the support of all the Members for this programme of urban and rural development which goes beyond the simple remit of employment. The provision of employment and helping the long term unemployed is the objective but that must be done through an integrated programme. I hope that all Deputies who are invited to attend local launches around the country will do so because it is important to encourage and give leadership locally to the community to participate in this important programme.

Mr. T. Kitt

This is one of the most important debates we have had in this House for some time. Unfortunately, it is not well attended but I have no doubt that other Members intend to contribute.

I welcome the Minister's comments and I am very much aware of his personal experience gained as a member of Dublin Corporation and as Lord Mayor of Dublin. I particularly welcome the fact that in this debate rural and local TDs are of one mind in relation to the need for local initiatives. I come from the west and I have always supported rural initiatives, particularly relating to the west for which the arguments are very strong. For too long this House neglected the needs of urban areas, particularly Dublin, and I am glad that position is changing. In many regards rural areas have advantages in that local parishes have a sense of community and neighbourly support which very much fits into this approach of bottom-up development and community participation. Sadly, that does not exist in many parts of Dublin and that is why we need intervention by agencies from the Government down.

I agree with the point made by many of my colleagues that there is a complexity of agencies and a number of Minister agencies dealing with this matter. That issue needs to be addressed. We heard a very fine speech from the Minister of State, Deputy Gay Mitchell, who has responsibility for local initiatives. The Minister for Enterprise and Employment, and the two Ministers of State at that Department, are also involved. Demarcation lines and responsibilities in this area should be clarified. Sometimes we hear reports of competition between Ministers, but I do not know whether they are true. Those involved in community initiatives at various levels — many excellent groups and organisations are involved — should be told who is responsible and who will support them in their efforts.

Since this is the first of two reports, the Local Employment Service will not operate to its full potential until the comprehensive package of recommendations by the National Economic and Social Forum is fully implemented by the Government. The establishment of the Local Employment Service was the central recommendation of the forum's report published in June of last year. Like other Deputies, I pay special tribute to the chairperson of the NESF, Ms Maureen Gaffney, for her commitment, energy, leadership and dedication, all of which she demonstrated in endeavouring to tackle the greatest challenge of our time, long term unemployment.

The forum has clearly set an agenda for the future. A new, realistic approach is being taken to this matter and a fundamental reassessment of policies in this area is taking place. We have had many excellent reports, documents and analyses and I think everyone would agree it is time for action. The problem is serious and needs our attention. Structures must be put in place immediately. This can be done relatively swiftly in the 12 partnership areas. I suggest that the Minister make the necessary arrangements immediately for the non-partnership areas. He must ensure they get off the ground without delay so that they can provide the necessary services in the most needy areas.

The forum report emphasises that the Local Employment Service should make available education, training and employment experience options, as appropriate, to its clients. It also stresses that the purchase and delivery of programmes must be eventually separated. That recommendation is worthy of support. It is not desirable that the purchase and delivery of a service be in the hands of the same agency.

The Government task force will concentrate on the forum's recommendations on employment options for the long term unemployed. I agree with the forum report that the full set of options as recommended be implemented. I would place particular emphasis on the longer duration contract type options. It is vital the Local Employment Service has direct access to resources and has control of expenditure, otherwise its functions will be ineffective.

I welcome the publication of this report and the launch by the Minister for Enterprise and Employment of the new Local Employment Service. The service and the local management committees which will be responsible for running it build on the area development partnerships established under the Programme for Economic and Social Progress by Fianna Fáil in Government. In this context, I am pleased to note that the local management committees will operate under the auspices of the existing area development partnerships and will thus benefit from the experience which has been gained by the partnerships.

The new initiatives which are welcome and which build upon work commenced by Fianna Fáil, not only under the Programme for Economic and Social Progress from 1990 onwards but earlier under the Programme for National Recovery launched in 1987, address one side only of the very serious challenge to us all to provide jobs for the 280,000, or 20 per cent of the workforce, who are unemployed. It is desirable, indeed essential, to improve the operation of the labour market and to positively discriminate in favour of the long term unemployed who are undoubtedly the most disadvantaged of those who are without employment.

Services for the long term unemployed, no matter how excellent in quality or how well co-ordinated, will not, however, directly result in the creation of very many additional jobs. We cannot rely totally on local initiatives, however desirable and effective they may be. We must return to address each of the four essential integrated components of economic and social policy which were first enunciated by the social partners in the NESC report of November 1986 and which formed the cornerstone of the Programme for National Recovery agreed between the Fianna Fáil Government and the social partners in 1987. The four essential and integrated components of the strategy for economic recovery were and still remain: control of public finances; tax reform; development policies and the removal of social and economic inequities. The provision of new services to help the long term unemployed will certainly help to alleviate some of the social disadvantages from which they suffer and it will help to prepare them for entry to the job market provided jobs exist for which the long term unemployed can compete.

I spoke in the budget debate about a number of issues which the Minister for Finance should address in the forthcoming Finance Bill if he is really serious about encouraging enterprise. I suggested, for example, a targeted approach to reducing corporation tax which would help small companies to grow by allowing them to retain and invest profits for expansion. I suggested extending the PAYE tax allowance to owner directors who operate the PAYE system in full. I reminded the Minister for Finance that if he wants to encourage the entrepreneurs in our society, he should look at these issues.

My comments about the need to encourage enterprise which I made in the context of the 1995 budget are equally applicable to the debate on how to help the long term unemployed to gain employment. We must remember that jobs are created by people who have the skills and other resources to produce and successfully market goods and traded services in Ireland and internationally. The development and encouragement of these entrepreneurs is what job creation is all about in the final analysis. The development of entrepreneurs is the only sustainable way in which to provide jobs for the 280,000 who are out of work, including the 135,000 long term unemployed. The Minister of State, Deputy Mitchell, referred to a very successful project in Coolock where people with experience who showed leadership in getting involved in these projects drew from their entrepreneurial skills and achieved tremendous results. The approach of entrepreneurs leading others is a model we should pursue.

An aspect of national economic policy which is very topical and is directly relevant to job creation is the current instability in international money markets and the knock-on effects on Irish interest rates and on the exchange rate of the Irish pound with sterling. I remind the Government and the House that small Irish exporters are particularly dependent on the British market and will lose market share, and consequently jobs, if the appreciation of the Irish pound against sterling remains for anything other than a very short time. The United Kingdom remains by far Ireland's largest trading partner both in terms of imports and exports. More than two-fifths of our imports come from the United Kingdom whereas only one-twelfth of our imports come from Germany. In terms of exports almost one-third go the United Kingdom — the figure is very much higher for indigenous Irish manufacturing exports — in contrast to one-eighth to Germany. In terms of economic importance, therefore, the United Kingdom is five times more important to us as a source of imports and two and a half times more important as an export destination.

The interests of Irish jobs in business demand that the Government prepare as a matter of urgency and place for debate before this House a paper assessing the implications for Irish monetary policy, trade, economic development, job maintenance and job creation of the current instability in the international money markets. The paper should focus on the implications for Irish interest rates and exchange rate policy of the de facto and financial market links with sterling and the implicit public policy of shadowing the deutschemark. It is clear the two sections in the economy to suffer most from interest rate increases are home owners with mortgages and small businesses trying to finance working capital in order to underpin jobs.

There is a need to focus on enterprise and job creation. If we really want to help the long term unemployed in an economically sustainable manner I suggest the Government should look more fundamentally at the relationship between education and jobs. The Government should concentrate in a focused way on providing the necessary resources to enhance the job prospects of early school leavers so that they will not become the long term unemployed of the future. I agree with many of the sentiments expressed by Members from all parties. Let me remind the House that according to the National Economic and Social Forum almost half of the long term unemployed are without formal educational qualifications and fewer than one-fifth have a leaving certificate or higher qualification. Every year approximately 20 per cent of students leave the education system with poor qualifications or none whatsoever. The view expressed in the report which we are now debating is that it is almost inevitable that a large percentage of these will become long term unemployed. It is time for the Government to address the problem of such school leavers rather than wait until they become statistics in some future report. The last annual school leavers report I read showed that 5,200 young people left school with absolutely no qualification while a further 11,000 left with just the intermediate or group certificate. We are aware that there is a direct relationship between the level of educational qualification attained and success in the labour market.

