I welcome Mr. Rody Molloy, director general of FÁS; Mr. Gerry Pyke, assistant director general; and Mr. Roger Fox, director of planning and research. I apologise for taking so long but another item was on the agenda. I look forward to their contributions which will be followed by a question and answer session. It normally takes ten minutes to make a submission. Members will ask questions afterwards.
FÁS Annual Report 2005: Presentation.
Mr. Rody Molloy
I thank the Chairman and members of the joint committee for giving us the opportunity to attend this afternoon. We are present to discuss the FÁS annual report for 2005 but I do not intend to rehearse the content of the report in my opening presentation. Instead I will concentrate on the issues facing us and the country in the labour market. If members wish to explore issues relating to the annual report, that is fine but, given that the committee has already received the report, I thought it would be more interesting to raise matters we see as important in the foreseeable future.
The big issue facing FÁS and the country relates to skills. The nature of employment is changing and will continue to change as a result of globalisation and our loss of low-skill jobs to new accession countries and further afield. If we are to keep apace with such change we must ensure to continuously upskill all our people, including the upskilling of people now in employment. A substantial number of people in the workforce of 2020 — some 60% — are already in the workforce. If these people are not continuously upskilled, they will become the unemployed of the future.
That presents challenges to us in the broad sense in terms of what we are turning out of the educational system. Much effort from other agencies has gone into the issue of producing more science and engineering graduates, and we need more people with PhDs. However, it is often forgotten in that debate that upskilling also includes people at lower levels. It is not confined to finding more people with PhDs, master's degrees or even more third-level qualifications. It is about upskilling people at all levels throughout the workforce. No matter how sophisticated our economy will become, there will still be blue-collar workers in the economy requiring certain skills.
As an organisation, our increased concentration over the past year or two, and which will continue into the foreseeable future, is how we can upskill people in the workforce. We have put together a number of programmes with many other bodies interested in this area, such as the Small Firms Association, the Irish Congress of Trade Unions, IBEC and other educational providers, in an attempt to devise programmes which would allow us to engage in a meaningful way with people in employment. We see our focus in this context on low-skilled people in employment.
Our dilemma in this case is that we know from research that employers tend not to invest very heavily in training of low-skilled people. In so far as they invest in training, they tend to fund people who already have significant qualifications. Part of the same dilemma is that low-skilled people tend to be the least motivated in demanding new skills. Through innovative measures with people we believe can contribute to this process, we are attempting to find ways of breaking into that difficult area and getting the skills to the people who need them most.
A management issue clearly makes up part of this, and there is a pool of qualified managers within the economy. Some of our investment goes into this, and our investment has increased five-fold in the past two years from approximately €8 million in 2005 to over €40 million this year and pretty close to €40 million last year.
Research also shows that if the management, particularly owner-managers of small companies, appreciate the value of training, it will be more likely to invest in the training of low-skilled workers. One of the dilemmas we find in this whole concept of training is that small indigenous Irish companies in particular tend to see the spend on training and development of staff as a cost rather than an investment. Big successful multinationals are very clear that spending on training and development of staff is an investment in the future of the company.
As an organisation we try to bridge the gap between economic and social policy and we hope to bring about a realisation that both are part of the same process. As part of the skills concept we recognise that although unemployment is at historically low levels, there are still significant numbers of people either on the live register or in various programmes that we run. We still recognise our responsibility to try to get as many of those people as possible into the workforce. Immigration will continue to play a significant part in supplying the skills appropriate to the kind of employment we will have in the future.
Regarding the upskilling of people already in the workplace, we do not want to create a situation where unskilled and low-skilled Irish people are forced out of the new high-skilled workplace to be replaced by high-skilled immigrants. However, we recognise that a substantial number of migrants, probably in the region of 500,000 over the next ten years or so, will be required in the country to meet the demands of the economy and we have a responsibility in this regard.
Before Christmas we conducted a snapshot, one-day survey of people coming through our employment service offices and we were somewhat surprised to find that over 50% of them were non-nationals. We had felt, based on anecdotal evidence, that this might be the case, but the figures were somewhat starker than we had expected. There were 94 different nationalities represented among the non-nationals that came to the office that day and this gives a startling indication of the changes that have occurred in our economy over the past four to five years.
