Vol. 505 No. 4
11 Mr. Noonan asked the Minister for Finance the proposals, if any, he will bring forward to increase the labour force; if his attention has been drawn to the increasing shortage of workers in many sectors of the economy; and if he will make a statement on the matter. [13865/99]
The Government is fully aware of the increased pressures in the labour market. These pressures apply at both the higher skilled and lower skilled ends of the market. As the Deputy will recall, skill shortages are being addressed through a marked increase in investment in technological education and training. An additional £280 million was provided in a special fund for scientific and technological education and research and development for this purpose, and a further £75 million for capital investment at third level. The results of this investment will become increasingly evident in the labour market in the near future. More recently, FÁS initiated a proactive programme with a target of attracting Irish citizens and EU nationals to meet increased demand for skilled labour in construction, IT, electronics and teleservices.
As regards the less skilled end of the market, the Government took a radical approach to taxation of the low paid in the budget last December. The result was not only to remove 80,000 workers entirely from the tax net but to greatly increase the financial incentive for the unemployed to take up open market jobs as against remaining on social welfare.
There are a host of other measures either being implemented or under consideration, such as the National Employment Action Plan, which is being updated for 1999, and the various proposals in relation to participation by women in the workforce. An interdepartmental group of officials, the Strategy Group for Employment and Unemployment, also advises the Government on the main strategic requirements.
The fact that our unemployment rate is now down to about 6 per cent illustrates the success of our policies. We intend to continue with further active policy initiatives, as required, in this area so that we can ensure that the labour market continues to respond to the opportunities increasingly evident in the marketplace.
Will the Minister agree that the single biggest threat to our growing economy is the danger that the country will run out of workers, that the sources of workers in terms of people moving from social welfare to work and emigrants returning is drying up and that the only major source of new workers is to encourage more women who retired from the labour force on marriage to return to it? Has the Minister any specific proposals on tax changes or child care which would encourage more married women to participate in the labour force?
I would not necessarily agree that the only constraining factor to the continued growth of the economy is the availability of workers. I would give it a high rating in the number of factors, which also include infrastructural deficits and other areas, that might constrain the economy. I agree with the Deputy that it is a constraining factor. We must remember we have moved fairly rapidly from a time when unemployment was a scourge and the main consideration was to create jobs at all costs to the other end of the market where we are gladly talking abut these problems associated with success. I am sure neither Deputy Noonan nor I thought ten years ago that we would ever be in this position.
The Government has a wide range of measures available to it. The Deputy referred to taxation and that is one of the factors the Government will consider. The number of women participating in our workforce has increased more or less to the level of the European norm in recent years, but it is still below the average level of northern European countries. The Deputy is correct in that there is a pool of available workers and we will consider a wide range of initiatives to encourage some of the people to whom the Deputy referred back into the workforce.
Does the Minister agree that when a married woman returns to work she usually has to pay the higher rate of income tax and the fact that the 46 per cent rate applies at such a low level of income prohibits many married women from returning to the workplace?
I agree the tax rate is a consideration for some married women who decide at a certain stage to return to the workforce. As the Deputy will be aware, the reason they come into the tax net at a higher rate is that their allowance would have been assumed by their spouses. This raises the question of how we should address the taxation code in the future. I accept that it is a disincentive for women returning to the workforce to have to pay the 46 per cent tax rate immediately. It is difficult to find a way of overcoming this problem without causing more difficulties in the area of taxation. However, I accept it is a problem.
