We are glad to be here to discuss our 2006 annual report.
The year 2006 marked the mid-point in the life of this Department's statement of strategy 2005-07 and the 2006 annual report outlined the many actions the Department undertook during the year to advance the objectives set out in the strategy. In our statement of strategy we set ourselves the mission of working "for Government and the people to grow quality employment and national competitiveness". Our policies have been designed to enhance competitiveness, help create an environment where enterprise can flourish and consumers are protected, where we focus on up-skilling the labour force, providing sustainable employment opportunities, improving workplace conditions, and overall helping build an inclusive society.
We based the strategy statement on four pillars: enterprise, innovation and growth; quality work and learning; making markets and regulation work better; and business delivery, modernisation and customer focus. In respect of the first pillar we set the key goals of enhancing Ireland's productivity and competitiveness levels to sustainably produce and sell on world markets goods and services which add to national welfare; and the development and implementation of policies to enhance the enterprise environment leading to high rates of sustainable entrepreneurship activity, the start-up and growth of competitive firms, continued inward foreign direct investment and sustainable development. A further aim was to stimulate business to increase commitment to research and development, the promotion of innovation and a culture of entrepreneurship amongst researchers and the encouragement and rewarding of effective links between enterprise and academia; harnessing the potential of the knowledge-based economy for economic and social well-being, turning knowledge into products and services; and contributing to the development of enterprises that can compete internationally and thereby deliver growing employment for the benefit of all. We also aimed to work with the various relevant stakeholders to ensure that Ireland becomes internationally renowned for the excellence of its research and is at the forefront in generating and using new knowledge for economic and social progress, within an innovation-driven culture and reviewing and updating industrial policies and interventions in light of the evolving competitiveness environment, developments in respect of the all-island economy and the need for regional balance.
In the area of quality work and learning, we set as key goals the pursuit of labour market policies which promoted the development of human capital and lifelong learning, helped to address the skills needs of the economy, facilitated increased participation in and access to employment, and contributed to social inclusion and the further enhancement of quality employment by improving and enforcing employment rights and entitlements, including safety and health at work, and promoting social partnership, industrial peace and effective dispute resolution.
For the third pillar we set the goals of ensuring that the regulatory system delivered efficient and competitive markets with high standards of corporate governance and consumer protection; the further development of the legislative framework, having regard to best regulatory practice, in particular the principles of better regulation; and the reduction of the cost of the delivery of compensation and the delivery processing times for personal injury claims with a view to improving the functioning of the insurance market for the benefit of consumers and businesses.
The fourth pillar was more inward-looking than the other three as we were studying our systems and services but we also looked out to our customers. There we aimed to improve the provision of high level professional support and advice across the Department in key support areas to ensure that we met our business goals and continued to be at the forefront of the modernisation agenda; and the delivery of excellent services to our external customers and stakeholders through ensuring the most effective use, development and deployment of our resources and the achievement of maximum value for our expenditure.
During 2006, the outlook for the Irish economy had remained particularly positive, with GDP growth of 5.8% and GNP growth of 6.3%. The services sector grew by 6.5% during the year, while the growth rate in non-services industry was 4.8%. The labour market remained buoyant with employment growth in the region of 85,500 or 4.3%. The total numbers of people in employment in the State reached more than 2 million for the first time. Redundancies during 2006 were marginally greater than in 2005, however, with a small increase of 2.3%. Immigration continued to be an important factor in our economic success, with net migration into the labour market increasing to an estimated 52,000 in 2006.
The underlying trend in the inflow of workers from the new EU member states had increased since EU enlargement began. In our annual report, we highlighted how our export performance had continued to grow despite relatively high oil prices, as well as rising interest rates and fiscal pressures, which we acknowledged could ultimately slow the pace of growth in many of our trading partners, as well as in Ireland. We also highlighted the new and increasingly difficult challenges which arose during 2006 and which were facing Irish business, such as competition associated with greater globalisation, higher business costs and a considerably tighter labour market. These challenges still obtain.
In the SME sector, the report of the Small Business Forum, which was published during 2006, noted the increasingly important role small business played in the economic, social and cultural life of the population. The forum also noted that, while globalisation and international market liberalisation had opened many foreign markets to Irish business, it also resulted in a greater international presence in the Irish locally-traded market, where most Irish businesses traded. Accordingly, as Irish companies continued to face increasing competition from major international players they would need to offer superior levels of innovation, service and quality to compete successfully. The report also noted that a greater proportion of the country's wealth creation would be generated from indigenous companies with the potential to grow and to conquer international markets than heretofore. In this regard, implementation of Enterprise Ireland's strategic plan 2005 to 2007, Transforming Irish Industry, commenced in 2005, was identified as a crucial factor in ensuring an ever sharper focus on growth opportunities both for individual companies and for targeted new growth sectors.
We also continued to provide a supportive environment within which small businesses could flourish and sought to reduce unnecessary burdens and provide appropriate supports for the sector. The Department also committed to implementing the recommendations in the report of the Small Business Forum which came within our remit.
