I remind Members that the rule governing these questions is that supplementary questions and answers cannot exceed one minute.
Other Questions.
Price Inflation.
Eamon Gilmore
Question:42 Mr. Gilmore asked the Minister for Enterprise, Trade and Employment his Department’s view on the recent increases in the NCB purchasing managers index, which rose to 66.2% in May 2006, and the consequent pressures that are being put on small enterprises due to rising costs; if his attention has been drawn to the fact that costs for small businesses in the service sector are rising at their fastest rate since 2002; the action he intends to take to bring costs under control; and if he will make a statement on the matter. [23488/06]
The figure referred to by the Deputy relates to the NCB purchasing managers services index. It indicates impressive growth in the services sector and healthy demand. The May data from this report signalled the sharpest expansion of new business placed at Irish services firms since September 2000. This report provides further evidence that expansion in the services sector continues to be an important driver of economic and employment growth. Some of the higher costs mentioned in the index are attributable to the very strong growth being experienced in the sector as almost 50% of firms recorded an increase in activity over the previous month.
Recent CSO data show that employment in the financial and other business services sectors increased by 16,300 or 6.4% in the first quarter of 2006. We are now the world's 14th largest exporter of services, a remarkable achievement for a country of just 4 million people. This underlines the competitive strength of our services sector in winning business against strong international competition.
Being one of the world's most open economies has allowed Ireland to prosper for over a decade but also leaves us prone to the pressures of rising external costs. The inflationary impact of escalating energy costs, for example, is a factor every economy is facing.
The Government is playing its part in influencing inflationary trends by implementing responsible fiscal policies, promoting stronger competition and strengthening consumer protection.
I draw the Deputy's attention to the recently concluded social partnership negotiations where, pending formal ratification by the parties involved, it has been decided to reconstitute the anti-inflation group established under Sustaining Progress with the same membership and mandate as before. The parties are also agreed on the critical importance of bringing inflation down as quickly as possible towards levels comparable with our trading partners' performance and towards the eurozone average to secure jobs.
Public policy, both at central and local government level, and the actions of employers and trade unions will be framed with this inflation target in mind and its progressive achievement over the period of this agreement. It has been agreed in this context that trade unions and employers will respect the terms of the pay agreement, having particular regard to the common objectives of improving competitiveness and living standards by bringing inflation under control. The Government, for its part, will seek to minimise the effect of the public service pay agreement on inflation by actively pursuing the agreed modernisation programme to achieve better value for money in public service delivery.
I thank the Minister for that reply. I am happy to share his optimism about the underlying strength of the economy. Will he agree, however, that focusing on inflation per se is not enough and that we must isolate the factors over which we have some control, such as domestic pushers of inflation as distinct from international pushers like energy, over which we have no control? In that context, what specific steps does the Minister propose to take in his Department to identify the domestic causes of inflation over which we have some control and the steps he will take to try to reduce or contain those costs because inflation costs are rising faster now than at any time since 2002?
It is important to point out, as the Deputy has indicated, that the recent increases in inflation are largely due to external factors, namely, higher oil prices and higher interest rates. If we excluded higher interest rates and oil prices, the CPI would have gone up by approximately 2.25% to 2.5%, but I accept we cannot do that.
In terms of our position on inflation, the rationale behind our recent decision on the groceries order was to create a more competitive environment in the retail sector. That arose from strong advice from a number of sources and followed on a serious analysis undertaken by my officials in a comprehensive report on that. That is an example of the type of active intervention we took to remove a barrier to competition and thereby create a better environment for prices in that sector. We met with much opposition from within and outside the House. Competition policy is a key area to try to tackle inflationary pressures with a view to creating greater competition and keenness in respect of prices. In that regard, this year I allocated significant additional resources to the cartel division of the Competition Authority to break up cartels in the economy and have greater enforcement.
I do not share the Minister's complacency that our inflation is predominantly internationally generated. If he considers what happened in Ireland compared to the rest of the eurozone, last December inflation was below the European average. We have now surged well ahead of the European average, which suggests we have internal rather than external problems, as referred to by Deputy Quinn. On that aspect, will the Minister put in place some monitoring of cost pressures specifically in the building and oil pricing industries, which are two critical factors for small businesses and businesses exporting? It alarms me that the Minster does not appear to track what is happening in these critical markets despite the evidence on both fronts that Ireland is poorly priced compared to competitors. There appears to be issues that need to be addressed. Will the Minister undertake to regularly monitor and assess the pressures in those sectors?
We constantly do everything we possibly can not just to monitor but to determine the steps we can take to ease the conditions that give rise to higher prices and higher pressures.
Does the Minister monitor them?