The fact that 20 per cent of those who leave school each year do so with little or no educational qualification indicates that in all likelihood these young people will become tomorrow's long term unemployed. I agree with targeting as suggested by Deputies on this side of the House. All the Ministers involved should have a chart in order to check and monitor targets weekly. It is vital that this be done and that serious efforts be made by Government now that funds are available, which were not available in the past, to provide jobs for the long term unemployed. Currently there are 27,000 young people under the age of 25 who are classified as long term unemployed. If we are to defeat long term unemployment, would it not be sensible that Government policy should in large part be aimed at heading off the entry of young people into the ranks of the unemployed in the first place? Setting targets would be vital in trying to achieve this. All the evidence shows that the longer a person is unemployed the more likely it is that he will remain long term unemployed and that his chances of successfully competing in the labour market are severely restricted.

As the interim report correctly points out, the longer pupils stay on in school, the more likely they are to acquire qualifications. However, the reality is that many of those who leave school each year do so with little or no qualification. Being a primary teacher before I entered the Dáil I think it is crucial to try to keep people within the system and that is where the concentration of resources must be placed.

While links between the proposed local employment service and schools are to be welcomed, the fact is that many of those young people who leave school early are totally alienated from the school environment and require alternative forms of education and training, Reports into the Youthreach scheme highlight many of the problems young people face and also the difficulties that exist in relation to certification and accreditation. The Youthreach programme has been in operation since 1989 and provides two years of integrated education. It is disturbing to read that generally speaking some of the participants are severely disadvantaged and a recent survey carried out among course co-ordinators shows that almost 28 per cent of participants have been in trouble with the law, 31 per cent have suffered from alcohol or substance abuse, 29 per cent have less than one year of post-primary education, 32 per cent have one to two years post-primary education. The report deals with the home environment and the difficulty of motivating themselves. The figures speak for themselves. As the report correctly points out, the relationship between educational qualifications and employment success is particularly strong for the young unemployed. What is needed in my view is to ensure that those young people who leave school early with few qualifications and with the likelihood of becoming long term unemployed should be offered educational-training programmes which will have a credible value in the labour market and will enable the young person to progress to further education and training and employment.

There is a serious gap in the provision of programmes for unemployed 18 to 21 year olds. This has been pointed out by bodies such as the National Economic and Social Council, which states in report No.95 that there is no provision for educationally disadvantaged young people in that age group. The council recommends that the needs of this age group should be addressed in the further development of compensatory second chance education for the educationally disadvantaged. The growing skill and educational requirements of the employed labour force mean that preparation for the labour market is not just a preserve of the labour market policies for the unemployed or those at work but also has a strong educational dimension which ought to be addressed at an earlier stage through the cultivation of relevant life skills, including social and entrepreneurial skills in the educational system.

In the light of the close relationship between educational qualifications and unemployment, especially for the young unemployed, there is an urgent need to ensure that the qualifications young people receive on education and training programmes are of a high standard and mean something to the young person as well as to prospective employers. It is essential that they provide a ladder or progression for the young person enabling him to compete in the labour market. The days when a certificate of attendance would suffice on education and training programmes are long gone. What is required is a nationally recognised form of certification which will enable the young person to progress and further his career and not end up on the scrap heap of long term unemployment.

Mr. Dukes

Like many Members, I know a number of long term unemployed people. There are far too many of them. I also know a great number of young people who are about to join the labour market, some leaving school next summer and some finishing third level education. They are understandably worried about their employment prospects. They want to know if they will join the ranks of the short-term unemployed or if, in the fullness of time, they might join the ranks of the long term unemployed. They are entitled to know the effect of public policy on their chances of gaining employment.

For people in that position it is not interesting to look at the macro factors that effect overall employment. They do not see the immediate relevance of them to their individual chances of employment. It is evident that any approach to such people, whether it is a policy or political approach — there is a difference between the two — must identify with the person. That cannot be done at the expense of attention to the macro factors, what we do in the market and in terms of public, economic and social policy which will affect their chances of employment. By dint of being so concerned with being relevant to individuals, we tend to lose sight of the deeper underlying factors that affect people's chances of employment who are not currently in the labour market and we affect the chances of continuing employment for many in the labour market already.

We ignore the more fundamental factors and the result of our effort to be humane and concentrate on the individual is very often inhumane because long term unemployment is an inhumane position in which to place anyone. That is what strikes me in reading the report and I am sorry that it does so because my party campaigned from 1987 until 1993 to set up something like the National Economic and Social Forum. It was not until 1993 that the initiative was finally taken. I am glad it was taken because it was the first time democratically elected politicians were involved in making these decisions.

I make no apology for saying I object to the process under which Governments, without much reference to the national Parliament, and economic interest groups, who have their own job to do and cannot be criticised for doing it but have no democratic mandate, set up the Programme for National Recovery, Programme for Competitiveness and Works and so on. They are not quangos and thankfully have not been institutionalised but they make agreements which are political accommodations between political forces and conveniently ignore the fundamentals of the market they have to deal with. They have visited more unemployment on us than we deserve. We have more people out of work than we should have. That will be interpreted by some as a hostile comment on the entente cordiale which has reigned for some time between Governments, trade unions and employer organisations but I see no reason to change my view. It is a bad formula for making fundamental decisions on economic and labour market policy. We see the result of it all round us.

I am disappointed that the NESF has allowed itself to be seduced into this kind of consensus which has not produced good results. It allowed itself to be side tracked into the same old formula which has given us an enormous multiplicity of organisations, initiatives and programmes of every kind which are more like bits of sticking plaster put on a chopped up body than any real attempt to heal the ill. I am sorry to say that. We have wasted a good deal of energy, imagination and resources on things which are fundamentally incapable of producing the necessary answers for the long term unemployed and young people who are about to come onto the labour market. They have been ignored because their structure is such that they are bound to ignore the fundamental questions of economic policy, competitiveness and labour market policy which must be addressed if we are to expand employment.

The European Union is the largest trading block in the world. It is potentially the most powerful economic unit in the world, yet it has a far worse record of unemployment than the United States or Japan. In terms of employment growth, innovation and the development of new technology it is only trotting after South-East Asia. We need to learn from that. South-East Asia is now the employment boom capital of the world. We could expand that to the Pacific rim but the employment boom capital of the world is not where we live. That is something for young people and those at work to worry about. We criticise that kind of analysis sometimes because we say we will not turn Europe or Ireland into a low wage, rapid expansion economy. I understand why people say that but it ignores what is happening.

I had an opportunity to look at conditions in one of these booming economies in Taiwan recently. It is true that they have an income per head which is so low that any movement towards the kind of income per head or the housing or working conditions we have in the West is bound to be huge progress. Even if such progress is gradual, it will keep people in those countries happy for a number of years. That ignores the fact that something else is changing. The day is gone when goods we bought from Hong Kong or other places we had not heard of when I was young were shoddy. The day is also long gone when goods imported from Singapore, South Korea or Hong Kong were cheap imitations of things we made so much better in the West. Today the goods we buy from those countries are high quality, high tech products which are totally reliable and comparable in every way to products made in the West. They compete increasingly with Western products. We may deplore that but it is the reality. The nature of competition is changing.

The day is not far off when we shall have lost the consoling opportunity we had of saying that all these things were made with sweated labour, in back streets, in Taipei and Singapore and that decent people would not buy them; that is no longer the case. Admittedly, some of them work in conditions that would raise more than a few eyebrows here. I visited a computer plant in Taiwan where the more skilled parts of the workforce work a 48-hour week, in four 12-hour shifts, a firm in which the employees are reasonably well paid compared with many other people in Taiwan. However, the people who work for 12-hour shifts a week in that plant are not much better paid than the other workers in that plant; they accept that is the way they have to work to use their technology to supply their markets.

If you tried to persuade workers in any high, medium of low-tech firm here that that kind of operation is required if they are to maintain their markets it would cause a revolution. Members in this House would complain about the type of unnatural working conditions being forced on people. We are ignoring the realities of the market. We may feel superior to people prepared to work like that; in some respects we may even be superior to them at present, but they will have the satisfaction of being superior in terms of their control of the markets. We must also face competition from economies characterised by higher levels of pay and productivity than we have. For example, we face competition from firms in the United States, Germany and Belgium — a different kind of competition but competition nevertheless.