The challenge facing FÁS lies on the side of skills and we have switched our attention to that area in an effort to clarify the importance of the issue in the minds of Irish employers and employees. The skills issue does not solely affect FÁS and it does not apply to a niche market, it is far bigger than that and relates to the entire education system and people with educational qualifications at all levels.
A note has been given to the committee which summarises how FÁS sees the situation and how its goals and objectives fit into it. The skills issue is the major challenge facing us and if we do not get it right problems will be created either in terms of an inability to keep the economy in its current position or the replacement of unskilled Irish people by skilled people from overseas. We must be careful to avoid the consequences of such a situation emerging. FÁS seeks to address this issue in conjunction with many other organisations as we do not believe that any organisation can tackle it on its own.
We see ourselves working closely with the education system, particularly the VEC system, community groups around the country, private trainers, third level institutions and anyone who can help devise new ways to impart knowledge and skills. We also see ourselves working with employers, unions and with our sister agencies in the Department, such as the IDA Ireland and Enterprise Ireland. I am happy to take questions from the committee members.
FÁS is an organisation that emerged in the bad old days, when Ireland was on its knees in the 1980s. It did a wonderful job and gave people heart and a purpose to get out of bed when they had no work by providing a little job of some sort. I compliment Mr. Molloy and his organisation on what has been achieved for the people of Ireland, especially those who wished to stay here, have a job of some sort and play a part in regenerating and recreating the Ireland we know today. Statistics were given to us on the skills needed for 2020. Some 60% are satisfactory, but upskilling needs to take place to meet the challenges of the next ten or 15 years. How sure is Mr. Molloy that we will need 50,000 more migrants for the next ten years to keep the economy going?
FÁS works closely with the VECs, the IDA and Enterprise Ireland, as well as with the private sector. It is the great strength of FÁS that it does not try to do it all itself, but acts as a conduit and a motivator. I compliment Mr. Molloy for the great achievements of FÁS. I know what it has done in County Westmeath, which was one of those counties that relied heavily on FÁS.
Mr. Molloy
I thank the Chairman for his comments. With regard to how sure I am that we will need 50,000 more migrants, I am always very nervous about forecasting the future.
You have a great deal of experience behind you.
Mr. Molloy
It is a dangerous game and can be quoted against me in a few years. On the basis of all information available to us, from our staff on the ground and from the forecasts of the ESRI, taking into account possible dangers that we spelled out in a report before Christmas, we still see a substantial need for migration. The issue is that we get the right type of immigration so that we can get the people with the skills that we need. In that respect, the new legislation on green cards will contribute to that process. From our interactions with similar agencies in the EU and beyond, we know we will be competing with those countries for skilled people. We have been buffeted to some extent by the arrival of new member states in the EU. Some of those states have high levels of unemployment, especially Poland, and many people from those countries had certain skills and were prepared to work in this economy.
In attracting 94 different nationalities, how important has the minimum wage been?
Mr. Molloy
I am not so sure if it attracts people. People go somewhere else due to experiences in their own economy and the opportunities that exist in our economy. I am not sure if anybody in Poland looks at the minimum wage before coming here, but it allows us to ensure that people who come here are treated properly and are not exploited. It sets a yardstick by which we can measure if people are being abused. In the immigration issue, we must ensure that migrants who come here are treated in the same way as Irish citizens.
I thank the witnesses for attending and updating us on the role of FÁS in training for the future. Mr. Molloy is right that the skills challenge is a huge task. There will be a considerable change in the remit of FÁS, as envisaged by Mr. Molloy's remarks today. What type of role change does he see for FÁS? As the Chairman rightly pointed out, the labour force policy is completely different to what it was 20 years ago. The systems currently in place are practically irrelevant to what is required to meet the needs of the 94 nationalities referred to earlier. I am sure Mr. Molloy has thought about these matters. He might want to give practical expression to them in the context of what he envisages in regard to language training and the integration of the many new nationalities into the Irish labour force, which is essential from a societal perspective. If there is economic change in any sector, we do not want the politics of begrudgery breaking out, particularly in the area of construction or other areas where there is likely to be cyclical development in regard to the level of employment. That ties into the issue of apprenticeships, to which Mr. Molloy referred.
