Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 12 Jul 2023

Statement of Strategy: Department of Enterprise, Trade and Employment

An Cathaoirleach

We have not received any apologies. Those members who are participating remotely need to do so from within the Leinster House complex, as they will know.

Today, we will discuss the Department of Enterprise, Trade and Employment's statement of strategy. It sets out the vision, values and mission of the Department for the coming years. The statement of strategy comes at a time when the Irish economy faces many challenges, including those posed by the digital and green transitions. Emerging from Brexit and the Covid-19 crisis, and with the war in Ukraine continuing to create uncertainty, the strategy offers an insight into how the Department aims to address issues such as trade and the cost of living while continuing its focus on protecting workers and consumers. I am pleased that we have the opportunity to consider this and other related matters with the following officials from the Department of Enterprise, Trade and Employment: Mr. Declan Hughes, Secretary General; Mr. David Hegarty, assistant secretary; Mr. John Newham, assistant secretary; Ms Jean Carberry, assistant secretary; Mr. Dermot Mulligan, assistant secretary; Mr. John Maher, principal officer; and Mr. Thomas Murray, principal officer.

Before we start, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if witnesses' statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statement has been circulated to members. To commence our consideration of this matter, I now invite Mr. Hughes to make opening remarks on behalf of the Department.

Mr. Declan Hughes

I thank the Cathaoirleach and members of the committee for the opportunity to discuss the statement of strategy for the Department of Enterprise, Trade and Employment for 2023 to 2025. I am very pleased to meet with the committee for the first time since my appointment as Secretary General on 1 June of this year. The Cathaoirleach has introduced my colleagues. I am joined by Mr. David Hegarty, who is head of our enterprise strategy, competitiveness and evaluation division; Mr. Dermot Mulligan, who heads our workplace regulation and economic migration division; Mr. John Maher, from the corporate services division; Mr. Thomas Murray, from the indigenous enterprise division; Mr. John Newham, who heads our investment and innovation division; and Ms Jean Carberry, who heads our EU and digital affairs division.

As the committee will be aware, my Department leads in advising on and implementing the Government's policies of stimulating the productive capacity of the economy and developing an environment which facilitates employment creation and sustainability. We are also charged with promoting fair competition in the marketplace, protecting consumers and safeguarding workers' rights.

Since 2020 the Department has been working to achieve the commitments and priorities set out in Programme for Government: Our Shared Future. We implemented our 2021-23 statement of strategy and progressed our strategic goals during a period when, as the Cathaoirleach said in his introduction, the Covid-19 pandemic, the UK's withdrawal from the EU and the war in Ukraine created unprecedented challenges for the business community in Ireland.

A wideranging and comprehensive response from the Department and a range of supports for firms more broadly from Government have helped to underpin the resilience of the economy and the labour market, with more than 2.6 million people employed, unemployment at its lowest rate ever at 3.8% last month and, critically, all regions within 1% of the national employment rate, which is a key target for us.

The performance of our enterprise development agencies is key to our strategic objective of creating and maintaining high-quality employment across all parts of our country. Enterprise Ireland, EI, results for 2022 are very strong. EI client company exports increased by 19% to a record €32 billion in 2022, which was a new record, with 64% of new jobs created outside Dublin.

The local enterprise offices, LEOs, continue to nurture and support entrepreneurs and help companies throughout the country respond to the energy and cost-of-living crises. In 2022, more than €21 million in direct financial assistance was approved for 1,112 business projects.

Despite significant challenges in the global economy, half-year results from IDA Ireland published last week show our strong performance has continued into 2023. In the past six months, 139 investments were won with the potential to create 12,000 jobs. Of these, 52 were first-time investments, with 67, or 48%, of the 139 being outside Dublin.

However, despite these positive results, we are again in a strategic planning cycle for the coming years defined by uncertainty and challenge with the continuing war in Europe and its consequences for energy security, trade and the cost of living. As Secretary General, I am cognisant that economic pressures arising from the war in Ukraine and addressing the twin transitions of digital and climate present significant challenges for workers, businesses and the Department. Responding to these will be our key objective in the coming years, alongside maintaining our robust economic and employment performance.

A significant influence on the development of our updated strategy is the Government’s White Paper on Enterprise 2022-2030, which was published in December. The White Paper sets out the medium and long-term ambitions for a vibrant, resilient, regionally balanced and sustainable economy made up of a diversified mix of leading global companies, internationally competitive Irish enterprises and thriving local businesses. The White Paper puts decarbonisation at the centre of enterprise policy, and its publication in December 2022 provided a fresh impetus to the ambition for the success of our business sector. That vision is reflected in this strategy. In May, the Government published the first of the six-monthly reports on the White Paper and the 40 actions we are focused on progressing.

We are acutely aware our work is critical to driving the efficient economic engine that is our country. As part of our strategy for the coming period, we have set out a vision "to make Ireland the best place to succeed in business, across all parts of the country, with vibrant enterprises, more high-quality employment, growing trade, fair workplaces and higher productivity". Our strategic approach for 2023 to 2025 is to protect and build on the progress we have made while advancing the digital and green transitions; championing enterprise; ensuring a competitive business base to incentivise work, sustainable enterprise, innovation and investment; strengthening global connections and trade; promoting fair, competitive markets and responsible business practice; and ensuring safe, flexible and decent workplaces through the regulatory and enforcement work of the Department, its offices and its agencies.

Over the next three years, we will work towards achieving our high-level goals of sustaining full employment in all parts of the country and ensuring strong regional economic development by focusing on creating a competitive business environment with a resilient, innovative and sustainable enterprise base through the work of our agencies, our regional enterprise plans, smart specialisation strategies and new regional funds; advancing the green and digital transitions to ensure the competitiveness and sustainability of Irish-based enterprise and achieving the climate action plan targets of a 35% reduction in industrial emissions by 2030 and net zero by 2050 and the ambition of a strong and vibrant offshore wind sector; promoting safety, better pay and conditions, good quality jobs, gender equality and inclusivity in the workplace and ensuring employment rights and labour market standards are kept under review to reflect national and international developments; enhancing our business regulatory environment and Ireland’s attractiveness as a place to do business, and ensuring high standards of consumer protection so that consumers can make well-informed decisions; leadership on corporate governance and working collaboratively across government on delivery of priority areas for enterprise, including skills and training, the cost of doing business, including insurance, and tax and infrastructure; deepening and extending Ireland’s global business and trade in a responsible, fair and sustainable manner that is supportive of high living standards, growing further the all-island economy and our base of exporters, and exploiting fully the potential of the Single Market and free trade agreements; and building an innovative and agile Department at the forefront of evidence-based policy of public sector innovation and transformation with a strong public service ethos driving effective and responsible policy implementation.