I know there is no good giving a lecture on this to somebody who has been unemployed for 13 months but it is part of the background of what will determine whether that person has a job. These reports are not addressing it. In place of that consideration they are resorting to short term palliatives that do nothing for the structure of our labour market or our capacity to employ people. We have been through two major rows in this House. We have witnessed the position in TEAM Aer Lingus and in Packard, neither of which was put into liquidation, to which I shall revert in a moment in another connection. TEAM Aer Lingus must compete on the one hand with firms that have access to labour at a fraction of the price paid by TEAM and which have produced comparable productivity levels. On the other hand, TEAM has to compete with firms that pay higher wage levels but which produce correspondingly higher levels of productivity, rendering them capable of competing with or out-competing TEAM and to get work that TEAM would like to get.

We saw the so-called rescue plan put together for TEAM Aer Lingus. As far as I could understand recently, it was posited on the assumption that TEAM would be in a position to charge the equivalent of £45 an hour for work it did on its contracts. What happened? Its competitors produce the same work for £30 an hour. That is not a rescue plan, it ignores reality.

We have the same problem in Packard, another firm that must deal with competition from high and low wage economies and firms but the difficulty comes to the same thing in both cases — the combination of wage levels and productivity renders other firms competitive with Packard. If we do not want to change the wage levels, we must change the productivity, and if we do not want to change the productivity, then we must change the wage levels. If we do not want to change the wage levels or productivity, then we must accept we will not be in business; there is no other way out of it and no amount of jumping up and down on the part of the politicians in here or elsewhere will change that. The market does not want to know what Members think about matters of social justice and competitive equity, the markets want to know how much we can sell to the customer at a price that allows us make a profit.

If we fail to learn those lessons, as we seem hell bent on doing, we shall condemn more people to unemployment. We had another example of it earlier today when Deputy O'Rourke spoke about what needs to be done to save the Silverlea company and jobs in Athlone and Athy, a very worthy cause but she was seriously proposing things she knows a Government cannot do, which she knows have no basis in any kind of competitive reality. I know Deputy O'Rourke knows that much of what she is saying was pure pretence because, if she does not, she spent at least the last two years of her life fast asleep — which I know she has not. Nonetheless, she is pretending that a Government can step in to a firm in liquidation and pull the chestnuts out of the fire. She is pretending that a worker buy-out scheme-feasibility study she has seen on paper — perhaps because it was undertaken by a firm she says has associations with the Government — is the answer to the problem, that in some way the Government should wield the big stick on the liquidator, tell him to hold off his statutory job, a law she knows backwards, inside out, because she lived with it for two years — contending that the Government should find some way around the law and try to save this company. That is not the way to protect employment in this economy; that way lies absolute, utter madness, more unemployment for people now in our workforce amd longer term unemployment for people who are not.

The Minister for Enterprise and Employment, Deputy Richard Bruton, in his speech earlier identified some of the causes of long term unemployment. He spoke of low levels of skills, educational attainment, barriers facing the long term unemployed in terms of recruitment practices, employer reluctance and unemployment traps, loss of skills and other policy factors. The measures set out in the report are aimed at dealing with some of the problems but they will deal with some of them only in a very local or partial way. Undoubtedly these measures are needed as part of our local approach to the problem but, if not underpinned by a sensible view of the macro factors affecting overall employment in our economy, they are doomed to failure. It does not matter how many agencies we have if the basic combination of wage rates and productivity in our economy is wrong, it does not matter how many ADMs, local partnerships or Outreach programmes, whatever else we may call them, we have, we will not get more people into employment because they just will not win markets. The only way we will employ people is by manufacturing goods and delivering services at prices that will beat competition.

The problem I have with some of what is set out in this report is not that it is not worthwhile in itself but that it diverts a good deal of attention and resources from the main problem. These are supposed to deal with long term unemployment. I find in the Executive Summary of the report — a fashionable phrase — the objective is to aim at long term unemployment first. However, the report goes on to attach some importance to prevent the drift into long term unemployment. Then I find in the key proposal, in the target groups for local employment service, one of the "broad priority groups" for that service includes the registered unemployed for more than six months. In fact it is implicit in this report, although not recognised, that the problem of unemployment is not comprised of several different problems — it is not the long term, short-term or recently unemployed, it is a problem of unemployment.

There are as many different unemployment problems as there are unemployed people but the fact that somebody is long term unemployed just means it has taken longer to solve that person's problem than for somebody else. If we devise too many different programmes, based speciously on these different kinds of unemployment, we will miss the boat because they divert our attention from the fundamental factors that determine our total level of employment.

I find one encouraging thought in this report and it is set out on page 15 of the Executive Summary. It states, "There must be a financial incentive for the unemployed to take up part-time temporary position and changes should be made in the tax and social welfare systems to ensure this incentive exists". When that is decoded and put into recognisable English, it means that we believe our labour market should be made more flexible. All I ask is that those in Government and in the services which produce this wonderful wisdom recognise that the prescription is just as valid when no State agency is involved as when State agencies are involved. It is just as valid in the private sector as when a multiplicity of State agencies are involved. Labour market flexibility is something we must aim for.

The section of the report immediately preceding the section dealing with labour market flexibility is called "Community Employment". We know there are community employment schemes throughout the country. They are being held up now because one trade union has decided to use the existence of community employment schemes as a bargaining lever with local authorities to increase certain kinds of employment. That is the wrong way for them to go about that job and they are stopping employment projects proceeding which have nothing to do with local authorities and never had anything to do with them. Will they take seriously the logic of the reports they support and let us see some labour market flexibility for the sake of the unemployed?

Mr. S. Brennan

Long term unemployment is at the heart of the unemployment problem. It is difficult when people find themselves unemployed and it involves a good deal of personal trauma. However, if they are back in employment within a few months they can put that period of unemployment behind them, look on it as a bad phase and avoid lifelong damage to their prospects and self-esteem. Unfortunately, that is not the case for the long term unemployed, who are in a much more difficult position.

This report focuses on efforts to help the most needy among the long term unemployed, and that is only right. We are all aware there is a raging academic debate — some of which we have heard in this House today — among polititions, and economists about concepts such as structural unemployment, the possibility, however remote, of full employment and so-called natural rate of unemployment or what is more distressingly recognised as the acceptable level of unemployment. However, we would consider it an enormously valuable practicable achievement if we could minimise long term unemployment alone. If we crack that problem, we will have holed the general problem of unemployment below the waterline.

The interim report focuses on the initiative to establish a local employment service which would offer a wide range of services to help the long term unemployed get back to work. I commend the report for the detail with which it addressed the implementation of the idea of local support services. Some of the details seem on the face of it a trifle bureaucratic. However, there is little point in arguing over the design of optimal oversight systems. Let us see what happens in practice and be prepared to change the management structures later, if necessary.

I accept there are good reasons why we should focus on the local level and why the report does that, but in my short contribution I caution against an over-rigid emphasis on employment opportunities in a particular geographic area. It is well recognised that one of the reasons European unemployment rates are still higher than in the United States is that people in the European Union are less willing or perhaps less able to move around freely in search of opportunities. Mobility in the European Union, even within individual countries, is probably lower than in the United States. A total focus on particular geographic areas mitigates against mobility. I support the focus in the report on geographic areas but not in a paranoid and highly targeted fashion to the exclusion of the overall problem. Employment cannot be boxed in in that way; mobility is essential.

Naturally most people would prefer to find employment in their locality, but State services assisting the long term unemployed should not limit themselves to helping the unemployed find suitable opportunities in a particular geographic area alone. I support the policy, but it should not be the only one. That is particularly applicable to younger people or those who do not have significant family commitments. Would it not be unfortunate if there were a match for a person's skill elsewhere in the country and our State support services had not, because of the manner in which they organised, been able to make the connection between that person's skill and the requirement for that person's abilities? Co-ordination across areas and within the national FÁS database should not be forgotten as attention is paid to the local scene. There should be balance in that area.

I query the thinking behind the idea in the report that the employment service must be able to place the individual in the conventional labour market or in employment resulting from a special employment opportunity. If that could be done, long term unemployment, at least in statistical terms, would be eliminated at a stroke, but we know that would be a buck exercise and would be illusory. We know that forcing the issue eventually devalues one or other good idea. In this case it is likely that if any special employment opportunity must be found, the attractiveness of special employment opportunities will be lost. A less charitable interpretation of that would point to dangers of coercion of the individual involved. That is not to say that some individuals will have to be left behind, the contrary is the position. Some people will want to hold out for conventional work and if they apply themselves to securing it, they should not be corralled into special employment opportunities. The long term unemployed are interested in training and placements, but only if they see them as part of their progress towards conventional work or more generally towards a meaningful productive life. They are entitled to that view. Unless this perception is shared by both the unemployed individual and the employment service and based on reality, it would be a disservice to the unemployed to insist on some form of placement.