Of course we monitor them. There is a range of monitors.
Will the Minister permit me to make one point?
No.
In the past I asked the Minister to give me figures to show he is monitoring them but he could not do so. That is what concerns me.
The Minister, without interruption.
The Deputy has a habit of interjecting. I was hardly out of the traps and he was in straight away.
The Minister answers questions that are not asked.
I reject the Deputy's first point which uniquely tried to side-step the issue. The cause of most recent inflation is external. That is not my spin or that of the Government. Those are the facts from the CPI index——
Has the Minister looked at the CSO figures to which I drew his attention?
——which indicate oil and interest rates as the causes.
Prices are rising here faster than in the rest of Europe.
The future challenges will be in respect of those two areas. Domestically, it is about creating greater competition within the economy.
That is the point of my question.
That is very important. The one time I decided to do something about it, the Deputy's party took an ambivalent approach to it——
It did not work.
——and played both sides of the House on the groceries order. I know he would have had a different view from that of the party's spokesman on enterprise because he always favoured the abolition of the groceries order, yet Fine Gael tried to undermine that for political reasons. Every time we try to move on the domestic economy the vested interests come out of the traps and politicians from all sides try to protect them. That is one of the biggest challenges politically if we are serious about opening up the professions and so on. It is time for everybody to get on board and see these issues through because on any analysis, productivity on the domestic side is not as strong as it is on the foreign direct investment side. The absence of competition in a number of the sectors the Deputy mentioned — construction, professional services and others — is responsible for that and is leading——
If the Minister produces the information and illustrates the problem we will have some chance of movement.
Economic Competitiveness.
Joe Costello
Question:43 Mr. Costello asked the Minister for Enterprise, Trade and Employment his plans in relation to the joint European resources for micro to medium enterprise programme; the amount of funding to be allocated each year to 2013, including 2006, under the programme; the types of businesses he intends to aid through this mechanism; the processes to be used for businesses wishing to obtain such funding; if he intends to set a maximum timeframe from a completed application being submitted to a decision being given to the applicant and to funding being paid down; and if he will make a statement on the matter. [23489/06]
The joint European resources for micro to medium enterprise is a joint initiative by the European Commission, European Investment Bank and European Investment Fund, which is intended to improve the access of SMEs to finance within the framework of the European regions. The initiative, which is known by the acronym, JEREMIE, is voluntary and is designed to enable European member states and regions to use part of their Structural Funds over the period 2007-13 to develop financial instruments that are specifically designed to support micro and small and medium enterprises.
The European Regional Development Fund is a Structural Fund for financing measures to promote development and structural adjustment of regions and the economic and social renovation of areas facing structural difficulties. Structural Funds generally provide financial assistance in the form of grants. Under JEREMIE, however, some of these grants can be transformed into financial products which can be focused at regional level.
In so far as Ireland is concerned, the framework for the next round of Structural Funds — the national strategic reference framework, NSRF 2007-13 — is being prepared and negotiated under the aegis of the Department of Finance. This will outline the strategy for allocating the available European Union funding through operational programmes. The proposal is that the ERDF funding available will be dispersed through two regional operational programmes managed by the respective regional authorities in the Border, midlands and west and south and east regions. Precise details of what these operational programmes will contain have not yet been developed. The possibility of using Structural Funds in line with the JEREMIE initiative will be considered in this context.
I thank the Minister for the information. Perhaps he might come back to me later, if not today, as regards the following. If they are to be used for micro businesses, surely the county enterprise boards are obvious bodies for administering these funds. Will the Minister indicate, either today or later, the level of funding it is intended to allocate during the programme in the period 2007-13? What differential will there be between the two regions that constitute the country in terms of access to Structural Funds?
I certainly will come back to the Deputy as regards this initiative. It is worth pointing out that the county and city enterprise boards were already co-funded by the ERDF and to a certain extent have been doing some of this type of activity. Some 40% of grants from county enterprise boards, I believe, were on a refundable basis. This is an increasing phenomenon and it helps them in terms of reallocating resources going forward.
Enterprise Ireland, likewise, in its venture capital programmes, is now taking equity in almost all cases as opposed to just giving straight grants to companies. I like the idea contained here. It dovetails with some of the recommendations in the small business forum or relates to them. As soon as these come closer to realisation, I will be anxious to see how we can make inputs to this to see how we may facilitate the application of the JEREMIE initiative to our domestic situation. I do not have the breakdown in terms of the regions yet, but I shall come back to the Deputy on that.