We will continue to prioritise our engagement with the broad base of business, employer and employee representative groups and stakeholders through initiatives such as the enterprise forum, the retail forum, the Company Law Review Group, our new employment law review group and the enterprise digital advisory forum. We also place huge value on Government and cross-departmental groups such as the labour employer economic forum, LEEF, for which we provide a secretariat, and other groups set up for specific purposes. Separately, bottom-up initiatives facilitated through the regional enterprise plan governance structures provide important leadership for the regional enterprise ecosystem.

We look forward to continuing to work with this committee and the Houses of the Oireachtas to progress new legislation and policies across our remit in the areas of company law, competition and consumer protection law, health and safety, trade and digital, as well as employment rights and industrial relations. We will continue to work with the broad base of enterprise and worker stakeholders to support entrepreneurship and prepare businesses for the challenges and opportunities in the future economy, including increased digitalisation and green transition and taking full advantage of the opportunities for increased productivity growth, innovation and internationalisation so our businesses are best placed to provide sustainable, rewarding, and well-paid jobs into the future.

Deputy Louise O'Reilly

I welcome Mr. Hughes and his team. I will not name them all but they are all very welcome. I wish them the best and Mr. Hughes the best in his new role. He has a fair bit of work ahead of him but he has a good team around him so he is halfway there.

A commitment has been given to transition to the living wage by 2026. This is not as far as I would like it to go but that is where it is. Regarding the stage the transition is at this year and through to 2025, does the Department have a view on time-limited supports to help businesses that need to move to the living wage? We know there is an exemption under section 41 of the National Minimum Wage Act. Mr. Hughes might know more about this than I do, but to my knowledge, that exemption has not been fully utilised. I think some people nearly used it but did not. This is for businesses that can prove they cannot pay the minimum wage, which is different from the transition to the living wage and does not really address the issue of a worker who will miss out when everyone is moving. Does the Department have any view on time-limited supports for business to transition? Clearly, the Department does not want to leave them on that support forever but neither does it want those workers to lose out, and none of us wants to put the business in a situation where it becomes unviable because of the living wage.

Mr. Declan Hughes

Last November, the Government announced the introduction of the national living wage for employees and said it would be set at 60% of the hourly median wage in line with the recommendations of the Low Pay Commission. It will be introduced over a four-year period, which will be in place by 2026. It is preferable to move towards a living wage gradually using a procedure that takes account of prevailing conditions and conditions at individual company level. All of those elements are being considered by the Low Pay Commission. My colleague Mr. Hegarty works with the Low Pay Commission. This was supposed to have been considered by LEEF as well. This is work in progress but Mr. Hegarty might update the Deputy on it.

Mr. David Hegarty

The recommendations of the Low Pay Commission last year to move to a living wage of 60% of median hourly wages, which were accepted by Government, were informed by a lot of analysis and research, including by a group of economists at Maynooth University. Essentially, its findings were that a move to 60% was unlikely to have significant disadvantageous labour market implications. Beyond that, the evidence is a bit more mixed. The Department and, subsequently, the Government were happy with that analysis that a gradual move to 60% would not present serious problems for employers or employment generally.

Subsequently, the Government was happy with the analysis that a gradual move to 60% would not present serious problems for employers or for employment generally. As the Deputy knows, at the moment, the Low Pay Commission, LPC, makes an annual recommendation to Government. It is considering that right now. The recommendation is due on the third Tuesday in July, which is actually next week. The commission can take account of the state of the economic cycle in its recommendation on how we get to the 60% and, therefore, it is open to it too by its judgement.

Deputy Louise O'Reilly

I apologise for cutting across Mr. Hegarty. Is it his thinking then that the LPC is not going to recommend anything that it does not think employers are going to sustain? In that instance, because of the way it is going to be stepped in, is he saying there is not going to be a need for support? I think we can all agree that what is in the living wage Act is not going to work necessarily for this. If that is the belief, that is fine. I am trying to understand whether Mr. Hegarty thinks it is not going to be necessary. I know there has been discussion at the Labour Employer Economic Forum, LEEF, and when we talk and engage as we do with business representative groups, they cite this as an issue. However, if the thinking is that it is not that big an issue, I would be interested to hear that.

Mr. David Hegarty

We have to wait to see what the LPC recommends for this year or if the minimum wag increase would apply from January. The evidence that the LPC had was that a move to 60% over a period of four years of itself would not impose significant problems in the labour market. What we do not know, of course, is what the LPC will recommend for next year and we will have to wait and see what that is. We as a Department-----

Deputy Louise O'Reilly

I apologise for cutting across Mr. Hegarty again but in the interests of time, if the recommendation was a big jump, would he be open to considering those supports or does he not see that happening? I am trying to understand that.

Mr. David Hegarty

That would have to be considered at the time when we see the recommendation.

Mr. Declan Hughes

The mechanism is already there for that engagement in terms of ability to, pay etc., and what the issues are a company level.

Deputy Louise O'Reilly

Yes, but that is for an exemption. When the Government and others say we need to move to the living wage, we do not need to move to a situation whereby there can be exemptions from it. That is slightly different. That is something on which some work will have to be done and the recommendations thus far from the LPC have been moderately paced, or slow, depending on how someone looks at it; they maybe they have been too fast for some. We will have to wait to see what that means.

I am sorry for jumping ahead but I have a number of questions lined up. I would like to ask about the commitment to equality, diversity, and inclusion, which is mentioned in the documentation, not only within the Department but in respect of the broader employment of people with a disability. The European Disability Forum described Ireland as leading the hall of shame. Nobody wants us to be in that position. We have one of the lowest numbers of people with disabilities in employment in Europe. Disabled persons who are entrepreneurs will attend a meeting of the Joint Committee on Disability Matters tomorrow morning and I have very much looking forward to engaging with them. There is a comprehensive employment strategy for people with disabilities and it is supposed to operate across Departments. Many of the actions reflect a really good approach. They are interdepartmental with all parties are at the table. However, we discussed the employment strategy and impact on disabled persons in the workplace at the committee three weeks ago and the key actions that are necessary for the advancement of people with sight loss, which is just one area we discussed, have not been completed. We heard on "Morning Ireland" earlier a report again about people with disabilities. They are excluded from the labour market here more so than they are in other areas. What will be done to address these issues? Is there a target to increase the number of people, and not just increase activity, and to actually measure that against how many people with a disability are entering and staying in the work force?