I welcome this report and commend the work that has gone into it. It is an extremely valuable contribution and I compliment all those involved. I believe the ideas contained in it will work if they are thought through and if rigidities of any kind are avoided. The labour market is not static. The goal is to break down barriers between people seeking work and the work that needs to be done. I argue that we should allow for greater flexibility. We must not lose sight also of the basic economics of the situation, as they are always with us.

Taxes on unemployment must continue to be reduced. Financial incentives given by the tax and welfare systems should not operate as barriers to people offering and accepting work, rather they should be designed to increase employment. The tax burden on the producing sector of the economy has to be kept as low as is practicable. The environment has to be conductive to wealth and employment creation and small businesses and service companies must be developed. There are some 150,000 small firms in Ireland today. Even one extra job in half of those would put a major hole in our unemployment problem. We must do much more to develop the great potential of the service area.

At Question Time today I was staggered to hear the Minister of State, Deputy Eithne Fitzgerald, following questions from this side of the House say, not once but two or three times, that she saw no distinction between a person working for a small or a large company. She took the view which she suggested was a Government view — I doubt if it is the Fine Gael view — that a person working in a small firm with two or three people should have exactly the same employment rights in regard to unfair dismissal, labour laws, health and safety laws and a plethora of European Union directives which apply to the labour market. She was strongly of the view that whether you worked for a company with two people or a company with 2,000 people precisely the same legislation should apply. I totally reject that view. I would like to hear the Fine Gael view on this. I doubt if the Minister for Enterprise and Employment agrees that if you work for a two or a three person firm the whole weight of European Union labour market regulations, audit requirements and the various directives should apply in exactly the same way. If I do the Minister a disservice no doubt she will correct the record, but I understood her to say there should be no distinction based on the size of the firm. I ask her to rethink that view and, in particular. I ask the Fine Gael members of Government to examine the record and see whether they can live with that attitude. There are 150,000 firms who, in my view, would adopt an entirely different approach.

All of these changes and an attitude of flexibility is necessary. They are necessary, if not sufficient, conditions to reduce unemployment. A well designed local employment service operating in this context will make a strong contribution towards reducing long term unemployment.

I took part in the debate primarily to draw attention to the need not to box ourselves in to a localised geographic solution to unemployment. It is a help, it is good and it is worth doing but we must not be so rigid and inflexible as to make it difficult to match skills which may be available on a national basis.

The success of the United States in employment is substantially due to mobility, particularly among young people who get up and go and find or generate employment wherever their talents fit. If we in Ireland insist on catching the European disease of starting from a proposition that one is entitled to work where one grew up it gives us inflexibility and it would be a disservice to the long term unemployed. We should insist on mobility and flexibility being part of the system, particularly for younger long term unemployed persons.

I welcome the report and I commend the excellent work which has gone into it by all concerned.

Mr. Costello

I too welcome the report. I wish to comment briefly on Deputy Brennan's remarks, which I appreciate. The report is not rigid in relation to local employment. It proposes a local employment service and points out the benefits from placing people in the local geographic area. Where national employment is available it does not exclude access to such employment. It provides a focus rather than rigid parameters. That is the spirit of the task force and the spirit of the forum, of which I was a member, which drew up the report.

Deputy Brennan referred to the comments by the Minister of State, Deputy Eithne Fitzgerald. What she said was that the status and working conditions of regular employment should be approximated in whatever business enterprise an employee is engaged and that we should seek the best level of standards for all employees. Too often employees in certain types of business are exploited. We should use as few excuses as possible, whether it is a small or medium operation or a part-time contract. That is the direction in which this report is going.

This report — Interim Report of the Task Force on Long-term Unemployment — originates from the National Economic and Social Forum Report, No. 4, presented in June 1994, entitled Ending Long-term Unemployment. What was interesting about that Forum report was that for the first time we had a full spectrum of interests represented in drawing up the report. Strand No. 1 consisted of politicians representing all parties. Strand 2 was made up of the social partners consisting of the farmers, the business community and trade unions. Strand No. 3 consisted of women, the unemployed, disadvantaged people, youth, the elderly, people with a disability, the environment and academics. We had an expansion of the normal social partnership which the Government has engaged in drawing up work programmes for Government. On the industrial relations side we had an extension to strand 3 which was crucial to the quality of the report. The terms of reference of the National Economic and Social Forum which was established in 1993 focused on combating unemployment, particularly long term unemployment.

Report No. 4, which gave rise to the interim report of the task force, is the most important of all the reforms to date. I cannot imagine any report in the future being more important in its intent. The problem is one we have always had. It has countered that adage that the rising tide lifts all boats. That is not correct in economic terms. All boats are not lifted. The boat that is not lifted is the boat of the long term unemployed. Irrespective of how burgeoning our economy the long term unemployed scarcely shift in terms of numbers. They do not benefit and that is clear from the statistics. The 1980s was a time of spiralling unemployment, originally prompted by the two oil crises in the seventies. In 1980 8 per cent of the workforce was unemployed. In 1994 the rate of unemployment was approximately double that. Approximately 100,000 were unemployed in 1980 while today the figure is 275,000. Some 2.8 per cent of the workforce who were unemployed then were long term unemployed while 135,000, almost percent, are long term unemployed now.

It is very important that we target the long term unemployed and deal with the problem seriously. In 1993 approximately £2.16 billion was lost through social welfare unemployment payments and tax and PRSI foregone. Unemployment payments account for 7 per cent of our gross domestic product while the average in the European Union is 4 per cent. We are second only to Spain in the amount of GDP allocated to unemployment payments.

Economists regard short term unemployed people as a pool of available labour which can be soaked up as jobs are created. Business people and economists regard long term unemployed people as a stagnant pool — it does not change, is of benefit to no one, is a burden on everybody and creates incredible poverty, human degradation and other problems.

We have never had coherent policies on how to deal with long term unemployment and many of our policies have led to an increase in long term unemployment. For example, local authorities, which have operated in isolation, have built housing estates and flat complexes without proper amenities, employment structures, industrial complexes, transport systems, estate management or shopping centres. The only amenities in unemployment blackspots such as Tallaght and Ballymun are primary and secondary schools and churches, and the only reason these were provided is because the church intervened when the State did not and the local authority felt it had fulfilled its duty by providing the housing. Ballymun, which has a population of 20,000, has no shopping centre, industrial complex or transport system. It is out in the wilderness and nothing has changed over the years. Instead of dealing with unemployment our planning policy has given rise to problems largely because it has been divorced from any integrated approach.

We have a burgeoning economy, yet we still have endemic unemployment. We must intervene to address the problem. It is not good enough to have low inflation, low interest rates, industrial stability, relatively low wage increases and high exports if we do not intervene effectively to address the problem of unemployment. This debate is appropriate in that this year we will commemorate the Famine which occurred 150 years ago. At that time Ireland was a relatively wealthy country, yet because of lack of intervention hundreds of thousands of people died of starvation. Intervention is a key factor in solving the unemployment problem.

Under the National Development Plan approximately £20 billion will be provided in Structural, Cohesion, European Social and Community Framework Funds to develop education, infrastructure, community projects waste management, transportation, ports and urban renewal. While this is a very fine package, the ESRI estimates that between 1994-2000 unemployment will have declined by 3.5 per cent per annum at best. This means that by the year 2000 there will be 132,000 long term unemployed persons on the live register. This minuscule decrease proves that the rising tide does not lift all the boats.

The Programme for Competitiveness and Work refers to placing 100,000 people in training and education courses by 1997. While I welcome this proposal, it will not remove the burden from the State. It is envisaged that the National Development Plan will create 50,000-80,000 jobs by the year 2000. During the 1980's approximately 20,000 people emigrated for various reasons but mainly because they had no choice. All these factors have an effect on the unemployment figures but they have a minimal effect on the long term unemployment figure.

We need to focus almost exclusively on this section of the live register, to target long term unemployment in a way it has never been targeted before. I was a member of the forum which drew up the report "Ending Long-Term Unemployment" which provided a real basis on which to deal with long term unemployment. It referred to the elimination of unemployment and drew much of its thinking from the European Community "White Paper on Growth, Competitiveness and Employment, 1993" and the OECD report "Employment Outlook, 1993". The Interim Report of the Task Force on Long-Term Unemployment does not reflect the way in which the matter was discussed and analysed by the forum.