Our 2006 annual report also stressed the development of the knowledge economy as one of the key challenges and opportunities that faced Ireland if we were to protect and expand on recent economic progress. Ireland has to become a world-class centre for the development and exploitation of knowledge.
Notwithstanding our impressive progress in science over the previous decade, there remained significant challenges for Ireland. We were not as advanced in comparison with some of our competitors. We needed to benchmark ourselves against countries such as Sweden, Denmark and the USA, whose research systems have roots extending back more than a century. The policies and funding outlined in the strategy for science, technology and innovation, launched by the Government in 2006, have been identified as crucial to Ireland securing its position as one of the world's advanced knowledge economies and becoming renowned worldwide for the excellence of our research.
The strategy outlines a vision of Ireland as a leading knowledge economy by 2013 and sets out the steps needed to ensure Ireland becomes a world-class centre for the development and exploitation of knowledge. The Department of Enterprise, Trade and Employment is the lead Department driving the realisation of the strategy. Its successful implementation will sustain and improve our global competitiveness.
We also emphasised in our annual report how enhancing Ireland's competitive advantage in a changing world economy and building sustainable social and economic development remained a core objective of the new social partnership agreement, Towards 2016. While focusing on the need for improved competitiveness, we also acknowledged the complementary objective of enhancing our employment rights compliance regime including the establishment of the new National Employment Rights Authority, a trebling of the number of labour inspectors and an increase in the staffing resources for the adjudicative bodies such as the Labour Court, the Employment Appeals Tribunal and the Rights Commissioner Service. These developments were needed if we were to create the environment where employment could grow in a stable harmonious industrial relations climate.
We highlighted how the successful implementation of the new system of employment rights compliance would set challenging targets for the Government, employers, employees and the social partners. The Department has been to the fore in implementing its complement of the Towards 2016 commitments.
The industrial relations environment showed encouraging improvement in 2006 with record lows in the number of days lost and number of disputes commenced since statistics were first compiled in 1923. In 2006, a total of 7,352 days were lost due to industrial disputes, compared to 26,665 during 2005.
The high level manufacturing group was established by the Department in 2006 in response to Towards 2016 commitments. It allowed key stakeholders focus on policies and actions that would not only maintain and grow our existing manufacturing base, but also identify new opportunities in an extremely important sector of the economy. The group's work is nearing completion and its final report will be made available to the social partners soon.
Ensuring the availability of an adequate supply of labour and developing a highly skilled and adaptable workforce to help assist our ongoing economic progress has been an important policy challenge facing the Department and Ireland. The need for further investment in education and training, especially for those already in employment and who may be at risk of being unable to access the employment opportunities arising from our knowledge-based economy, was a priority in the year under review.
During 2006 the Department chaired the steering group which completed the Forfás expert group on future skills needs report, Tomorrow's Skills — Towards a National Skills Strategy. The development and implementation of that strategy, through 2007 and beyond, was identified as a key labour market initiative which should ensure, over the period to 2020, Ireland has the skills required to remain competitive in the global marketplace.
Activation of unemployed and inactive groups and increasing the participation of women in the workforce were important issues for us during 2006. While our employment rate for women has increased significantly in recent years, we identified scope for further improvement, particularly with regard to older women and sought to promote greater family-friendly work policies to assist in this regard. The ageing of our population and the consequent decrease in the working age population was also identified as a major challenge. Ireland's employment rate for older workers, at 53% in 2006, exceeded the EU 2010 target of 50%.
Several reforms had, nevertheless, been undertaken to encourage more older workers to remain in or return to the workforce. These included raising the retirement age for new entrants to the public sector to 65 years; extending the labour market activation process from 55 to 64 year olds; and the phasing out of the pre-retirement allowance.
A review of the level and adequacy of pension coverage was also identified as an important factor in striking a balance between the improvement of retirement incomes and the enablement of older workers to continue working.
The Department also published its sectorial plan under the Disability Act 2005 dealing with the provision of services by the Department to people with disabilities. The plan covers 2006 to 2010 and contains several key initiatives to promote and support the inclusion of people with disabilities in the labour market. Several schemes had also been introduced to encourage employers to retain and recruit disabled employees.
A continuing challenge for the labour market was to bring in from outside the European Economic Area, EEA, skills which we needed to progress the economy to one that is knowledge-based and innovation-driven, where such skills could not be sourced from within the EEA. The implementation of the green card system for high-skilled non-EEA nationals, and the revised work permit system for occupations where the shortage is of labour rather than of skills were important in ensuring migrant workers continued to make a positive contribution to our economy and to participate significantly in the development of our infrastructure during 2006. The Oireachtas enacted the Employment Permits Act 2006, establishing a statutory framework within which to implement an active, managed economic migration and employment permits policy.
An important challenge in an economy which was growing at a rapid rate was to ensure consumers' economic well-being was not compromised as the economy expanded so rapidly. This was achieved by using consumer and competition policy in such a way that it would allow the economy to grow while protecting consumer interests.
The Competition Authority continues with its studies on various sectors of the economy to raise awareness on how competition — or the lack of it — can adversely affect the consumer. The interim board of the National Consumer Agency, since established on a statutory basis in 2007, continued with its awareness programmes on various consumer issues.