Mr. Declan Hughes

I assure the Deputy that this is an issue that is under active consideration in the Department with the Minister. I thank her for noting the Department's own policies on equality, diversity, and inclusion in the Department. We have a strong performance in accommodating and increasing numbers of people with disability who are in employment in the Department therefore we are good on that but we recognise right across the enterprise base that there are, and continue to be, barriers or issues related to participation. In census 2016, 36% of people with disabilities reported being in employment. There is quite a significant cohort there for whom there are access issues or there is untapped potential. We need to establish what the routes are back into rewarding employment.

I will mention some of the things our agencies and the Department is doing but as the Deputy mentioned, they all fit under the national disability and inclusion strategy and the comprehensive employment strategy. From our perspective, I will talk about some of things we are doing. First, there is the engagement with a range of groups and NGOs to understand what the issues are and reviewing the range of supports that are there at the moment. There are initiatives such as the JobsPlus scheme, which provides additional support and essentially payments to employers to take on those with disabilities, particularly those who have been long-term unemployed. There are also a range of grants, etc. The issue is to review that package of supports. We have been working on this for a number of years now with Enterprise Ireland, EI, the local enterprise offices, LEOs, and Industrial Development Authority, IDA, Ireland. Enterprise Ireland is focusing particularly on supports for entrepreneurs and those with disabilities who are looking at their own business or job opportunities but also to working with companies to increase access. Both EI and the IDA have signed partnership agreement with the Open Doors Initiative to develop awareness campaigns and programmes that utilise success stories of self-employment and entrepreneur road models. The LEOs are progressing a new online course for entrepreneurship for people with disabilities, which will begin in September this year, and we hope to bring a high profile to that. IDA Ireland is working very closely with a range of bodies and representative groups regarding access for companies. It will return as headline sponsor for the legacy campaign, Dublin23, which is designed for future leaders to reimagine their community and the work place and environments 20 year into the future. IDA Ireland will also sponsor 20 spaces for under-represented groups to attend. Last year, those spaces went to groups such as Open Doors Initiative, the Movement of Asylum Seekers in Ireland, MASI, Exchange House Ireland, Sanctuary Runners, the Traveller Graduate Network, NCBI, and as the Deputy mentioned, Youthreach.

Deputy Louise O'Reilly

Is the Department setting targets though? I do not suggest that good work is not happening but if it is not being measured and there is not something to aim for, I fear we will be back next year having the same discussion, which is not good enough because other countries in the European Union can do this and we seem to be falling very far behind.

Mr. Declan Hughes

We have not set targets yet but we are looking at targets in terms of how we are doing with employers. Getting employers to 3% to 6% is the type of range we are looking at. We have not set that as a target yet but that is certainly the national objective in the public sector and we see we need to also propagate that across.

Deputy Louise O'Reilly

Sometimes where the public sector goes, the private sector follows but sometimes it does not unless there is a target and a push on it.

Mr. Declan Hughes

Yes. We have raised this issue and what more we could do most recently at our enterprise forum, which the Minister chairs and was attended by the Ministers of State, Deputies Calleary and Richmond. There was a strong openness to engagement and we will also take that forward with other sectors such as retail where we see potential. I would also hazard that there is probably potential there in other sectors such as hospitality, where there are very tight labour markets. People have disabilities for a range of reasons. They may not go back to their previous jobs if it is acquired in work but maybe there are opportunities for them to work in alternative roles as well.

Deputy Louise O'Reilly

That is something I learned this morning. I was listening to the radio and learned that most people who are living with a disability are not born with a disability; they acquire it. This means it may be someone already in the labour market-----

Mr. Declan Hughes

Exactly.

Deputy Louise O'Reilly

-----which means all that is needed is reasonable accommodation.

We also need that culture shift, which requires the Department to be proactive. I hear what has been said and I understand the Ministers are committed, which is welcome.

I also wish to ask about productivity among our indigenous SME sector and the Department's commitment to improving managerial skills. Is the Department committed to continuing and increasing support schemes to improve managerial skills? I am thinking of something along the lines of a blue certificate scheme, a training certificate that would educate participants in business and commercial law, tax and wage technology, marketing and treasury skills and all of the things with which SMEs sometimes struggle. I am talking about a scheme that would be based on the Teagasc specific purpose certificate in farm administration, that is, the green certificate, which is successfully in operation. Would the Department consider something similar in the SME sector?

Mr. Declan Hughes

We certainly see management skills as critically important. We have a strong target of 2.5% per annum for increasing productivity in the indigenous enterprise sector. We recognise that central to that increase is ensuring leaders across companies have the all the skills she has mentioned and are keeping up to date with those skills. It works well in the agricultural sector.

Deputy Louise O'Reilly

It does.

Mr. Declan Hughes

That gives confidence to lenders, banks and other partners. We already have a range of initiatives. The leadership for growth scheme is run through the LEOs and EI. Everybody who does the start your own business scheme goes through those leadership and management development courses. Skillnet has a range of leadership and management development programmes. We would like to see more and I hope we will. We are working with our colleagues in the Department of Further and Higher Education, Research, Innovation and Science to that end. There are multiple providers. We would like to have a common certification so everybody gets to a certain level, whether that is a blue certificate or what we want to call it. We are working with the Department of Further and Higher Education, Research, Innovation and Science in that regard to ensure a common set of competencies, skills and qualifications. There would be a slight complication with a blue certificate if it were to become a prerequisite for getting bank loans, etc. We must ensure the provision of courses and that there is access to all of those supports and schemes before mandating that something like a blue certificate, or other type of certificate, is required because that will become a barrier for entrepreneurs. It is a point of discussion. We want to ensure we have full range of provision and access to all of those supports, particularly for SMEs and microenterprises.

Deputy Richard Bruton

I congratulate Mr. Hughes on his appointment as Secretary General. I know he will bring great skill to that post.

I was in the Department for some time and congratulate it on the progress since 2012. The IDA has added an extra 148,000 jobs and EI has added 48,000 jobs. Approximately 200,000 extra jobs have been created in the space of a decade by the enterprise support agencies. As we know, close to 600,000 extra jobs have been added elsewhere in the economy. Our enterprise sector is in rude good health. I cannot remember who said that wisdom is not the reflection on the past but the responsibility for the future. With that in mind, I will turn my questioning to some future issues.