Is the Minister not alarmed that the recent evaluation of the Community's last support framework for 2000-06, showed under the heading "entrepreneurship" that the original application of funds was only 10% of all the employability funds that were devoted to entrepreneurship? Only 36% of the target money has been spent to date and the Minister's Department has been unable to give any indicator as to whether achievement has been registered in this section under entrepreneurship. If we are to have faith that the Minister will put a credible package together for the period 2007-13, I want to know why and what has gone wrong with the last programme. Why is the Minister unable to publish proper indicators of performance against targets in that crucial area?
That is a fair point. However, let us not overstate the impact into the future of ERDF on our business support measures, as the bulk of this will be Exchequer financed. Entrepreneurship in Ireland has gone from strength to strength. The most recent global economic monitor rates Ireland as No. 1 in terms of entrepreneurial activity within the entire European Union. Some 80% of Irish people now perceive entrepreneurship in a positive light.
It would appear this has happened despite the Minister's Department rather than because of it.
I do not accept that. The role of Enterprise Ireland and——
The figures are there.
——the support we have been giving Enterprise Ireland has been very strong. Venture capital initiatives have been particularly effective and the most recent round I have announced will be even more effective. The results from Enterprise Ireland more or less confirm that. The county enterprise boards have had good success across the country in terms of micro business. That is not to say we can afford to take the foot off the pedal. We must keep pushing, maintain our vigilance and as regards the specific question the Deputy asked, which is not the subject matter of this question, I will come back to him on that.
Labour Inspectorate.
Seán Crowe
Question:44 Mr. Crowe asked the Minister for Enterprise, Trade and Employment his views on whether the Labour Inspectorate has the number of inspectors necessary to carry out the duties in respect of the increased workforce and in particular to inspect the treatment of the growing number of migrant workers here. [23479/06]
Seán Ryan
Question:78 Mr. S. Ryan asked the Minister for Enterprise, Trade and Employment his views on whether Ireland is meeting its obligations under the Labour Inspection Convention 1947, and other relevant international agreements, in relation to the number of labour inspectors; the progress which has been made in hiring the additional labour inspectors announced earlier in 2006; and if he will make a statement on the matter. [23507/06]
I propose to take Questions Nos. 44 and 78 together.
Article 10 of the Labour Inspection Convention 1947 provides that the number of labour inspectors shall be sufficient to secure the effective discharge of the duties of the inspectorate and shall be determined with due regard for the importance of the duties which inspectors have to perform, in particular; the number, nature, size and situation of the workplaces liable to inspection; the number and classes of workers employed in such workplaces; the number and complexity of the legal provisions to be enforced; the material means placed at the disposal of the inspectors; and the practical conditions under which visits of inspection must be carried out in order to be effective.
The ratio of labour inspectors to the workforce shows a marked improvement over the past ten years from one inspector for every 150,000 people at work in 1996 to one for every 67,000 at work at the end of 2005. This is against an increase of over 500,000 in the workforce in the same period.
The assignment of previously announced additional labour inspectors was completed in November 2005. That brought the complement of serving inspectors to 31. The increase in staffing represents almost a doubling of the number of labour inspectors in the last two years.
The Department of Enterprise, Trade and Employment circulated a discussion document, Mandate and Resourcing of the Labour Inspectorate, to the social partners in early 2005. That document was the basis for further consideration by the employment rights compliance group, ERCG. The ERCG, which comprised representatives of the social partners, including the CIF and SIPTU, together with the Department of Enterprise, Trade and Employment, the Department of the Taoiseach and the Department of Finance, has completed its report. The report, together with the resourcing of the labour inspectorate and options to enhance the effectiveness of our employment rights compliance regime, were considered in the social partnership discussions which concluded recently.
A major package of measures has been agreed by the parties, including the establishment of a new, statutory office dedicated to employment rights compliance, a trebling in the number of labour Inspectors, greater co-ordination among organisations concerned with compliance, new requirements in respect of record keeping, enhanced employment rights awareness activity, the introduction of a new and more user-friendly system of employment rights compliance, increased resourcing of the system and higher penalties for non-compliance with employment law.
The number of labour inspectors will be progressively increased from 31 to 90 by end 2007, as part of an initiative to increase the staffing resources of the employment rights bodies generally. Inspectors will be specially selected and trained and will be deployed on a regionalised basis. In addition, the new office will be provided with legal, accounting and other administrative support to ensure its effective functioning.
I welcome the announcement of the increase in the number of labour inspectors to 90 in the partnership talks. The Minister should have done this some time ago, but well done, nevertheless. I have a couple of questions arising from that. How soon will recruitment begin? Will it be pretty much immediately? Is he talking about the end of 2007 in terms of completion of the recruiting and training process?
