Charles Flanagan
Question:1 Mr. Flanagan asked the Tánaiste and Minister for Enterprise, Trade and Employment her plans to deal with the recent announcement of job losses throughout the country. [9356/02]
Ceisteanna – Questions. Priority Questions. - Job Losses.
Pat Rabbitte
Question:2 Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of redundancies or job losses notified to her Department during 2000 and 2001; the number of anticipated job losses reported to her Department to date in 2002; the steps being taken to deal with the serious level of job losses in recent months; and if she will make a statement on the matter. [9416/02]
I propose to take Questions Nos. 1 and 2 together.
The numbers of redundancies notified to my Department in 2000 and 2001 were 13,316 and 19,828, respectively. In the months of January and February 2002 a total of 4,025 redundancies were notified. With regard to anticipated job losses, one indicator of this is the number of collective redundancies notified to my Department under the Protection of Employment Act, 1977. These are the numbers of employees that companies have indicated they propose to make redundant after the statutory minimum notification period of 30 days. A total of 2,217 collective redundancies was notified in the first two months of 2002.
I share the disappointment of Members about the number of job losses in recent months at locations throughout the country and I recognise their impact on the lives of workers and their families. In attempting to devise a comprehensive response to these developments, it is necessary that we understand and address the underlying causes giving rise to difficulties. It is standard procedure that, where we become aware that certain companies are experiencing competitive difficulties or where major job losses are likely, the full services of the agencies of my Department are made available to work closely with the companies involved in addressing the difficulties arising and to provide whatever assistance possible to the workers affected.
It was inevitable that Ireland would be affected by the current worldwide economic downturn, the most severe slowdown since the 1973-74 oil price shock. The information and communications technology sector has been especially hard hit by the recent downturn, with a loss of more than 200,000 jobs worldwide in 2001. The manufacturing component of the ICT industry represents about 10% of Ireland's GDP.
It is also necessary to see recent job losses in the context of our recent record level of job creation. The number of people in employment has increased dramatically in the life of the Government. The latest quarterly national household survey shows that, in November 2001, 1.75 million people were at work compared with 1.38 million in April 1997, an increase of 370,000. While the record breaking levels of job creation of the late 1990s have ended, overall economic prospects are encouraging. According to preliminary statistics, more than 29,000 new jobs were created in IDA, Enterprise Ireland and Shannon Development supported companies during 2001. This was a strong performance considering the state of the global economy. In any comparison with other European economies, the economy still performs well.
While there is still uncertainty about the short-term, economists forecast that a recovery in the global economy will be under way later this year. As a result of the policies this Government has pursued and continues to pursue, the fundamentals necessary for Ireland to take advantage of this recovery are in place. It is necessary, however, that we continue to address those factors which impact on our competitiveness in areas such as the cost environment for enterprise, infrastructure, education and training, and research and development.
I put it to the Minister that the position has become serious and that, almost every day, we are greeted in the news with job losses or warnings about them. Some 4,000 job losses have already been posted this year and only job losses in their hundreds attract national publicity.
With specific reference to recent changes in the Industrial Development Authority practices and promises and commitments supported by the Government that 50% of new starts would be in the Border, midlands and western region, will the Minister report progress on the number of IDA supported jobs in this region in the past nine months?
Notwithstanding the recent difficulties and slowing down of the economy – many economists have said it is over – this economy continues to be the best performing economy in Europe. We will experience growth at between 4% and 5% this year. To put that in context, approximately 1% of the workforce became redundant last year; in the late 1980s and early 1990s we had redundancies at an annual rate of more than 2.5% of the workforce. We are losing too many jobs but relatively speaking we are not losing as many as we were losing a decade or so ago.
In the midlands in particular, the number of people in employment has increased by 16% since this Government took office. The rate of unemployment has decreased by 56%.
Will the Minister supply the House with a little supportive evidence for her proposition that the downturn is over? Will she tell the House on what she basis a growth level of 4% to 5% for the current year? There is no growth at the moment. What basis have we for assuming that it will reach 5% in a full year? Is the Tánaiste saying that because more people are at work now it is not too bad to have a ratio of 1% of them being made redundant as compared to 2% in the bad days of deep recession? Will she tell the House whether the early monitoring unit still exists in her Department and if so, in what work is it engaged?
The growth forecasts are not mine alone, they have been made by many independent commentators such as Mr. Colin Hunt and Dan McLoughlin. Mr. Hunt, an economist with Goodbody Stockbrokers, in recent commentary said the recent recession is over. It is also evident in the forecasts from IBEC and other companies for the remainder of this year, including the Pipeline from the IDA. Although things are not as they were a couple of years ago – I do not wish to fuel false expectations – companies are beginning to expand their operations.