The report proposes that a local employment service be established which would consist of a group of mediators. It is estimated that approximately 100,000 out of the 135,000 people on the live register would volunteer for employment service. Under this proposal approximately 800 specially trained mediators or counsellors would be employed to contact volunteers and develop an action plan in the context of the person's strengths, resources, training etc. That mediator would act as a placement person. He could build up a portfolio of employers in the community and act as a broker between potential employees and employers. He could engineer social contact, find out if an employer would recruit an extra person and what skills would be required for the position. He could then seek out persons with the necessary skills.

There are thousands of small businesses which, with a little persuasion, could take on an additional employee and a budget of £30 million was sought for this purpose. However, a budget of £6 million is available, £1 million for training and education purposes and £5 million for general purposes. That is a start, but it is not sufficient. We would seek a guarantee from employers that they would take on a person and that mediator would have access to resources whether from the local vocational education committee, FÁS office or otherwise. That is the approach which is envisaged, using small and big businesses and computer data about jobs available on a national basis.

The French Government adopted a similar approach in 1992. It interviewed and counselled one million people, 17 per cent of whom were placed on training programmes immediately. There was no immediate solution in only 25 per cent of cases. The process of mediation, counselling, guidance and placement — absent from our training schemes — has proven successful in France. The Coolock contact point, referred to in the report, was set up 14 months ago and since then 308 people have been placed in employment, 46 of whom were long term unemployed. In a burgeoning economy it is simple enough to place the highly skilled and those fresh out of universities in employment. When we reach the stage of securing employment for 50 per cent of the long term unemployed then we will have succeeded.

Another part of the equation is to prevent people becoming long/term unemployed. The report sets out proposals on how to stem the flow of those on short term unemployment which, if successful, would prevent the number on long/term unemployment from increasing. The employment service would be obliged to provide options in training, education, personal development and work experience for people who are less than 12 months unemployed to enable them to participate in the workforce. We should endeavour to prevent an excess in the numbers on short term unemployment and focus specifically and personally on the question of long term unemployment. That is the only solution to the problem of unemployment.

In 1992, 48 per cent of the long term unemployed did not have educational qualifications and only 4 per cent had a third level education. Virtually nobody with third level education is long term unemployed but approximately 50 per cent of the long term unemployed have no educational qualifications. Sixty-six per cent of the unemployed over 35 and 22 per cent of those between 15 and 24 have no educational qualifications. Twenty per cent of our young people leave school annually without official accreditation or qualification and that area must be addressed. The report deals with that under the European initiative, Youthstart. Each member state must guarantee facilities for those who leave school without qualifications by placing them in a training system. We must start at pre-school level when children are most impressionable and those in deprived settings can drift and lose out if they are not channelled properly through the education system. We must establish a proper national pre-school system.

I am reasonably happy with the recommendations of the task force report, but I would prefer if they were targeted stringently along the lines proposed in our report. I acknowledge that a final report will be published in October 1995 which I hope will propose that, instead of providing £6 million in funding to fill gaps in the services, a main employment structure for the long term unemployed which will have its own funding will be put in place.

Éamon Ó Cuív

Tá amhras mór orm faoin tuarascáil atá curtha faoin ár mbráid. Is cuma cé a chuirfeadh ar aghaidh é, muidne nuair a bhíomar sa Rialtas nó an Rialtas atá ann anois. Is í mo thuairim le fada nach bhfuilimid ag breathnú ar cheist na dífhostaíochta ar bhealach bunúsach.

I do not consider this report a blueprint for solving our unemployment problem and I do not say that in a party political sense, I say it from my 20 years' experience in creating employment and trying to deal with some of the perceived definitions that bedevil the problem of unemployment. The proposed solutions will only tinker with the basic underlying problem regarding the structure of our society and the reason for our high unemployment rate.

It has come to my attention that there are cutbacks in the community employment schemes, which are very serious for rural areas as the extension last year to allow people to remain on those schemes for two or three years at a time has provided many basic facilities and gainful occupation for the people. We know from the demand that, of all the schemes, the community employment schemes are those with which rural people have identified most and have seen as beneficial.

It would seem that this document was written from an urban perspective as it deals mainly with the unemployment problems of urban areas which, I concede, are horrendous. However, those problems are exacerbated by the social make-up of our cities and by segregation in housing which has an adverse effect on people's chances of getting gainful employment. Why, when mankind has reached its highest point of technological development, are we faced with one of our greatest disasters, forced unemployment? For centuries people have had to spend most of their time working to provide themselves with the basic necessities of life — food, shelter, clothing and heat. It is heartening that, because of modern technology, it is no longer necessary. On the face of it, these technological developments should have provided people with new vistas, new opportunities to develop the things of the mind, cultural and physical matters. Instead, in our modern society, we face the terrible spectre of forced idleness and structured unemployment. We must examine, as a matter of grave urgency, why this is so and why the freedom afforded by this progress has become a millstone around our necks.

The problems relate to our definitions of work, employment and unemployment. They stem from our linking of payment and occupation, and from the erroneous perception that a large part of our population is still engaged in the production of our basic needs. Two Victorian concepts have a predominant influence on our society. The first is the notion of a job as a fixed amount of time worked in a fixed place of employment for a fixed remuneration. The second is the definition of unemployment which involves a payment to those who have no work on condition that they are available for work and do not engage in any activity until a standard job is provided for them, and the penalty for engaging in any type of activity by those who are considered unemployed is loss of the payment. The concept of being available for work and not engaging in any occupation is amazing in a society that no longer needs the sweat of all its citizens' brows to provide its basic needs.

Why, in a modern society with so much unemployment, does so much need to be done and so much forced idleness, when there is so much opportunity for activity? We all accept the need for more nurses, social workers, environmental workers, council workers, research, art and culture workers, gardaí, teachers etc., but we need to mend roads, care for the old, the handicapped, bury telephone cables and provide ourselves with 1,001 other services that would be good for our society. Again there is a paradox: in these days of cutbacks in basic services, when we are told that we cannot afford teachers and nurses, that hospital wards must be closed, we are also enjoying the greatest output that this society has ever experienced.

This brings me to the question of economic growth, of growth in GNP and its relationship to the provision of employment. There is a myth that if the economy grows, employment will automatically follow and that unemployment is because of a lack of economic growth. This is false as economic growth is about the creation of wealth, and the creation of employment, although dependent on the creation of wealth, is more fundamentally dependent on the distribution of that wealth in an equitable way. There has also been concentration on the idea that the creation of wealth and the creation of jobs would happen in the same sector. For example, there was, and still seems to be, an idea that we will create both wealth and jobs by increasing manufacture, agriculture, fishing etc. There is even a new belief that tourism can solve our unemployment problem. These services are important for the creation of wealth as, without the creation of enough wealth this society would not be able to buy from outside the services it requires. However, as long as we can buy all necessary services from outside, the provision of employment or useful activity for people has more to do with distribution of wealth and activity than with the creation of wealth itself.

Curiously enough, earlier societies had adequate wealth creation and fully occupied populations. It struck me that if, in previous centuries, when there was surplus labour and societies had our system of unemployment, the monks and the craftsmen, instead of providing us with treasures like the Ardagh Chalice, the Book of Kells, the Celtic crosses etc., would have been on the dole forbidden to engage in anything that might be artistic or useful. Thank God their system was more enlightened than ours.

We must accept that in future fewer people will be employed in manufacturing, agriculture, fishing and primary production. This is not necessarily a bad thing as many of the jobs in these industries in the past were back-breaking, monotonous and even dangerous. Basically, we have enough wealth to provide a useful and gainful occupation for all our people and our task must be to examine how we distribute this wealth and ensure that everybody shares it. This can be done by compulsion, for example, through the imposition of high taxes and the provision of more State services, or by the creation of a tax or social welfare code that makes it attractive for people to provide services that other people want. It is by a combination of the provision of more State services for which there is a public demand and the creation of a tax or social welfare system which gives an incentive to work that we will solve unemployment.

I would like to look at the tax and social welfare code and its inhibiting effect on the creation of employment and on equalisation in the distribution of wealth. It flies in the face of the whole purpose of business to depend for the creation of employment on giving incentives to the rich and powerful in society by way of grants and tax reliefs in the hope that they will create not only wealth but employment.