At the moment, the enterprise agencies support approximately 20% of the workforce. At a time exports were our overriding priority to try to build our economy, that was understandable. However, as the focus now is on productivity and adaptation to change as digital and green considerations have given rise to raising wages and different working conditions, does the focus of the enterprise energies need to shift? Do the 80% of people employed in enterprises that are not supported by the agencies need to see a more coherent strategy? It will not be the same. I know the mandate of LEOs has changed somewhat but it has not moved away from exports or export-oriented activities.

On sustainability, there is a target of a 35% reduction in emissions in the industrial sector but that is a very narrow measure because it is probably dominated by a tiny number of sectors, particularly, for example, the cement industry and high users. To examine the sustainability of our sectors, the circular economy, the materials and processes used by companies, and how they approach maintaining materials in use for a long period, manage waste and recover the percentage of reused material that goes into their primary processes need to be considered. Has the Department recognised that is a very different thing from focusing on the emissions issue, which is a narrow, albeit important, focus? It is just as damaging to the global climate if an industry buys a lot of equipment that has an immense carbon footprint as if those emissions were coming from the island of Ireland. What are the indicators the Department is using to evaluate how far on we are in that regard? Is it using reuse indicators? Are there waste minimisation and selection of material indicators? Much of this will be required of companies up to a certain stage. It seems we need a new strategy.

I am interested to know how the average pay in IDA Ireland and Enterprise Ireland companies has moved over the decade. What is it like now? How does it compare to the rest of the enterprise sector? It is one thing to have good pay in our premium export-orientated sectors but we also need wages to be lifted elsewhere. How does the Department address that issue? As an economy, we face a productivity issue to bring all enterprises up to a certain level.

I would be interested to hear the Department's views on the future of LEOs. They have been very useful. There is one for every county and I can see the sense in that. On the other hand, it is hard to see each of those LEOs being able to offer the range of services that an enterprise might want or need. There is a need for centres of excellence to be built somewhere in the system to allow for quick referral. I am interested to know what progress has been made in that regard.

I would also like to hear the views of the officials on the regulation of AI and how that is going to impact the companies in their portfolio and the public interest. It seems to be the massive regulatory challenge in the enterprise sector. Our witnesses are on the one hand well placed to comment because so many of the big players are operating in Ireland. On the other, we need to have a vision of what is sustainable regulation for a sector such as that.

Mr. Declan Hughes

I thank the Deputy for his good wishes. My colleagues might come in to respond to some of his questions if there is time. He mentioned the 20% of the workforce with whom the IDA and EI work. A similar percentage are working with those companies through indirect employment as sub-suppliers, etc., of goods and services. In accessing those supply chains, they must meet certain standards and certification, etc., and be at the frontier of technology. It is important to manage technology transfer and management transfer spillover to the domestic economy.

While we work with about 300,000 in IDA client companies, Revenue would see foreign multinationals and foreign ownership across all sectors of the economy, in transport, hospitality, etc. That is bringing knowledge and information and increasing productivity to all parts of the country. We would estimate that nearly 1.3 million people are in jobs which are relevant, or directly or indirectly impacted by trade and investment and open markets. That is a force for good. It is a force for competition. It is a force for driving productivity and innovation across the economy. It is challenging for all companies, but particularly for those companies at the frontier and which are competing on international markets. In recent years with the range of supports we have provided, those companies have adapted to increased costs, changes to supply chains and the geopolitical environment. Our new enterprise White Paper was published in January. That White Paper not only recognises the importance of the international trading sector but also now places a central focus on locally traded businesses and that broad base of enterprises in the economy. That is a central pillar.

We have not just the agencies, IDA and Enterprise Ireland, but we work with a range of other agencies in specific sectors. Fáilte Ireland works directly with the tourism and hospitality sector, involving nearly 300,000 people. Bord Bia works at farm level with the horticultural sector and on marketing. Screen Ireland works with the animation and audiovisual sector. There are also a range of horizontal supports. I mentioned SOLAS and Skillnet Ireland which work across all sectors. We try to be the central point for all enterprises in the economy. I mentioned some of those we work with in the retail sector. We also work with the hospitality group and others. Mr. Hegarty might come in to speak about what we are doing as part of the enterprise White Paper.

On sustainability, we place a high priority on carbon emissions, the 20% reduction by 2025 and 35% by 2030. Those are really challenging and stretched targets which require very significant adjustment across all sectors and all businesses, moving from brown to green. That will require significant investment in a range of technologies. Last week we introduced a new scheme for solar photovoltaic panels on top of buildings. We have moved to heat pumps. We need to fully electrify the enterprise base. That gets us about 50% of our target. The other 50% or 45% is the cement industry where a significant amount can be done.

Linked to that, yesterday we launched a report on modern methods of construction. That is fundamentally about changing how we build residential houses, not just to ensure how we can deliver them quicker - the speed is up to 30% or 40% quicker - but also has circularity built into the design of houses from the start, meaning we reduce waste on site. Waste is designed out and we only bring to site what is actually needed for construction. We had a range of indicators yesterday specifically on public housing, an initiative for 1,500 houses, but we would like to get to 10,000 social housing units built every year to get to where the market is at, in terms of 50% or 60%. That will take a number of years. It requires a bit of an adjustment in terms of design and circularity, but we think it can be achieved.

The IDA published figures on wages last week. I do not have them in front of me but I think it is in excess of €60,000. There is still a gap between foreign multinationals and indigenous Enterprise Ireland clients. We have seen some catch-up based on the productivity and growth in the sectors Enterprise Ireland is working with. This comes from higher productivity and high-value areas. The food sector itself is changing, as are ICT, pharma and medtech, but there is still a gap with the rest of in terms of median wages. There is a significant impact where enterprise and investment or foreign direct investment into a region is helping that convergence and catch-up. We recently had figures for the north west where there has been a significant catching up and closing of the gap in income disparity. That is really important and I would be happy to come back to that.

Others may want to come in on the productivity side. Our focus is on digitalisation and adoption of artificial intelligence, AI. We have a really strong target for digitalisation by 2030. Nearly all businesses should have got on that digital journey. For example, more than 700 companies now have online retail scheme support. The retail sector has gone through that transformation. We are working with the construction sector on modern methods of construction, and similar initiatives are needed in other sectors.

