Written Answers. - State Agencies' Performance Indicators.
Mary Harney
Question:
53
Miss Harney
asked the
Minister for Enterprise and Employment
if he can quantify the impact of State agencies on the creation of employment in the Irish economy; whether there are any mechanisms for measuring such impact of employment in the Irish economy; and if he will make a statement on the matter.
[17241/95]
Máirín Quill
Question:
60
Miss Quill
asked the
Minister for Enterprise and Employment
the performance indicators in use to measure the efficiency and effectiveness of the job creation agencies under the remit of his Department, namely Forbairt and IDA Ireland; and if he will make a statement on the matter.
[17243/95]
I propose to take Questions Nos. 53 and 60 together on the basis that Deputy Harney has asked whether the impact of the State agencies on the creation of employment in the Irish economy can be quantified, and whether there are any mechanisms for measuring such impact in the Irish economy and Deputy Quill has asked what performance indicators are in use to measure the efficiency and effectiveness of Forbairt and IDA Ireland. Both agencies have employment creation as a key objective and, as such, the employment performance of the firms assisted by the agencies is one of the main measures of agency effectiveness.
In response to the first part of Deputy Harney's question, I would confirm that there are well established procedures for quantifying the impact of the state agencies on the creation of employment in the economy. The primary mechanism is the annual survey of employment which records the actual numbers employed in each company assisted by the agencies. The annual survey is supported by interim quarterly estimates of employment, given by the agencies.
The employment survey provides information on the permanent and part-time employment levels in the companies involved. By comparing the employment survey results with previous years, the following information can be obtained: the number of jobs created; the number of jobs lost; and, the net change in employment.
The employment survey results for the agencies are reported in the Forfás annual employment survey report. The 1994 survey was published in July of this year and I have arranged to have copies transmitted to Deputy Harney and Deputy Quill. In summary, the main findings set out in the document are: in 1994 overall permanent full-time employment in the portfolio of companies dealt with by the agencies increased by 6,057 jobs to 218,138 jobs; IDA Ireland companies accounted for 5,208 of the 6,057 net employment increase, with Forbairt companies contributing a net 202 jobs and Shannon development companies accounting for the balance of 647 jobs; the gross job gains in 1994 was 20,795 jobs — IDA Ireland companies accounted for 9,764 jobs, Forbairt companies accounted for 9,147 jobs and Shannon development companies, 1,877 jobs.
A further means of assessing the impact of the increased industrial activity within the economy is through the annual Irish economy expenditure survey which is conducted by Forfás. This survey gathers data on: expenditure on wages and salaries; purchases of Irish manufactured raw materials; purchases of Irish Services; and profits retained in the economy.
The most recent survey published covers 1993 and I am arranging to have copies of this survey transmitted to the Deputies also. In this context, research work undertaken by the Economic and Social Research Institute and Forfás indicates that expenditure by manufacturing companies within the economy leads to nine additional jobs in services for every ten jobs in manufacturing, thus demonstrating the importance of manufacturing as a stimulant to overall employment levels in the Irish economy.
Analysis of grant cost per job sustained provides an indicator of the efficiency of the agencies in assisting job creation. State grant cost per job sustained is defined as the sum of all Forbairt and IDA Ireland grant payments over a seven year period divided by the number of first time jobs created and still in existence at the end of that period. For the purposes of this calculation, a first time job is defined as the increase in employment in a company over and above the peak employment level in the previous five years and related to a specific investment programme agreed with IDA Ireland or Forbairt. The grant cost per job sustained for the seven year period 1988 to 1994 was £9,930 for Forbairt companies and £12,786 for IDA Ireland companies, giving an overall average of £11,409.
Historically, there has been a tendency to consider the impact of the industrial development agencies only in terms of employment in firms. In the light of the current unemployment situation we need to continue to focus on this area. However, I believe that we also need to look at other indicators of industrial performance such as sales, exports, profitability, productivity and R&D spend. This is particularly important in the case of indigenous industry whose historically poor employment performance can only change for the better if substantial improvement in all of these areas is achieved. I have asked my Department, in conjunction with Forfás, to give increased attention to this wider set of indicators as part of its monitoring of the performance and impact of the agencies, and proposals in this regard will be included in the enterprise strategy which I intend to publish shortly.
We must, of course, acknowledge that the agencies are contributors to, as opposed to determinants of, industrial performance, whether it be measured in terms of sales, employment or any of the other indicators I have outlined. Ultimately, the performance of Irish enterprise depends on the ability and willingness of Irish people to take the risks associated with entrepreneurship and to develop the competencies to manage growth in an increasingly competitive world. It also depends on the creation of a favourable environment for enterprise which supports firms in improving their competitiveness. By addressing these issues we will improve the performance of enterprises themselves and also add value to the developmental actions of the agencies.