I welcome FÁS's link to the education system, which is critical for the VECs. Many people see the role of FÁS as duplicating the VEC system to some degree. Developments in that regard will be a matter we will examine in terms of FÁS's future role.
I know I will be expected to ask a Birr man when he is going home.
I did not understand that.
Mr. Molloy understood it. As a native of Birr, County Offaly, he can imagine that the former Minister, Mr. McCreevy, and the Minister of State, Deputy Parlon, are likely to——
There was a great deal of good work between Kilkenny and Offaly.
This will take particular skill. Mr. Molloy will need his skills and dexterity to get himself out of this one. Can we have an up-to-date report on the decentralisation of FÁS to Birr?
A number of problems are emerging at community level with regard to the community employment programmes. Some change was made recently by the Minister, Deputy Martin, so that, effectively, those aged over 55 could remain in the programmes for six years. A cohort of those involved in the schemes will never get into mainstream employment. We want to ensure they are occupied in some way that is gainful and meaningful to them and the community, and that they do good work. We must have greater flexibility for local ward bosses in Kilkenny and elsewhere. These people will never be in mainstream employment. At this stage we have much knowledge of their individual and collective talents, and what they can and cannot do. The community would like to have them continue in their role, whether in resource centres, environmental works or otherwise. More flexibility is required than is currently being displayed.
That was very well put, Deputy.
Mr. Molloy
I will deal with the Birr issue first. I intended to say I would wait until I saw how Offaly did against Kilkenny this year, and we would then try to identify a few good hurlers to send down.
That is a secondary issue. A FÁS scheme is what Mr. Molloy needs.
Mr. Molloy
On the Birr issue, we are in the final stages of a contract for a site in Birr which have been dragging on due to difficulties with the vendor.
Will FÁS have the site before May?
Mr. Molloy
That is in the hands of the vendor, not my hands. At one stage, I had signed the contract for the site but the vendor then changed his mind and wanted to sell it through a third party. We now have draft contracts with the third party. We are taking part of a site and are waiting for the transaction between the vendor of the whole site and the developer, who is taking the other part of the site. The transaction has been set up so that the vendor will transfer the whole site to the developer, who, as part of a site contract, will pass the site on to us, as we had already agreed with the present owner of the site. That is the current position.
We have taken temporary accommodation in Birr and have some staff there at present. It is our intention that before the end of this year we will have 50 to 60 staff based in Birr.
How many are based there now?
Mr. Molloy
Three.
There is major excitement in Birr about that.
That is progress, Deputy.
It is great progress.
Mr. Molloy
I will revert to the more serious questions. Deputy Hogan asked about the changes to the organisation arising from the changes in the labour market. FÁS has not just begun to consider this issue, as it has introduced many such changes in the past five to six years. As the unemployment rate fell, we recognised the need to switch our resources towards the provision of training, the original primary function of the organisation on its establishment, at least for one of its main parts, namely, AnCO. I argue that during the period of very high unemployment we neglected this part of the equation and the changes have given us the opportunity to redirect our attention.
In recent years we have developed many activities, some of which are important from the health and safety perspective. For example, in the construction industry FÁS has introduced the Safe Pass and construction skills programmes, through which it has put hundreds of thousands in recent times. As previously noted, in the past two years our expenditure on the training of people in employment has risen fivefold. It was in the order of €8 million in 2005 but will come to more than €40 million this year. This constitutes a substantial switch.
The organisation employs a process of strategic planning, whereby at regular intervals it takes stock of the labour market's current status and predicted future direction. As members are aware, every year FÁS produces a policy statement in which it raises the issues it believes to be emerging in the labour market. We do so to generate debate in the political system and the wider community in order to be ready for such issues if they arise, rather than merely reacting to them. The organisation employs a sophisticated process to identify what is happening within the labour market to prepare for all eventualities.