On the future of the local enterprise offices, LEOs, we have a centre of excellence which manages the 31 LEOs and is rolling out a new programme of ensuring all the LEOs can provide a consistent first-stop shop, but also a consistent level of supports and services for any business with up to 50 employees which is going on that journey and has that ambition. That is very important. I come back to the leadership and managerial expertise point Deputy O'Reilly mentioned. In terms of centres of excellence, we are looking at that model. There is expertise out there. In the area of AI, for example, CeADAR has been nominated as the European digital innovation hub. There are centres of excellence, whether they are in the LEOs themselves or accessible to companies. We need to identify those and ensure they can be provided.

In the interests of time, I might go straight to the regulation of AI on which we are working at EU and national level. I will ask Ms Carberry to come in on that.

Ms Jean Carberry

I will make two points. First, a strong and consistent regulatory regime has been a priority of Government for many years, and our Department has consistently driven home the message that it is the strategic imperative we have a well-resourced and coherent regulatory regime. A memo went to Government yesterday again making that point. I am sure members are aware that under the Digital Services Act, Ireland is now the de facto regulator of 13 of the 19 largest platform companies. Consistently, our Minister has delivered the message that we will put whatever resources it takes to execute this well and maintain our reputation in Europe. It is a really important part of what we bring to the table as a digital leader that we have a well-resourced, consistent and coherent regulatory regime.

The AI Act is still in trilogues, but the version that has come out of both the Parliament and the Council focuses on the regulation of the use of AI. That means the version of the AI Act at the moment will not be looking at the developers or the large companies that are propagating these AI systems but will be regulating the way they are used. However, the final version of the Act is still open. What was debated in Council and Parliament predated ChatGPT. We have had a revolution with a much faster deployment of this general purpose AI than had been expected. I anticipate there could be some changes to the Act which might result in some onus on us. Effectively, these types of models are coming from four or five of the large companies we are all aware of, many of which are headquartered here. If it is the case we need to directly regulate those companies that are developing these new AI models, I assure the committee that it will be the number one priority to ensure that regulatory regime is fit for purpose when it is required. I cannot say at this time who the regulator will be. However, based on how the AI Act is currently drafted, much of the onus will fall on the Competition and Consumer Protection Commission, CCPC.

Deputy Matt Shanahan

I welcome our guests this morning. I congratulate Mr. Hughes on his appointment. As has been said, I think he and the very strong team around him will manage to give good leadership in the area. I will go through some notes I made and I might ask the witnesses to reflect on a few points at the end.

Mr. Hughes has touched on the macro picture. Employment is at full capacity and our exports are buoyant. The FDI sector is racing away and the enterprise sector is resilient. We have diseconomies countrywide, with challenges including housing, inflation and the difficulties in trade skilling and the cost of living.

I want to first address the GDP-FDI sector versus our own. GDP is now almost double GNI in the economy. Foreign direct investment is twice what is being done in the domestic economy. Much of the intellectual property, IP, registered in Ireland is driving FDI. We have invoice discounting and third-party manufacturing all appearing in FDI and inflating it beyond what is being developed at core. It is fair to say the employment being generated is not the same as it would be if that money were being developed in the domestic economy. There is also the Silicon Valley syndrome, which I am sure Mr. Hughes is aware of, where there is a concentration of large employers which raises the boats for a number of people but also inflicts significant costs. It causes a brain drain from the regions into the centres. We see that happening, in particular in Dublin. Frank McDonald wrote an article in the The Irish Times about ten days ago - I am sure Mr. Hughes saw it - where he was talking about the need to look at the national planning framework because we are not levelling up, the regions are falling way behind and Dublin is marching ahead.

We need to look at how we support the SME sector. It appears to me we need to be adventurous with tax laws, which will have to be looked at to try to support indigenous operators. What is happening with most of the them is sale not scale. It is easier and better for a promoter to take the money off the table and sell the business, and the main buyers are international. The result is that all the future development of revenues and IP is invested offshore, or it might be here but profits generated are going offshore. Mr. Hughes might say this a matter for the Department of Finance, but I think his Department must take a leadership role in applying pressure for favourable tax policies for management buyouts and executive purchase of companies going forward. This obviously applies to the IT sector in the main, which is the fastest growing sector, but it also applies across the board. It is the ability of people working in companies to try to generate and scale those places. They must have ownership and it must make financial sense for them to do that. Being an entrepreneur is difficult. It is years of 90-hour weeks. If a favourable tax policy is not there, why bother?

In touching on the national planning framework, I again ask Mr. Hughes to look at what Frank McDonald said in his article. He had statistics that really show how Dublin is racing away. Our tax and general strategic development policies do not reflect what is in the programme for Government. My own area of Waterford, which is the economic driver of the south east, is a laugh, to be quite frank, when you look at what is happening with State investment in Waterford as a driver of FDI.

We have spoken in this committee a number of times about what I see as the general challenges. I am concerned about two main areas. The first is the general balloon of climate action and the speed at which we are developing wind, solar, regenerative and the rest. We have not yet developed the maritime area regulatory authority, MARA, after three and a half years of this Government. I know Mr. Hughes has spoken about the White Paper, but how can we drive that situation forward? The second area, which Ms Carberry has spoken about, is artificial intelligence. It will be one of the biggest challenges across the world in terms of the displacement of jobs. We are not different from anybody else.

I will come back to climate action and the construction sector. Another area that needs real concentration is finance activity in the construction sector. Only the big players, obviously, can make it work. Smaller builders and others cannot access finance. So much development could happen in the country, but we do not have a financial model to allow developers get ahead and execute their plans. The pillar banks, unfortunately, are not a source of finance worth talking about anymore.

Mr. Declan Hughes

I might have to race through some of those, but I will make a couple of points first. I mentioned the unemployment figures, as did the Deputy. Having been working with stakeholders in the south east for the past ten to 15 years starting with the employment action plan, to get a 3.7% unemployment rate for the first quarter of this year, which is below the State average and below the 5% rate in Dublin, I think is a significant achievement. It is a credit to all of the stakeholders in the south east. We look forward to continuing to work with them on that. We are in quite a different space at the moment in terms of attracting investment into the regions, for all of the reasons the Deputy mentioned. However, combined with the cost of living and access to facilities and so on, we have seen quite a significant number of capital investment projects go into the regions because there is that attractiveness both from a skills perspective, availability of land, etc. We need to ensure we have that for the future. We are committed to ensuring that infrastructure is there.

The national planning framework is really important. The population will increase by approximately 1 million in the coming ten years. We are probably ahead of those projections. That was to 2040. That is an additional 600,000 people in the labour force for whom we have to ensure we have jobs, which will be green, clean energy jobs that will be fully digitalised. We need to ensure we have jobs across all sectors.