The Competition (Amendment) Act 2006 revoked the Restrictive Practices (Groceries) Order. The Act also strengthened the provisions of the Competition Act 2002 by specifically prohibiting the fixing of minimum retail prices by suppliers, unfair discrimination in the grocery trade and the payment of advertising allowances and "hello money".
The general scheme of the Consumer Protection Bill was also published in August 2006 and has since been enacted, establishing the National Consumer Agency on a statutory basis and implementing important reforms of consumer law. This represented the first phase of a two-phase project aimed at modernising our consumer protection legislation. The second phase comprised a review of the law governing consumer contracts and the review of all secondary legislation has continued in 2007 and 2008. The Department was intensely engaged during 2006 on the preparation of its input to the national development plan, NDP, covering the period to 2013. This was launched by the Government in January 2017. A total of €13.7 billion investment in enterprise, science, innovation and human capital was agreed under the new NDP. The main focus of this investment will be on creating and sustaining high value jobs, growing Ireland's exports through Irish enterprise and foreign direct investment companies, upskilling workers through the national skills strategy and a doubling of funding for the strategy of science, technology and innovation.
The €13.7 billion investment comprises €7.7 billion for training and upskilling, €3.3 billion for enterprise development and €2.7 billion as part of the overall wider investment of €8.3 billion in science, technology and innovation. The business regulation forum, which was established at the end of 2005, began its work in earnest in 2006 undertaking research, pilot studies and surveys of business, which culminated in a report to the Minister early in 2007. That work has continued into the current year, when our aim is to identify practical ways of reducing the administrative burden placed on business through necessary balanced regulation by the State and at international level. We also continued our work to progress the development of key business networks on a North-South basis through the work of InterTrade Ireland, which our Department co-funds with our counterpart in the North, the Department of Enterprise, Trade and Investment.
In the nature of the broader remit of the Department of Enterprise, Trade and Employment, much of our work is undertaken on an interdepartmental basis in areas such as the promotion of the competitiveness agenda. In areas such as energy and related activity we are very dependent on the co-operation of other Departments in addressing our competitiveness challenges. Ireland's engagements with various international forums such as the EU, the World Trade Organisation and the International Labour Office continued apace throughout 2006 on budgetary and tax issues as they impact on enterprise and employment and on promoting the social inclusion agenda, to name but a few areas. The focus on cross-departmental work was intensive also.
At a corporate level the Department continued to pursue its modernisation agenda, especially through implementing its customer charter and quality customer service initiatives, such as the maintenance of an up-to-date and expansive website and our one-stop shop information units. We also continued to roll out more e-government services, including an online redundancy payments system, a new Employment Appeals Tribunal website and a number of online services in the Patents Office. We continue to deepen the partnership model of doing work in consultation with our staff and have made significant progress on the implementation of our human resources strategy for the period to the end of 2007. We published our first ever training and development strategy, setting out how we intend to invest in our staff to allow each colleague to reach his or her potential in the service of our many and varied stakeholders. We continue to progress the value for money, or expenditure review, initiatives with the publication in 2006 of the science and technology expenditure review.
I am happy to report that further work was progressed in 2006 on the implementation of the Government's decentralisation programme. The Department is responsible directly for decentralising 250 jobs to Carlow and our work in 2006 led to an advance move of more than 100 staff there, which took place just before the summer break in July 2007. The annual report summarises the Department's key achievements in 2006, a number of which I have alluded to already.
Some of the headline achievements were the following: the launch of the strategy for science, technology and innovation; the report of the small business forum; the passing by the Oireachtas of the Employment Permits Act; participation in the expert group on future skills and the report, Tomorrow's Skills — Towards a National Skills Strategy; publication of the Department's sectoral plan for people with disabilities; participation in the negotiations of the social partnership agreement, Towards 2016; the coming into force of the safety, health and welfare at work construction regulations 2006; enactment of the Competition (Amendment) Act; and completion by the company law review group of the drafting of a general scheme of a new company consolidation and reform Bill. The latter is massive work which will come before this committee in due course. It is currently with the Parliamentary Counsel. Other headline achievements include the preparation of the Department's Towards 2016 modernisation action plan, the training development strategy that I have mentioned and our inputs into the national development plan.
Looking forward, I should like to highlight the key priorities over the period of the last strategy statement, which is where our 2006 work positions itself, that we identified with the Minister and he accepted when we developed it. These were in the areas of the enterprise strategy group, small business, research and development, economic migration issues, lifelong learning, people with disabilities, unemployed and long-term unemployed persons, consumer issues, competition policy and inputting into the national partnership agreements. Other priorities included the international dimension of our work at EU, WTO and other levels, decentralisation, the modernisation agenda, the better regulation challenge and North-South co-operation.
I hope my presentation has demonstrated the work done in 2006 to advance these key policy areas and indeed others which subsequently emerged in the furtherance of our mission, which as I stated at the outset was to work for Government and the people and grow quality employment and national competitiveness.