In respect of the community employment scheme, initially from our perspective it was purely a labour market intervention to provide people with work experience to prepare them for a return to the labour market but it changed over time and to a great extent became a means by which community groups delivered services to communities. We have been obliged to try to balance such community demand with our primary labour market focus, that is, to use the scheme as a mechanism to give people work experience with a view to getting them back into the labour force. I argue that we have been extremely flexible. While there will always be instances in which people believe they have been hard done by, we can explore them with members, if desired.
Although we have made changes to the programme over time, as a labour market organisation we have reservations about turning it entirely into some kind of paid public employment scheme. We are trying to avoid doing so and must be careful in respect of issues concerning labour and employment laws. However, we try to be as flexible as possible within the system and when major problems arise, we revert to the political system. As members are aware, they are more likely than I to hear about difficulties through their local representation process. When a substantial issue emerges, FÁS tries to find a way between the dilemma of not becoming a permanent funder of community activity while keeping in mind the labour market context within which we are trying to deliver the programme.
Another dilemma pertaining to the community employment scheme which emerged before the labour market became so tight is becoming critical. Many community groups do not wish to take the kind of people now eligible to participate in the scheme. They want people who are also capable of working in the open labour market because, given the nature of the services they deliver, they want reasonably competent individuals to deliver their services. Hence, another dilemma has arisen regarding the core group to whom the Deputy referred, namely, those who are unlikely ever to re-enter the open labour market and who are not attractive to the community groups which employ them.
I am talking about a group of people of between 50 and 55 years of age who got caught in this change introduced by the Minister. We all know they get along with the communities as they are at the moment, but no matter what one does with a little training and progression, it will not make much difference to some of these people. However, it is nice to know that for an extra few quid a week, they can be gainfully occupied for a number of hours. This provides progression in itself not just in terms of training, but also in the self-esteem it gives the individual. Communities are getting some benefit from this as well. I am not talking about a large number of people and I agree that this should not turn into a public sector employment vehicle at local level. That is not my point. FÁS is almost like MI5 at this stage because it knows everything about everyone on the computer when the button is pressed.
Mr. Molloy
Perhaps we are telling the Deputy too much.
They have been on FÁS schemes for so long that FÁS knows exactly who they are and what they can and cannot do. The FÁS local manager knows them better than anybody else. An audit of the particular skills that are available if a small number of people could be kept on the schemes would not do these people or their communities any harm because they will never be in the mainstream labour market.
Mr. Molloy
I do not disagree with the Deputy. It relates to finding a mechanism by which we can do that without opening the floodgates. We try to be as flexible as possible. Since we got through the difficulty of a few years ago where we had to bring the numbers down from 40,000 to their current number of approximately 20,000, there has been very little dissension or difficulties. Where cases of individual hardship have arisen, we have tried to find a way of dealing with them.
No matter where we draw the line, be it 50 or 55 years, one creates the next line of pressure when one moves beyond that point. It is something at which we must keep looking. At the end of the day, it is a decision for the political system rather than us as an organisation because there are funding consequences to whatever decisions are taken. Within the mandate we have, we try to be as flexible as possible and where there are cases of hardship, we try to ensure, notwithstanding the rules, that they are not treated unduly harshly.
The Deputy raised the issue of immigrants which I had not covered and about which Mr. Pyke just reminded me. We tried to recognise that a substantial number of migrants were going to enter this country. We also recognised that this could cause serious social problems within the country if these migrants were not accepted. We have carried out a lot of research on the displacement issue because this is the real area where difficulties can be caused. If people can show that they have lost their jobs because of immigrants or if there is a clear process of people being cleared out to bring in immigrants, this creates tensions within our society which other countries have experienced and which we would do well not to experience. We have carried out this work and so far we are happy that while there will be individual cases of displacement, it is not a substantial issue in the context of what is happening in the labour market and the kind of demands that exist.
We have also been conscious that when immigrants come here, they may need some support. In the context of the Chairman's question about the minimum wage, I spoke about avoiding situations where advantage is taken of immigrants. We developed a programme with the employment services in the accession states called "Know Before You Go". This was a process where we went into these member states and, through their employment services, participated in a very substantial advertising campaign about working in Ireland. The campaign told people that if they were going to work in Ireland, there were a few things about it which they needed to know and that they should not just arrive on O'Connell Street on a Monday morning with one hand as long as the other.