The shareholders of our publicly quoted companies would lose faith quickly in those companies if their primary aim was not the maximisation of profits but the maximisation of employment. This is not to condemn those involved in business but to recognise the structures, particularly the financial structures, of the society in which we live. The reliance therefore on the myth that business is about employment creation rather than the creation of profits is dangerous. As someone who for many years was involved in job creation and in the running of a business I am more than aware that pressure is constantly brought to bear to maximise profits, to compete and minimise the cost of overheads, including employment.

There is also a belief that by providing further training for everyone we will solve the unemployment crisis. This is another myth, yet it is one of the core concepts in this document. While the person who has been trained has an advantage and a competitive edge in seeking employment the provision of training only has a marginal influence on job creation. However, it increases the possibility of attracting overseas investors because of the availability of a trained workforce. If one looks at the figures for total employment one will find that the number of positions likely to be offered because of this factor is very small.

I wish to examine our taxation and social welfare systems to see whether they inhibit the creation of useful occupational employment and discourage the transfer of resources from one group of persons to another in return for the provision of services. I wish to introduce the concept that what most people are concerned with is the maximisation of their income. None of us works all our waking hours; most people do not spend all their lives trying to increase their income. Humans are social animals and therefore most of us try to strike a balance between the time spent earning a living and pursuing other social activities. The amount of voluntary work done in society is testimony to this phenomenon, which is often overlooked.

There is a simplistic belief that most families or individuals have one source of income — a standard job. In rural areas in particular more and more people are able to earn an income from various activities. For example, when I was manager of the co-op in Cornamóna most of those employed also owned small farms and were involved in the tourism industry. We created the concept of a family or household income which provided an adequate standard of living.

There is much talk about the need to provide incentives. In this respect we should examine what we do to the unemployed. We destroy initiative. For example, small farmers, fishermen, the self-employed and others who can earn an income from various activities but who also need to receive social welfare payments are caught in a system under which for every £1 they earn above a certain figure their social welfare payment is reduced by the same amount. This is a catch-22 whereby they are paying taxation at the rate of 100 per cent. Once social welfare recipients such as lone parents earn more than £6 per week their payment is reduced in this way. Furthermore, if they are in receipt of a rent allowance the system is structured in such a way that they are not allowed to retain any extra income earned. Is it any wonder that these groups tend to operate in the black economy or become totally disenchanted with the system and give up the impossible struggle?

A few years ago there was much talk about the disincentive for those earning between £50,000 and £100,000 per annum, who had to pay tax at the rate of 56p in the pound, to create employment and wealth. Yet we wonder why those at the lower end of the scale do not feel like taking up employment when their social welfare payments are reduced pound by pound for the amount they earn. In many cases they believe it is futile to seek gainful employment.

For those who manage to escape from the social welfare system by obtaining employment we place numerous obstacles in their way. As soon as their earnings exceed £70 per week they are taxed. Once they proceed up the ladder under the marginal taxation system they are taxed at the rate of 40 per cent. With PRSI this gives an effective tax rate of 45.5 per cent. If they continue to climb the ladder they will lose their family income supplement and medical card and begin to move backwards instead of forwards. Is it any wonder that the unemployed are not breaking their necks to seek out scarce employment opportunities?

Let us examine the areas where occupational employment may be created. Employment may be created in the provision of services to the community. We have to examine the concept whereby the same income is taxed each time we pay for a service. Much of our tax receipts are based on the transfer of income from one person to another in return for their labour. If a person earning £30,000 per annum — to give a simple example — employs a child minder, in order to pay them £2,500 per year they will have to earn £5,000. In turn, the child minder finds that the State takes some of the £2,500 back. Under our taxation system the higher the sum transferred the higher the sum collected in taxation and the greater the disincentive to create employment. I describe this as trying to ride a bicycle with the brakes on. In the case of social welfare recipients it is like trying to ride a bicycle with the wheels clamped.

The social welfare code inhibits the development of activities such as farming and fishing. It has to be accepted that a small farmer living in Connemara cannot have a modern lifestyle on his income from farming. It is nonsense to suggest that he is unemployed in the sense that he has no work to do. What he needs is a supplementary income from the State to raise his standard of living to an acceptable level. There is therefore a need for radical reform.

On the question of study and training, I am a great believer in education as the key to success. Many people have come to my clinic to state that they wish to attend a course at university. Instead of paying them unemployment assistance why do we not pay them study assistance whereby they would retain their payment without any limitations? I fail to understand why this obstacle is placed in their way in providing themselves with an education.

Kathleen Lynch

It is a pity the last speaker was not a member of the Front Bench of the last Fianna Fáil Government as I agree with most of what he says. There is a global term for what he described —"the system does not encourage savings". No matter what one does one cannot advance.

One in ten people in the State has been unemployed for over a year: 92,000 have been unemployed for two years or more and of these 74 per cent are likely to be unemployed one year later. These are but some of the grim statistics outlined in the interim report of the task force on long term unemployment.

Long term unemployment is the single greatest cause of inequality in our society, and that inequality is perpetual. All available evidence indicates that those who have been unemployed the longest find it most difficult to get work, even when the economy is booming. It is thus apparant that we must launch a two-pronged assault on unemployment and its causes. We must address the structural problems which cause unemployment and the social and human problems confronting the unemployed in their search for work.

The task force report highlights ways in which the long term unemployed can be integrated back into the workforce and I welcome many of its recommendations. In particular, I welcome the proposal to establish local employment exchanges. For too long we have had the absurd spectacle of people signing on at so-called employment exchanges. The term "employment exchange" is, of course, a misnomer: generally the only aid to job searchers is an appointment's page from the Irish Independent. Those in search of work have been forced to look to FÁS centres which are generally not situated in their local areas and are often not viewed as relevant to the individual's situation. A local employment service, with linkages to local employers and community organisations, would be a giant step forward and I look forward to the speedy implementation of these proposals.

The report also recommends that schemes providing direct employment to the long term unemployed should carry the status and working conditions of regular employment. For too long we have shunted the long term unemployed into schemes which, all too often, are seen as irrelevant both by the general public and by those directly involved. It is vital, not just for the schemes concerned but for society as a whole, that the status of community work is raised. In this regard, the report identifies the problem and suggests some of the solutions.

The social divide today is not between rich and poor; it is between those who have a little — the people at work — and those who have nothing — the people out of work. But there are also those at work who have nothing, who are working to maintain their self-respect and to keep in touch with the world of work but who, at the end of the week, take home little more than what they would get on the dole. Those people have been described in greater detail by Deputy Ó Cuív.

The report identifies the need for financial incentives to encourage the unemployed to take up part time or temporary positions by way of changes in the tax and social welfare systems. This is a crucial issue and the implementation of the recommendations of the report in this regard will make a substantial difference to thousands of low paid workers, many of whom are women and young people. There is no doubt that the report's recommendations, if implemented, will make a difference but they will do little to address the root causes of unemployment, nor was that part of the task force's mandate.

For some time unemployment has been at the top of the political agenda, or so we are constantly assured. Yet our live register figures continue to hover around the 300,000 mark. The number affected by unemployment, of course, are far greater. Whole families are consigned to the dole queues and communities have been devastated.

General unemployment is fast becoming a fact of life — one which is in danger of becoming the norm. Yet — and this is surely the supreme irony — our economy is booming. We have a high economic growth, we have complied with the convergence criteria under Maastricht, the national debt is under control and inflation is low. Despite all that we have the second highest rate of unemployment in the EU.

Booming economic indicators are of little comfort to people in Cork, where unemployment is now running at 22.8 per cent. That is nearly twice the national average. The people who come to my clinics every day are unimpressed with the Maastricht convergence criteria and they find the national debt supremely irrelevant. They are the human faces behind the phenomenon of jobless growth.

Last week 108 jobs were lost in the Sunbeam knitwear division. There are those in this House who would like to turn that human loss into a party political football. They know, however, that Governments can create the conditions for job creation and job maintenance — but they cannot simply save individual jobs with the wave of a wand. They also know that Government investment all too often postpones, rather than averts, disaster.

The Sunbeam workers deserve better from us than party political squeals. They deserve a long term assault on the root causes of unemployment and of enterprise failure. The old panaceas have not worked and are not likely to work in the future.

