Vol. 573 No. 2
8 Mr. M. Higgins asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of redundancies notified to her Department during 2000, 2001, 2002 and to date in 2003; if the number of notified redundancies in September 2003 showed an increase of 61% over the figure for September 2002; the steps being taken to deal with the sharp increase in redundancies; and if she will make a statement on the matter. [24475/03]
42 Mr. Kehoe asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of notified redundancies that have been presented; her views on the worrying trend of those statistics; and if she is considering new employment initiatives. [24417/03]
I propose to take Questions Nos. 8 and 42 together.
The number of redundancies notified to my Department in the years mentioned was 13,316 in 2000, 19,977 in 2001, 25,358 in 2002, and 20,150 in the period from January to September 2003. Notified redundancies in September 2003 were 61% higher than in September 2002. However, the pattern over many years is that the number of redundancies fluctuated substantially from month to month. A more meaningful comparison would be January to September when notified redundancies were 4.6% higher this year than the corresponding period last year.
The increased level of redundancies reflects slower economic activity in Ireland in line with difficult economic conditions worldwide. Although the Irish economy performed sluggishly in the first half of 2003, growth is expected to pick up next year as conditions in the global economy continue to improve.
However, given the open nature of the Irish economy, the Government's focus will be on maintaining competitiveness which is critical to sustaining and developing the manufacturing and international traded service sectors. Enterprise development here is facing a number of challenges, including significantly reduced export growth, increased competition from low-cost locations and cost and other factors adversely impacting on competitiveness.
Ireland's ability to compete with the emerging markets of central Europe, India and China for services and manufacturing activities that drove our earlier success is hampered by the rising cost of doing business here. Our strategic response must be informed by these realities and by the certainty that competition, resulting from globalisation and technological change, will continue to intensify. The changed domestic and global economic context means that Ireland's enterprise policy, which drove our success in the 1990s, based on the advantages of a plentiful supply of skilled and relatively inexpensive labour, a flexible business environment and low corporation tax, will no longer suffice. Future enterprise policy should facilitate the State and industry to create the conditions that will make possible a sustained shift to higher skill, higher value added and a more knowledge-intensive enterprise economy.
Does the Tánaiste accept that while we still have a relatively low rate of unemployment, the figures she has just quoted give cause for concern and require a response? Does she accept that the manpower employment outlook survey published last month showed that almost one fifth of employers will lay off staff this year and just 12% of companies responding to that analysis indicated they intended to hire new employees this year? Does she accept this is in stark contrast to the same survey results last year which showed employers much more confident with just 6% saying they would let workers go and 24% planning to hire new staff? What measures have been taken by her Department to identify redundancies pending, to support vulnerable companies and what early warning mechanisms have been installed in her Department to alert her to potential redundancies?
I will answer the last part of the Deputy's question first. The early warning system in the Department is constantly reviewed and revamped. It is not a perfect system and obviously requires us to be informed by the companies or by the agencies who are in turn informed by the companies. We operate a system where the State agencies involved with enterprise, both Enterprise Ireland on the indigenous side and IDA Ireland on the foreign direct investment side, are in constant touch with what we would call vulnerable sectors or vulnerable companies. A year ago Enterprise Ireland put a competitiveness fund together to help specific companies in particular sectors to overcome particular difficulties.
We cannot be complacent and what has happened is worrying. There is no doubt that there is less confidence but we developed employment over the last year by approximately 28,500 and a considerable number of those jobs, 12,000, were in the private sector. Although it is not as optimistic or as upbeat as it was a number of years ago, it is still a far from gloomy picture. The quarterly household survey published recently indicated that people were generally optimistic for the remainder of 2003 and into next year. We believe that the upturn in the global economy led by the United States in particular and to a lesser extent by the Asian economy recovery, will greatly aid Irish economic recovery. I do not want that to take away from the fact that we cannot be complacent. The number of redundancies sometimes obviously reflect the downturn but they also reflect many of the changes that are occurring. People are losing jobs in the vulnerable manufacturing sector while new jobs are being created in different sectors. The big challenge is to equip those losing their jobs with the skills to take up the new jobs that are being created in different sectors.
The remit of Enterprise Ireland allows equity to be put into indigenous industry but it does not allow for grant assistance to be introduced too often and it is very reluctant to do so. There is an early warning system in that Enterprise Ireland is given advance notice of troubles in various companies that are about to close but it is often hampered by what it can do, not only by the policy but also by EU rules. Notwithstanding that EU rules seem to be used as an excuse on various occasions for its lack of involvement in the early stages to resolve an issue of potential company closure, there are approximately 11 different EU countries—
A question, please, Deputy.
Is the Minister aware that there are 11 different sets of grant assistance in several EU countries that are far more generous to the prospect of inward investment than there is in Ireland? There seem to be no common EU agreements. There are rules but not agreements with regard to what is common and what can be used as incentives by any member state in order to attract inward investment.
On inward investment, the most recent EU policy requires large scale projects to be notified to the EU and this is a semi-clearance mechanism. The state aid rules dictate the level of assistance that may be given and that is substantially less now than it used to be. It would be mistaken to think that if we were to plough a whole load of money into a lot of companies we would do better. We put a lot of money into companies in the 1970s and 1980s with very little effect and very high levels of failure. All the companies grant aided in 1973 had gone to the wall 25 years later. Grant aid in itself is not a strategy to sustain companies if there are underlying difficulties and if the company is not going to succeed.
If indigenous companies have short-term difficulties to overcome, we have the flexibility to assist with short-term issues and Enterprise Ireland has done that. At the end of the day our companies have to be able to sell their products by growing sales, opening doors and finding opportunities in overseas markets, particularly in the eurozone market. We are exploiting the Chinese and the American markets to great effect but we need to do more in the eurozone where we could capture greater opportunities.
Does the Minister accept that it is not fair to characterise the redundancies being notified as the old industries in transition since some of the redundancies such as in 3Com where 640 high-tech jobs were lost in Dublin and Schneider in County Kildare lost 315 jobs in electronics? There are vulnerable, modern high-tech jobs also going.
Does the Minister accept that characterising it as a global phenomenon is not entirely true since the analogous survey to the one I am quoting for the Republic of Ireland shows the reverse is the case in Northern Ireland and a much more optimistic view of the 200 companies surveyed there about their employment prospects for this year?
While the company was in the electronics field, the Celbridge jobs were not very high skilled. There are electronics companies with low skill activity and they find it difficult to compete. Notwithstanding what we are saying, the level of foreign direct investment in 2002 over 2001 was up 19%. Statistics can prove anything. We are still doing remarkably well. The issue is whether we can convert the losses into alternative opportunities for those losing their jobs and that is a huge challenge requiring ongoing investment in training, upskilling and education. More flexible training policies are being delivered at company and ground level, not all through formal training or formal education. That is the direction we have been taking in the recent past.