I will make a further point. The Deputy mentioned a strong focus on foreign multinationals. However, indigenous companies have had extraordinary success in the past ten years in building scale and going international. The latest figures from the Revenue Commissioners indicate there are now approximately 2,800 Irish-owned multinationals. The Deputy will know names like ICON, Kerry Group and the PM Group. A number of those are now using schemes like the key employee engagement programme, KEEP, which are employee participation schemes and are really important. To bank that point, we are very focused on regional development. We have a unit looking at the nine regional enterprise plans. We will have significant funding coming through the European Regional Development Fund, ERDF. We will also have a new call for the regional enterprise development fund later this year, and the Minister has already announced €145 million as part of that.

On tax issues, our pre-budget submissions have been published, so the Deputy will know our perspective on those. We have worked with colleagues in the Department of Finance on a number of reforms. I characterise it as working to ensure the tax regime is supportive of entrepreneurs and businesses from start up, through scaling, and through to exit or taking some money off the table. The start-up relief for entrepreneurs, SURE, scheme is startup relief for entrepreneurs, which means they can get their income tax back for the past three years. That is really important. There have been amendments to KEEP, and the Minster is looking at it at the moment. The Minister for Finance has said he will continue to ensure that is usable. A number of measures around when tax is actually payable have been introduced, which has increased its attractiveness to employees. The Department of Finance conducted a major review of entrepreneur relief, I think it was 18 months ago. We have been working with it on particular types of startups and initiatives. They are ongoing discussions in areas we are particularly focused on. It is not just on the tax side, and there have also been reforms of the employment investment incentive, EII, scheme, which are very welcome.

We are also working to ensure there is access to finance for companies. We have just completed a successful €175 million seed and venture fund to ensure there is liquidity in the seed and venture capital market with a particular focus on the seed side. We also have a range of future growth loan schemes. One of these was oversubscribed and we have a new scheme coming shortly, which is long-term money that will be helpful for scaling companies. That is helping to make the market and working with the financial providers.

I also pick up the point made about the construction industry, which is changing quite radically at the moment.

It is not just developer-led, but is now bringing in the manufacturing and the off-site construction sector, which is important for a circular economy and for moving to a timber-framed and modularised system. The manufacturing sector in particular needs access to finance for capital investment but also in terms of liquidity. We will have supports and schemes for it.

Some of my colleagues might want to come in on offshore renewables. Last Saturday we launched the Shannon Estuary task force. It is a blueprint for the development of the Shannon Estuary region, but more generally in terms of how we approach the framework conditions that are needed to ensure that we can fully exploit the potential for offshore wind right around the country. I highlight in particular the most recent offshore renewable energy support scheme, which was announced on 11 May. It is probably under-appreciated, but that was a very significant announcement that more than 3 GW of offshore wind capacity is now going to be procured and developed, hopefully by 2028 to 2030. It will be a significant additional capacity of clean renewable energy for the whole enterprise sector as well as for homes. It will power, for example, more than a third of our current demand and a quarter of projected demand by 2030. That is enough to provide energy for 2.5 million homes, so it is a very significant initiative. The key now is to ensure that it is actually delivered, because it will be transformational in terms of the competitiveness of the industry base - that transition from brown to green - but also to ensure then that we can capture new opportunities right around the country. That is the case for new types of energy such as hydrogen but also new businesses whether it is pharma, data centres, manufacturing or the food sector. If there is time, I might ask Mr. Hegarty to come in.

Mr. David Hegarty

One point which might be of interest to the Deputy is that the Maritime Area Regulatory Authority, MARA, is being launched tomorrow. That is a key step in the whole offshore renewable energy development of the sector. It is being launched in Rosslare Harbour tomorrow.

Deputy Louise O'Reilly

I do not think I will take all of my seven minutes, as I have to speak in the Chamber. I apologise for that. I have one question about research, development and innovation, RDI. Committee members will have heard me ask this a million times because it is something I am very exercised by. We know that a lot of analysis goes on and countries shift around. We are moving in the right direction on the innovation scorecard. We are strong innovators, but not yet an innovation leader. On the Global Innovation Index we have drifted from 12th to 19th and on the Institute for Management Development, IMD, world competitiveness indicator we have gone from seventh to 13th.

I understand that the entire area of RDI does not fall within the remit of the witnesses but the budget it had was more than €255 million for last year. I want to ask about the innovation voucher scheme and whether the witnesses see the need to increase funding for the scheme. The rates have not been increased since it was introduced, which seems a little bit odd to me. Has the Department given consideration to using the innovation voucher scheme as a kind of mechanism or funnel to get SMEs into the kind of research and development pipeline, and that will help them improve in terms of productivity?

Mr. Declan Hughes

What we have seen over the last three to five years is a very clear focus from businesses on innovation. They have had to innovate to survive in terms of their products and services. I mentioned earlier in particular about the retail sector, for example, and the innovation it has had to go through, driven by Covid, in terms of how to provide new services, going online and how the logistics and transport sectors and others have worked with it.

Enterprise Ireland and the LEOs do provide a range of step-up services. The first one is the innovation vouchers. I think there was a bit of dip last year, but we have seen an increase again this year across all of those supports.

Deputy Louise O'Reilly

There has been no increase in terms of the overall amount that can be drawn down.

Mr. Declan Hughes

No, we have kept it as it is. It is something that we are not averse to increasing, but also that a company could not get just one, but it could get a follow-on, as we have done with the trading online vouchers.

We have also had other initiatives such as the disruptive technologies innovation fund. That is €500 million and we have allocated €300 million of that so far. The key there is that there is SME involvement. We are trying to crowd in SMEs. We got four new European digital innovation hubs, which is a new initiative now that we just got approved earlier this year in manufacturing, robotics, and AI, and they will be charged with working with micro enterprises and SMEs and bringing them through.

Deputy Louise O'Reilly

What about clustering?

Mr. Declan Hughes

Yes, and the clustering piece as well. Where we are at in terms of our innovation and enterprise research system is in a very different space from where we were ten years ago. We now have-----

Deputy Louise O'Reilly

I know, but there was a dip in the money for the innovation voucher. Would that not be remedied by an increase in the amount available? Maybe I am wide of the mark on that.

Mr. Declan Hughes

It is certainly something we would consider alongside all our other supports. Mr. Murray might want to come in on that.

Mr. Thomas Murray

Mr. Hughes is right. All of our schemes and supports are under constant review. The innovation vouchers depend on the demand on the current funding available at the time, but we take on board the suggestion that we would increase the funding at some stage.