The world of work is changing at a rate unimaginable just ten years ago. By the end of the century less than half of all workers are likely to be working in traditional forms of employment. The number of part-time workers — voluntary and involuntary — is growing, while many who would like to avail of part-time work of job-sharing have, in the past, been faced with a variety of obstacles and disincentives.

In addition, economies no longer function in a national vacuum. The collapse of an English-based bank, triggered off by events in Singapore, can have worldwide repercussions, as we experienced just a few weeks ago.

We live and work in a global market. Most experts are now agreed that individual state governments are powerless to tackle unemployment on their own. Capital and jobs are increasingly mobile. In the case of Ireland, the major economic and monetary decisions are made at a European level. It is for this reason that Democratic Left has long supported the concept of a common European industrial policy. Unemployment is rising throughout the EU as a whole. Europe's position vis-á-vis the Far East and North America is changing, especially in the context of GATT and NAFTA, and the North-South relationship continues to be ignored.

We raised the need for a common industrial policy during the Maastricht referendum and again during last year's European elections. There is a need to move jobs, as well as cash, from the centre to the periphery. The Structural Funds — which, in any event, are finite — are a limited response to the problems of peripherality. Democratic Left believes that the issue of a common industrial policy should be central to the discussions in the run up to the 1996 Intergovernmental Conference.

All too often today's problems have been met with yesterday's solutions. The programme for A Government of Renewal contains a number of innovative proposals which will tackle unemployment and increase the range of choices available to those wishing to enter, or re-enter, the world of work. The task of implementing these proposals began in the budget presented last month, and will continue in forthcoming budgets.

The task force report picks up on some of these proposals. The scope of the report, however, is necessarily limited and determined by the mandate given to the task force. I would welcome follow up research on the structural causes of unemployment and I believe the conclusions of such a report would point in the direction of a common industrial policy or similar.

Unlike the parties opposite, my party believes that the State has a vital role to play in the economy. We do not believe that the State can allow itself to be driven out of the economy by privatisation. The State has a vital role to play, too, in the boardroom.

In this regard, I particularly welcome the Government's committment to revitalise public enterprise and the recognition of the dramatic changes facing our State companies. Employment policy must focus not merely on job creation, but also on job maintenance and it is vital that our State companies be equipped to deal with the challenges posed by rapid technological change and the demands of EU membership.

During the past decade State companies in Ireland and elsewhere have all too often been viewed as little more than disposable assets to be sold off when the economic going gets tough.

Our policy towards State companies should be one of commercialisation rather than privatisation, and I am glad this is the route chosen by the Government parties in the programme. I particularly welcome the commitment to give commercial State bodies a clear commercial mandate and to clarify the financial targets by which their performance will be measured.

I welcome also the Government's commitment of indigenous industry. We should have learned the painful lessons of over-reliance on multinational enterprises which have little or no commitment to the communities in which they operate. A lesson should have been learnt in terms of jobs lost and communities devastated, and I hope that will not be repeated.

The development of industrial clusters will revitalise whole communities and allow for integrated industrial development. There is, however, a danger that industrial development will bypass those most in need, the long term unemployed. All too often, newly created jobs go to those already in employment or who have been unemployed for just a few months while the long term unemployed remain on the sidelines. In this regard, much valuable work has been done by various groups and institutes, not only in identifying the problems, but also suggesting solutions. In this regard, I am especially glad the Government programme borrows from the NESF in its commitment to establish an intensive guidance and placement service operated at local level and involving local employers and trade unions.

While I welcome the work being done by NESF, the task force and similar fora, I am conscious of the danger that theory may be substituted for action. The shelves in Government Buildings are weighed down under the dust-covered reports produced by various organisations. The time has come for these reports to be taken down, reexamined and, where appropriate, acted on.

I wish to share my remaining time with Deputy Broughan.

An Leas-Cheann Comhairle

Is that satisfactory? Agreed.

Mr. Broughan

I warmly welcome the interim report of the Task Force on Long-Term Unemployment. It echoes the comments of William Beveridge in his famous book, Full Employment in a Free Society, in which he states:

Unemployment cannot be conquered by a democracy until it is understood by them. Full productive employment in a free society is possible but it is not possible without taking pains; it cannot be won by waving a financial wand; it is a goal that can be reached only by conscious organisation of all our productive resources under democratic control. To win full employment and keep it, we must will the end and must understand and will the means.

On the publication of this report we have at last embarked on the route pointed to by William Beveridge in 1944, the creation of a third force in the social economy. This report is based on the NESF report, Ending Long Term Unemployment, published last June.

I pay tribute to the Leader of the Labour Party, the Tánaiste, Deputy Spring, who took the decision to proceed with the central recommendation, the establishment of an intensive local employment service. The key recommendation of the report is that such a service be set up as a gateway to a variety of options such as training, education and job placement for the long term unemployed. I am delighted the Ministers, Deputies Richard Bruton and Gay Mitchell, have taken the project on board and have ministerial responsibility in the 12 partnership areas and two non-partnership areas. As the report recommended, the programme is aimed at the four priority groups, the registered long term unemployed, those unemployed for more than six months, dependant spouses and lone parents and 18 to 21 year olds.

It is a source of great pride to me that the local employment service was pioneered in Coolock on the northside of Dublin. In the last ten or 15 years there has been a unique coalescing of the social welfare partners, local community organisations, employers, trade unions and other local interests resulting in the Northside Partnership which has a successful record and which is now the first contact point in the country. I pay special tribute to the Chairman of the Northside Partnership, my colleague, Padraic White, former Director of the IDA, and the Director, Ms Marian Vickers who very successfully presided over the development of this service on the northside of Dublin in the last four years or so. As Padraic White remarked yesterday on radio, when he came to work for the people of Coolock he noticed it was a heavily industrialised zone with hundreds of factories, yet there were estates with up to 70 per cent unemployment. He set about remedying this problem and, together with Marian Vickers, set in motion a process of positive discrimination in favour of the long term unemployed. With well over 600 placements in real jobs, he has achieved a great deal for the northside of Dublin, particularly the Coolock area.

The cost in terms of human suffering and misery as well as the financial cost of the long term unemployed, as outlined particularly in the appendix to the report, is totally unacceptable. In October 1994 there were 273,000 people unemployed, 133,000 of whom had been unemployed for more than 12 months and 67,000 for more than three years. Much of the devastation, social deprivation and crime fuelled by drugs can be traced back to this problem. As my colleague, Deputy Lynch, said, sometimes politicians lose their sense of moral outrage at this state of affairs. I am glad that we are now taking the first steps towards dealing with the problem.

One of the key points referred to in the report is the indictment on our education system that up to 20 per cent of people leave school without qualifications. This plays a key role in the increase in long term unemployment. I welcome the training and education proposals in the report, particularly the determination to provide a certified educational qualification to every man and woman who takes part in the local employment service. It proposes setting up through the mediation service in contact points, a system of progression which will allow for access to third level education for people without basic skills — I particularly welcome the focus on 18 to 21 year olds.

The report rightly looks for links, as we have done on the northside, between local employers, schools and the universities. I am unhappy with the links between our three Dublin universities, Dublin City University, TCD and UCD. In a couple of days' time we will celebrate St. Patrick's Day. A few years ago I remember TCD talking in terms of town and gown in this city, but we have never had this type of necessary interaction between our universities.

Another key feature of the report is that unemployment impacts mostly on Dublin. Much humbug is talked in this House about the problem in other regions, yet a labour force survey in 1991 shows that Dublin is the second worst region in terms of unemployment, with 107 per cent of the national average compared to 89 per cent in the south and 79 per cent in the west. Dublin is the deprived and neglected region——

Mr. Martin

The Minister with responsibility for rural development, Deputy Carey, will look after you.

Mr. Broughan

Fianna Fáil had seven years to do so but unfortunately it did nothing about the problem. The appendix to the report points out that 38 per cent of overall employment in this State is in the three Dublin regions, north, west and south, which encompasses many of the areas Dublin Deputies represent. Dubliners are no longer prepared to accept that. Nearly 50 Deputies are now speaking as a united group so that Dublin will no longer be discriminated against.

I welcome the £6 million allocated in the budget to begin to remedy the terrible disease of unemployment which impacts so badly on our city. I welcome the central thrust of the report and look forward to the new common logo of the contact points, not just in Dublin but across the country which will at last provide a basic approach to full employment which must be our economic pariority.