The major issue here which connects to the comment made by the Deputy is the language question. We have told people not to come to Ireland unless they have at least a rudimentary understanding of the English language and that English is critical to getting the kind of employment they want in this country and surviving within it. Having said this, we also put an electronic-based language translation service in place in our employment services office so that people could interact with our employment services officer in their own language. It is not ideal but it is better than struggling with two languages.
We do some technical English language courses for people working in particular workplaces. We have tried to avoid becoming the English language training organisation for those who come to Ireland. That would use up all our resources and it is the responsibility of another body. We provide language training specific to the needs of a person in a particular type of employment.
FÁS pays for personnel to teach English in the workplace, particularly in areas where it is difficult for employers to find employees.
Mr. Molloy
Where there is demand we try to be as flexible as possible. If it makes sense to send a teacher to the workplace rather than bringing workers to the FÁS centre, then we do so.
Before I call Deputy Callanan, I congratulate him on the new rural transport initiative announced by the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív. He has considerable experience in terms of the insurance inquiry by the committee and its proposals for random breath testing. Experience has also been gained from the various locations all over the world the committee has visited. I am proud that the convenor of the committee made the proposal for the rural transport initiative. I compliment all those who have supported him, including Mr. Gay Byrne and Deputy Lowry. Deputy Callanan is aware what his constituents require and I hope the scheme comes to fruition.
I thank the Chairman, who must visit east Galway.
I welcome the delegation and compliment it on its work. I have first hand experience of its work, such as when Square Deal closed. The workers were trained and returned to employment. That successful FÁS scheme should not go unnoticed.
FÁS runs programmes for some 6,700 people with disabilities. It supports regular employment for those with disabilities. There is a major problem in encouraging employers to employ people with the slightest disability. FÁS runs fine courses but securing employment is more difficult. What can FÁS do to make progress? Perhaps it is too easy to get foreign workers and employers do not have to depend on workers with a slight disability. They are being left behind in this fast rolling country.
Mr. Molloy
I agree that it is an extremely difficult area. FÁS has tried everything to promote employment opportunities for those with disabilities. We have grant schemes, coaching or mentoring schemes and various mechanisms to publicise these schemes. The principal difficulty is with employers. There are many fine employers who give an example by employing people with disabilities. They genuinely believe that employing people with disabilities is a major advantage in respect of the loyalty it generates.
FÁS is involved in the O2 awards in order to make employers aware of the substantial subsidies available to compensate for the perceived lack of productivity. Coaching and mentoring schemes address the employee and his or her colleagues. We also have a capital grants scheme to make any necessary changes to the workplace to facilitate a person with a disability. However, it does not change the reality mentioned by the Deputy and significant reluctance still exists. It is the one area where we did not spend our full allocation of funds during the past number of years. This was due not to a lack of willingness on our part to do so but a lack of take-up.
That is very serious.
Mr. Molloy
It is serious and I wish to make the point. During recent months, I had long discussions with Angela Kerins from the Rehab Group to see whether we could work together on this. The two organisations established a working group to examine whether we had considered every action we could take to improve our performance in this difficult area. The fundamental problem is the insufficient number of employers prepared to act. Many reasons for this exist, perhaps they do not have access. One would think in times of full employment and a tight employment market, employers would be prepared to make the jump.
Like previous speakers, I congratulate Mr. Molloy, Mr. Pyke and Mr. Fox on the great work done. I was principal of a vocational school and worked closely with FÁS. Yesterday, I was at Barntown community centre which would fall to pieces without the community worker there. I support Deputy Hogan. Some people are socially employable but not economically employable. I know this is more of a political issue than a FÁS issue and I made the point to the Fianna Fáil Party.
Sociologists use the phrase "social capital". People coaching soccer, rugby or hurling teams free of charge make a tremendous indirect contribution to the economy. It should not be an exclusive priority to train people to get them back into the workforce. It should be a priority to use them in social employment and give them the self-esteem they lost. I have seen tremendous success stories. In one case a person entered social employment and ended up writing a book. It would never have happened if he was left unemployed. I wish to emphasise this point.