Mr. Declan Hughes

I think the key thing with the innovation vouchers is that they are principally used with the technological universities, so they are very local and there is expertise. The companies can get to know who the key researchers are. During Covid, there was a little bit of a dip but now there is an active effort to try to increase the level of engagement. The clustering will be a really important part of that, which is working with multinationals in conjunction with indigenous companies – SMEs and micro companies – and with the university sector. I am working with the Department of Further and Higher Education, Research, Innovation and Science on that.

Deputy Louise O'Reilly

When it works it creates a very good ecosystem. I apologise, as I have to go.

Deputy David Stanton

I apologise for being late. I was speaking in the Dáil and I missed the opening remarks. I congratulate Mr. Hughes on his appointment. I thank his team, some members of it have been here before us and they have always been very helpful, enlightening and supportive.

For some time, I have been raising the issue of the unified patent court by way of parliamentary questions. I have had meetings with people about it. Has there been any slippage on that? I understand Denmark had a referendum on it in 2014. Are the witnesses confident that we will have it established here in time, because if we do not and we are not at the table, then we will not be influencing the culture of the court, which is quite important. I would welcome Mr. Hughes's thoughts on that.

I have also been raising the issue of inter-company transfers. It is a small issue that relates to the spouses and partners of people who take part in the scheme who are not allowed to work. The spouses and partners of people with critical skills are, and I have been told by some people in business that they have missed out on some fairly high powered individuals, for want of a better way of putting it. Highly skilled individuals have refused to come here because their partners or spouses would be sitting at home with nothing to do all day, which is not good for anybody. I understand a statutory instrument, SI, is required to make that change, but Mr. Hughes might clarify that. I know there is a review at the moment of the work permits, but this is something that could be done very quickly. I was surprised at the number of people who avail of this scheme every year and it would help that small number.

Has the Department carried out any investigation into unemployment black spots around the country? In my constituency, in Youghal for instance, nothing is happening. The place is dying on its feet. Has the Department or Enterprise Ireland identified any strategies with respect to identifying areas like that and then assisting and supporting them in order to get business and employment going? Otherwise, everyone just leaves in the morning and they travel long distances, which is not good for climate reasons either. Then they come back in the evening. Towns like that can die. I am sure there are other towns around the country in a similar position. It might be something that the Department has taken up.

We have had a number of meetings on the corporate sustainability due diligence directive and it has been put to us that there is a need for more information and support for businesses. A lot of businesses do not know about it and some of those that do are frightened by it. It might be something that Mr. Hughes could comment on.

I also want to commend the Department on the work being done on the Balance for Better Business initiative. This is something I was involved in previously. I understand there has been some little slippage there. Maybe we might revisit that again in another meeting. It is an important one.

Is there anything in the strategy with respect to cutting down on red tape and bureaucracy for businesses? Many businesses tell us that there is still a lot of red tape to be negotiated. Is there any way of reducing that? I want to express my thanks for the work done on the Open Doors initiative. We have already mentioned the issue of people with disabilities and even the report today says that we are way behind other countries regarding the number of people with disabilities who are at work. We need to do a lot more in that area. We have the reasonable accommodation fund, the disability awareness training scheme and the wage subsidy scheme. Is the Department doing anything to make employers aware of those schemes in order to increase take-up? I know that it is administered by the Department of Social Protection. Are there links between that Department and this one with respect to getting more employers to take up those schemes? That would help more people with disabilities to gain employment.

I have been contacted by a constituent who completed a GWO course which is a requirement for a job as a wind turbine technician. He had to pay for accommodation while doing the course. He is now required to do an unpaid work placement away from home, at his own expense. Skillnet is administering the scheme. I wrote to them last week but have received no reply yet. Hopefully I will hear from them this week. We need a lot of people in this industry. However, if it is the case that people have to undergo training at their own expense, with no support at all, perhaps we need to look at the kinds of supports and training that are available for people. I might be wrong in my assumptions but perhaps the Department could check with Skillnet. My constituent has certainly raised red flags for me if what he says is correct.

I want to bring up the issue of the old Amgen site in east Cork. It has been sitting there for decades and nothing is happening with it. I know the interconnector is going in there now. I am not sure how much ground has been taken by that. Perhaps the witnesses could get back to me with that information. It is scandalous that a fully serviced 64 ha site has been sitting there unused for decades. It has a rail link at one end and a dual carriageway at the other and the IDA cannot use it despite the authority running short of such sites. The site is flat and has water, waste water and electricity. It will now also have the interconnector with a very powerful Internet connection as well.

Mr. Declan Hughes

I thank the Deputy for his questions. We are at the table with regard to the UPC, even though we are not joining in this first tranche. We need to have a referendum on membership. The Government reaffirmed its commitment to joining the UPC and to having a local division of the court in Ireland. We hope to do that quickly. It has been indicated at political level that a decision will be made shortly. Hopefully that will happen over the next 12 months. Mr. Richmond attended the launch event around a month ago in Luxembourg and got a very warm welcome from colleagues. We will be keeping track and working with all the partners on it. Joining the UPC will be of huge benefit for SMEs in particular, in terms of only having to register once to defend their rights locally, etc. Perhaps we can come back to the committee at some point on it. The Chairman facilitated a briefing last year with the committee, which was much appreciated.

Regarding unemployment blackspots, we are very aware of the dynamics of what is happening right around the country. We work through the local enterprise offices with local authorities and councils on various initiatives. The advent of blended and remote working, which the Deputy mentioned regarding commuting, has changed the dynamics around blackspots. It has really helped and I think it is a contributing factor to the regional employment performance given that people can now work two or three days a week from anywhere. The key thing is that we have those facilities in place. Our Department has assisted in the development of between 80 and 100 digital hubs over the last number of years. There are now around 300 such hubs in the country. They have good broadband and good facilities. They are all part of the Connected Hubs initiative. That is something that Youghal and other areas could consider. We have mechanisms for working with them as part of the regional enterprise plans. I would certainly highlight that as an area with good potential.

The IDA and Enterprise Ireland also work with local authorities on skills audits, on assessment and on looking at potential areas for employment or outreach, etc. That has worked well. I can think of a number of examples, such as in the north west, where we have worked with some of the leading employers to set up local operations. We are happy to discuss that further.

On corporate social responsibility reporting, the Irish Auditing and Accounting Supervisory Authority, IAASA, has been undertaking quite an amount of stakeholder engagement as proposals are being developed and now as they are being rolled out. We are now probably at the implementation stage of demystifying the reporting requirements and what is needed.