I accept that every redundancy is bad news. Nobody wants to see any worker being made redundant. We have seen an unusually high number of redundancies in what I would broadly call the traditional sector, particularly in Wexford, Cork and Tullamore. Although the jobs in Tullamore were of recent origin that company decided to make its workers redundant when it lost a single contract from Dell in Limerick. It is often the case that some of our companies have a single source for their supply base and when that contract is lost, we lose jobs. The challenge is for us to seek to find areas where workers can be up-skilled for sustainable jobs in Ireland. Some of the decisions being made are affected by what is happening to the economies in the Czech Republic, Mexico, Morocco and Central and Eastern Europe which is now becoming increasingly attractive for FTI. Where wage levels are much lower, we have to make up the gap with a higher skills base, greater productivity, greater use of technology and so on. That is the challenge. I accept it is a major challenge to find new skill-sets for older workers who have been accustomed to doing a particular job for a long time.
I do not disagree with much of what the Tánaiste has said but I put it to her that there is a real failure of management involved in this and that there is no forward planning at Government level to deal with the type of infrastructural deficit which exists or the bottlenecks that are restrictive to industrial and commercial development and that that is the real problem? For example, the national spatial strategy and the national development plan have fallen behind simply because there is no proper management system or structure at Government level.
The Minister cited difficulties with wages and pressures from Eastern Europe. I put it to her that that is only half the story and the other half of the story relates to costs. Costs for industry and commerce are ever increasing. The Minister of State, Deputy Noel Treacy, could tell the Minister about the increases in insurance and transport costs. Fuel initiatives, promised to business by this Government, remain unfulfilled. Costs are rising at an enormous level giving rise to the type of pressures which result in redundancies. This is happening as a result of the failure of management, failure of planning and no clear thinking.
I acknowledge that costs are rising at an alarming rate in some respects. Wage levels for some sectors have risen enormously in recent years. That is why the strategies are focusing on tax reductions as a way of increasing take-home pay. The social partnership model has delivered unprecedented prosperity to workers generally, way beyond what would have been achieved had we been in a period of free bargaining.
I agree with Deputy Flanagan that the infrastructural deficit is a cause of great concern. I accept that. We have set up a Cabinet sub-committee chaired by the Taoiseach. We have made some progress but progress has been too slow in many respects. Everybody acknowledges that. We have to find a way of encouraging greater private sector involvement in the development of our infrastructure because with private sector involvement comes private sector speed and perhaps private sector efficiencies. Telecommunications is, perhaps, the most important piece of infrastructure. The Minister for Public Enterprise, Deputy O'Rourke, recently announced the Government's intention to roll out broadband to 19 towns. Over the next couple of years a number of other towns will also be given the necessary broadband infrastructure to ensure they can compete for key investment, whether foreign or Irish.
I am not sure whether the Minister replied to my question regarding the early warning unit. Is the Department in consultation with any companies who anticipate problems down the line?
The Minister quoted one or two economists and one could quote one or two back to her. One of the more prestigious stockbroking firms say growth will be approximately 1.5%. With job losses at a rate of almost 1,000 a week over four months, one does not have to have good arithmetic to know what they would be in a full year if the trend were to continue. I would like the Tánaiste to assure the House that she has some tangible evidence that it is not likely to continue at that rate? Deputy Richard Bruton referred earlier to the real danger of our reverting to public squalor in the midst of private wealth. Some of the job losses are focused on certain areas. There is regional imbalance involved. They are being shaken out for more traditional industries and the prospect of them being replaced is so slim that the picture is not a very happy one. The gap between those at work and those threatened with redundancy is widening.
The early warning unit continues to exist in my Department. However, as I said before, no early warning system can detect if a board meeting in the United States makes a decision to close its Irish operation. We are, from time to time concerned about particular companies. Even in the very good days when we were generating a substantial number of new jobs each week, there were always companies in difficulty. That is a fact. Some companies go under even in buoyant times. They are not competitive and cannot survive. That is why it is important that we remain focused on competitiveness.
I am concerned about the age profile of many of the people losing their jobs. Generally speaking, younger people even where they have a low skill level, are perhaps more adaptable and inclined to avail of training options and acquiring a new set of skills. The situation is much more difficult for older workers in regional locations. That is the concern and the challenge. To have balanced regional development, it is important to have infrastructure in place so that we can get key investment in those smaller locations.