Mr. Molloy discussed upskilling and FÁS is good at this. In Wexford, FÁS makes a tremendous contribution to the economy of the county by being perceptive. When I was principal of a vocational school I wanted to take people who were three-quarters qualified off building sites. In England, people who had to leave school early were called "chippies' mates". They attended the carpenters, plumbers and block layers.
The trades council in Wexford told me I would flood Wexford with tradesmen. Approximately two or three years later we had begun to bring tradesmen from Poland to build houses in Wexford. The council may have been wrong and I may have been right. Through a system of block release of people below a certain age, it should be possible to take people off building sites and within a short time give them the necessary skills to do FÁS examinations to become block layers rather than block layers' assistants or labourers.
Due to its proximity to Rosslare, Wexford probably has more transport employees per head of population than most other counties. Jobs are advertised through FÁS but people from Wexford cannot be found to take up the positions. People from Kilkenny cannot be found either or Deputy Hogan could send over a few hurlers and we could upskill them first. We got a few and Nick O'Donnell was a notable exception.
Those involved in transport tell me they cannot get people from South Africa who speak English but because of regulations they must get someone from eastern Europe who cannot speak English. This creates problems when an accident occurs and should be considered by FÁS.
Deputy Callanan spoke about disability. I chair Enniscorthy Enterprise and Technology Centre where we have started a voluntary group that educates people with disabilities, and we found that they lose their disability allowances. Disability stays with a person whether he or she is in or out of employment. This is a political matter but I have read it in this report too. It should be possible for a person to go on a FÁS course, retain his or her disability allowance and receive whatever allowances go with a return to education. The witnesses could think about that. I chair another group that helps children in wheelchairs to play hurling. We have a competition in Dublin involving seven teams in wheelchairs and we hope to spread it to Wexford. Some of the people have said the Wexford players might be better if they had wheelchairs. I would like Mr. Molloy to examine these areas.
That is quite a list of questions.
Mr. Molloy
For a number of years we have been wrestling with the issue of people on building sites or elsewhere who have acquired skills. We are examining how to accredit skills acquired outside the classroom. Our national apprenticeship advisory committee is looking at it. There are interest groups that have reasons for not wanting us to do so. Deputy Tony Dempsey hinted at this in the Wexford context.
"Hinted" is putting it kindly.
Mr. Molloy
We are wrestling with the issue and have discussed with the qualifications people how we could put in place a process by which we could assess people's level and what they need to go the extra step and get certification. We take certification seriously. This relates to the immigrant issue. If a Polish person presents himself or herself as a carpenter, what does that mean in the context of Irish skills? It is a live issue but is also complex. When I began to examine it first it seemed to be something simple we could resolve but there are many complexities in the recognition of skills acquired outside the mainstream. We are actively working on it.
We do much work on the transport area in terms of training people. We produced a major report two or three years ago on the training required for changing transport logistics. Yesterday with the Dublin Port Company we launched a training network for upskilling the employees of the 30 companies based in Dublin Port in light of changing transport demands. I am not sure how that relates to the situation in Rosslare and what the real issue is about not being able to get local people. We could talk to the people in Rosslare and surrounding areas to examine establishing a specific training programme for unemployed people in the area if we got a commitment from the companies there to give them at least a fair wind in terms of employment after they have completed the course. I would be glad to pursue that with the appropriate people in Rosslare or the larger Wexford area.
In our policy statement the year before last we argued for the retention of disability allowances when people go into employment due to the dilemma of the welfare trap. We argued the need for at least a sliding scale so that people do not lose all their entitlement once they reach a certain point. We are aware of the issue and it is a contributory factor to people with disabilities being unwilling to take up employment. It does not remove the other problem, which is the unwillingness of employers to give them the opportunity to go into employment.
On behalf of the committee I thank Mr. Molloy, Mr. Pyke and Mr. Fox for attending.
The joint committee went into private session at 3.40 p.m. and adjourned at 3.45 p.m. sine die.