Mr. Martin

I join with other speakers in welcoming the interim report of the Task Force on Long-Term Unemployment. It focuses attention on the difficulties faced by the long term unemployed and puts forward recommendations and suggestions as to how best we can intervene to break the cycle of long term unemployment and return people to the workforce where they have a more meaningful quality of life.

Primarily I will address the sections dealing with education but in passing, by agreement with our spokesperson on enterprise and employment, Deputy O'Rourke, I will develop the point she made that we must be careful about embarking down the road where we have a plethora of bodies with responsibility for employment generation in a given area. The north Lee area partnership board has been extended to embrace areas on the south side of the city. We also have the enterprise board, the vocational education committee, whose offices are playing an important role on these boards and in other areas, Forbairt and in rural areas there are Leader projects. We have to be careful that the same people are not running around to different meetings, all talking the same language. There is a tendency for that to happen and I am worried about that danger.

The concept of a local employment service is fine but I am worried that we may have a duplication of effort. Once we identify the fundamental structural problems that have given rise to long term unemployment, essentially it is a matter of allocating resources to the agreed interventionist methods. For example if it is agreed that early school leaving is a problem or that lack of achievement in the school system is a contributory factor to long term unemployment — and all the evidence confirms there is a strong correlation between early school leaving and those in the ranks of the long term unemployed — we must put the resources into this area. As Deputy Broughan has remarked it is an indictment of our system that 20 per cent leave school without the leaving certificate. That is unacceptable. If we agree that this is a fundamental issue we already have the structures in place to deal with it but resources are required.

The early start programme was initiated in eight centres last year and will increase to 33 by the end of this year. That is only the tip of the iceberg. What we need is a national system of pre-school education. It is incontrovertible that a proper pre-school programme would have a remarkable impact on the educational achievements of young people and generations to come and greatly increase their capacity to achieve at second level. The task force report talks about establishing pilot pre-schools in certain disadvantaged areas. We already have the early start programme but prior to that the health boards had established pre-school programmes and in some areas the early start programme was a duplication of that service. The understanding is that the health boards will draw back on their involvement in such provision. In Churchville in Cork there was a health board pre-school staffed by AMI Montessori teachers in existence but adjacent to it the early start programme was established. The AMI Montessori teachers' qualification is recognised by the Department of Education as indicating a particular expertise in infant education but they are debarred from participating in the early start programme and they may now lose their jobs. I would oppose any moves to set up a third tier of pre-school education. I suggest we accept the principle that pre-school education is essential and then create one national model and fund it in a comprehensive manner.

The home-school teacher liaison scheme has been a great success but is not uniformly available throughout the country. We should provide extra resources for it. Instead of creating new boards, new local bodies and ploughing money into administration, we should provide extra resources for the system that is in place. Likewise for remedial teaching and extra resource teachers in certain areas. My argument is that we have the structures in place to deal with most of the issues that have been raised in the task force report but we require the resources to drive these programmes forward and increase their capacity.

The task force report recommends that a local training and education fund should be available to the local employment service to enable it to arrange pre and post VTOS support which is administered by the educational system and in many ways is doing a fine job. Considerable expertise had already been built up. As chairman of the City of Cork vocational education committee I am familiar with the excellent VTOS scheme in Coláiste Stiofáin Naofa on the Tramore Road and the teachers administering the scheme have built up expertise and experience in dealing with it. I suggest that it would make far greater sense to allocate the additional resources at one's disposal to the existing VTOS scheme and allow the school or college to become the centre in that locality for the operation of VTOS. That could mean providing counselling and advice services and a guidance service in terms of the pre and post VTOS course. If you created a new body the officials who administer it will ring up the school to talk to the person in charge of the VTOS scheme to arrange to do things. The obvious thing is to directly ask the person who is doing that already. There is a danger that there will be a duplication of effort with too many people running around trying to carve out a niche for themselves. The infrastructure is in place and we require the resources to enable that infrastructure to provide the services and intervention that is necessary to help to assist those who are long term unemployed.

On the question of linkages between colleges and the local community, I am conscious of the BITE programme in Ballymun which operates under the auspices of DCU and is administered by a management board. That is an excellent model which could be followed throughout the country by other universities and third level colleges.

These colleges should look at what is happening in DCU in Ballymun in terms of linking in with feeder primary and second level schools in a catchment area where up to now participation in third level has not been what it should be. The objective of the programme is to provide educational and financial assistance to students at primary and secondary level to enable them become greater achievers, complete the leaving certificate course and then go on to third level education. They reserve a quota of places for students to attend the DCU.

A model exists where a particular university has brought about an interventional strategy to help students change their attitudes and look at third level education as another option. In many cases students do not consider completing second level as an option never mind attending third level. The BITE programme is a good model which could easily be replicated if the necessary resources were made available directly to the providers of such a programme. We could do that without much duplication of effort or the necessity to appoint an administrator. I strongly recommend it.

While early intervention is critical, at a recent seminar in Trinity College, Barry Keogh stated we must help those attending second level who, up to now, would not have looked at third level as an option. We need to develop strategies which will assist such students to look at participation in third level education as a realistic option.

I welcome the commitment in the report to 18-21 year olds. No young person should leave school without having the possibility of being placed on a course or in employment. I welcome the youth start programme. The Minister at the Department of Enterprise and Employment, Deputy O'Rourke, was responsible for initiating that programme and bringing it forward. Society stands indicated when the first experience of a young person leaving school is the dole queue. Our objective should be to provide a more constructive option for a young person through education or employment.

I am surprised that there is no mention in the report of the PLC structure. Some 17,000 students attend these courses. It has been a most exciting innovation in education. Much of it emanated from local initiative which is the hallmark of this report and of the National Economic and Social Forum. The PLC system was driven by principals and teachers who had the courage of their convictions, who developed new curricula and courses with little by way of resources and backup. The courses are well suited to the market place and many of them lead to employment. If the PLC structure had not developed where would those 17,000 young people be now? I suggest that many of them would be unemployed. I am surprised that there is no emphasis on the PLC system in the report. This is an area which could be looked at again as it has a significant contribution to make towards breaking the cycle of long term unemployment. Extra resources must be provided for this area. Many of the schools involved are second level schools which are becoming third level colleges but do not have the same level of resources, equipment or facilities.

The community employment programme is a relaunch of the old social employment scheme, the main difference being the education provision within that programme. The programme needs to be reviewed, in particular its training dimension. Some areas are experiencing difficulty with this programme. Cork Corporation has not been in a position to fill the 250 places available to it and Cork County Council is experiencing similar problems. That suggests there are some anomalies within the scheme which render it unattractive to the unemployed. It must be looked at again.

VTOS is an excellent programme and some schools have developed expertise in that area. However, its linkage with employment must be reviewed. What happens to students when they complete the course? Perhaps those involved in compiling this report or the Forum report could carry out an initial analysis on the operation of VTOS to date and ascertain the views of students on how they see the scheme, the difficulties involved in it and where they see themselves going when they complete the courses and so on.

There have been welcome changes in social welfare payments which enable students to attend third level education and still receive their allowances. That is commendable. However, there is need for someone to promote such programmes and give greater advice and assistance to potential participants. There should be a greater link between the Departments of Education and Social Welfare. At present, the Department of Social Welfare looks after a particular aspect of the programme and the Department of Education looks after another.

I welcome the report. While it was announced that the area of partnership is being extended to Cork, we have the spectacle of 100 jobs being lost in the Sunbeam factory. There was a certain paradox in Government Ministers coming to my city, saying they would initiate measures with a potential for 7,000 or 8,000 jobs, on the same weekend when approximately 100 families in Cork were beginning to experience the reality of unemployment. There is a fundamental double-think by the State in that area since an amount of £300,000 or £400,000 of working capital could have kept that factory going in the location where the area-based partnership was being established. The fact that these programmes are launched alongside very significant closures of factories, such as Sunbeam in Cork, Silverlea in Athlone does nothing for public confidence or credibility. Rather it creates a certain sense of unreality in the efficiency of these programmes and a certain degree of cynicism on the part of the public. Yet we know that is not the intention of those who want to launch these initiatives or programmes.

Debate adjourned.

Dáil Éireann debate - Wednesday, 15 Mar 1995

Interim Report of Task Force on Long Term Unemployment: Statements (Resumed).

Dáil Éireann debate -
Wednesday, 15 Mar 1995