In terms of the number, will the Minister give some indication as to how he arrived at the figure of 90? Did he adopt a particular model or what device did he employ to arrive at the figure? Was it simply a matter of horse-trading among the partnership talks participants, with an arbitrary figure being agreed on? Finally, is language a feature of the new inspectorate? Will some of the inspectors come from the prominent immigrant countries such as Poland and Latvia, or at least will some be required to have a competency in the languages of those majority immigrant countries?
The Deputy has asked about the system of recruitment and the time period over which it will be completed. Recruitment will commence pretty shortly. It is intended that the full 90 will be in place by the end of 2007. I remind the Deputy — Members who have been attending Question Time will be aware — that there is a considerable amount of work to be done in the process of recruiting people and in training labour inspectors. That was a feature in deploying the 31 inspectors currently in place. The figure of 90 was arrived at in view of the recent history in this area where there were clearly a number of challenges particularly new to us, not least the one mentioned by Deputy Morgan as regards people from other countries who have come to work here. While a preponderance of these people come from three countries, at this stage the Irish economy sustains workers from a great variety of backgrounds and locations with different languages. It certainly would be difficult to provide these skills across the entire labour inspectorate. Currently the practice is to deploy interpreters where necessary. That is being done quite successfully at this stage. Undoubtedly, this is a question that will be looked at in the context of the recruitment of the additional officers. It is intended that the new office will have considerably wider resources available to it in legal and accountancy terms as compared to the situation previously.
On what statutory basis is it proposed to establish this new inspectorate for workers' rights? What is the Minister of State's current thinking on this? Will it be a stand-alone body or will it be linked to the Labour Court or the Labour Relations Commission? What will be the relationship between the Health and Safety Authority and the Labour Relations Commission, not to mention the Labour Court?
The background to this arises from the document The Mandate and Resourcing of the Labour Inspectorate. Very considerable work was done in this document and the specific difficulties which had arisen were pointed out clearly. Some of these difficulties related to issues such as the poor quality of payslips that were acceptable under the previous regime. Much work remains to be done in that area. It is the intention that the new body and other bodies would liaise and have good relations with the Health and Safety Authority and with several Departments. An interchangeability of information should be facilitated under the new arrangement. This presents challenges and difficulties, but it will be dealt with in the legislative context.
What is the timetable for the establishment?
The undertaking is to begin immediately, but there are some challenges to be taken on in ensuring that all factors are taken into account and that all information is available to the inspectorate.
What is the evidence of non-compliance? In ten years, we have moved from one inspector for every 150,000 workers to one inspector for every 20,000. That represents seven times more inspection per head of the workforce. This is an extraordinary increase in inspection. Does the Minister of State have any hard evidence of much more abuse? We have had some extraordinary high-profile abuse cases, but it seems that those are issues of poor detection rather than a shortage of inspectors. Is this move — a predictable decision to create a new office with more staff — the way to get to grips with the problem? I would like to see some evidence to underpin this move.
We will not increase compliance burdens, about which the Department is also concerned. We will have intelligent systems for identifying wrongdoing rather than having many people operating systems that are not up to best practice.
I presume that Deputy Bruton is not telling me that we will now have too many inspectors. We need to acknowledge, not just on the basis of the high-profile cases but on the basis of other evidence, that there were difficulties. It is incumbent on the Government to address those issues.
An element of Deputy Morgan's question related to the manner in which the figure of 90 was reached. I agree with Deputy Bruton that it is a very strong response to the difficulties that have arisen. It arose because the Government, along with the social partners, is committed to ensuring that the work of the labour inspectorate is done in an efficient and timely manner. Everyone in the House would agree that is the appropriate way to proceed. There are good reasons to employ the best detection methods to ensure that everyone is treated fairly, especially in a multicultural workforce. However, we also need to acknowledge that the document found that there were major shortcomings besides the need for additional inspectors and these will also be addressed.
Has the Minister of State statistics on the extent of non-compliance?
I will provide the Deputy with some information on that.
The Minister of State gave me good information, but he did not answer how he arrived at the figure of 90. Is the figure a threshold or a ceiling? If the level of immigration continues, will he consider extending it beyond 90? Does he expect the level of enforcement and enforcement actions by inspectors to increase as a consequence of the new recruiting process?
There will undoubtedly be an increase in inspections, but the greater challenge is to ensure that workers coming into the country and others in the workforce are aware of their entitlements. That kind of information must be disseminated in a much more user-friendly fashion than has been the case heretofore.
The figure of 90 was arrived at by consensus, as is the case with all social partnership agreements. Everyone came to the table with an acknowledgement that there was a need for an increase. Nobody suggests that this figure will be deficient. Deputy Bruton's question illustrates that very well.
Written Answers follow Adjournment Debate.