Regarding the Balance for Better Business initiative, Deputy Stanton was there at the beginning. New joint chairpersons have been appointed. Over the last two or three years I thought the profile had been very strong from the committee. There is a new committee membership and I met them about a month ago, in early June when they had their meeting in the Department. We provide a secretariat for that. The key focus now is not just on board representation, where we have met the ambition as set out a number of years ago. The key focus now is more on senior leadership, and ensuring we have those mechanisms in place. I am referring to things like grant support for returnees, women who are coming back into the labour force, maybe part-time, who have a need for training or upskilling. There is also a spotlight on female entrepreneurship. From 7% of high potential start-ups previously, now nearly 30% have female founders. That is a really strong performance and other colleagues may want to comment on it.

There are two aspects to the issue of red tape. One is how businesses interact with the administrative system. We are working with a strong focus on digitalisation. Covid was a great spur for this. In our Department, everything around company registrations is now digitally filed. We can digitally store and check everything. Patents and work permits are digitally filed for permits. We have gone through a significant digitalisation process that can be seen right across the public sector. Artificial intelligence is increasingly being used for compliance checking and enforcement. The public sector is making an effort to significantly reduce the burden for businesses. On the other side, we have a raft of new regulations, all well grounded in terms of public policy. As we implement them, we need to ensure we do so in the most efficient and least burdensome way. We are committed to that.

I thank the Deputy for mentioning the open doors initiative. We will continue to work on that and certainly pick up on the issues around training. SOLAS is very committed to trying to facilitate upskilling and training into the centre at Mount Lucas, where work is ongoing on retrofitting. Those mechanisms seem to work well, so we will follow up with Skillnet and SOLAS.

We have had a number of engagements on the Amgen site. I reassure the Deputy that it is on the IDA's marketing list. It is an attractive sight for potential development. There is a demand for such sites for capital-intensive projects. The issue is with trying to find a willing investor. As Deputy Stanton mentioned, the interconnector and the facilities there, particularly with what is happening in offshore wind and connectivity, would be really important.

Mr. Dermot Mulligan

On permit holders working in Ireland being joined by spouses, dependants and partners, that is handled by the Irish Immigration Service in the Department of Justice. Spouses and partners dependant on critical skills employment permit holders can currently apply to come here. The Deputy is right in that there is an issue regarding inter-company transfer holders. We are very actively in conversation with the Department of Justice on that issue. I hope that we will be able to make progress on it in the relatively near future. We are working on it.

Senator Paul Gavan

I thank our guests for their fulsome presentation and answers. I hope that trend will continue with the question I am going to ask. I have the raised the issue of European works councils both at this committee and via Seanad Commencement matters on a number of occasions but have had no satisfactory answers to date. Infringement proceeding INFR(2022)4021 from the European Commission in 2022 states:

The Commission has identified a number of shortcomings in Irish legislation, which fails to guarantee the right of workers' representatives, the Special Negotiating Body ... or the European Works Council to go to a national court over disputes related to breaches of the rights and obligations under this Directive.

This has been ongoing for over 12 months. Every time I raise the matter, I have been completely blanked by the Department and the Minister. I have a simple question: can the witnesses tell us what is happening? Can they tell us what is going on, how the Department is dealing with these infringement procedures and what the response will be? In particular, can they explain why the Department has to date refused to take up the very sensible suggestion by Mr. Kevin Duffy, former chair of the Labour Court, on how to deal with this issue? There was a consensus at our hearings, that is, to amend the existing legislation to include access to the WRC and the Labour Court to help resolve disputes relating to European works councils. I thank the witnesses.

Mr. Declan Hughes

I thank the Senator for his question on European works councils. The Senator may have heard this previously but I assure him that with regard to the complaint that was referred to the European Commission, on behalf of the Department I can confirm that a European works council is in place in the company that was the subject of the infringement proceedings. A first meeting of that works council has been held. It should also be noted that the first decisions under Ireland's legislation on European works councils has recently been published by the Workplace Relations Commission. Any disputes regarding European works councils can be referred to the Workplace Relations Commission and the Labour Court. However, as the Senator mentioned, certain protections available under the regulation must be exercised via arbitration. I hope that is helpful to the Senator. Any disputes can be referred to the WRC and the Labour Court, and it remains the position of the Department that the provisions of the Transnational Information and Consultation of Employees Act 1996, as amended, fully meet the requirements of the directive. We are happy to take that up afterwards, if that is helpful.

Senator Paul Gavan

Yes, that would be helpful. My understanding is that those infringement proceedings have not been called off, and they are still in play. Am I correct in saying that?

Mr. Declan Hughes

I will ask my colleague, Mr. Mulligan, to comment.

Mr. Dermot Mulligan

The Commission raised by letter the issue of the infringement proceedings in May 2022. We responded to that in November 2022. We are awaiting the Commission's response to our letter. We have not heard anything further from the Commission. We await its response to our letter. As Mr. Hughes said, the first decisions under Ireland's legislation on the European works councils have been published recently by the WRC, so that is proceeding. That is the position as we know it.

Senator Paul Gavan

It is helpful to get that response. SIPTU met with the European Commissioner for Jobs and Social Rights, Mr. Nicolas Schmit, a few weeks ago and he expressed his concern that the Department has not moved forward on this issue. However, Mr. Mulligan has told me that the Department has heard nothing from the Commission since November. Is that what Mr. Mulligan is putting on the record here today?

Mr. Dermot Mulligan

We have not had a response to our letter of November 2022.

Senator Paul Gavan

That is fine. I will bring that back up with our colleagues in the union movement. I appreciate that the witnesses have given me some answer today. I thank them for that.

The second matter I want to raise is the concern I have, as to many others, regarding the issue of bogus self-employment. A reference was made to the construction sector a little earlier. I can tell the witnesses that if construction workers go around most of the construction sites across Limerick looking for work at the moment, they will be told that they can have jobs once they become self-employed. We know that this has become a matter of course in the postal and courier businesses as well. There is a massive issue when it comes to bogus self-employment. Does the Department recognise that there are real concerns in this area? What plans does it have to tackle the issue?

Mr. Declan Hughes

I thank the Senator. Any issues in that regard are of great concern, particularly in the context of the protection of workers' rights and good practice. We have maintained a very active inspection regime for workplaces, sites, etc., and they are done. I was with the team of inspectors in County Carlow recently, and they had just completed a series of inspections across the south-east region. They are very active in workplaces, checking for compliance and then taking enforcement action. For example, in 2022, the WRC inspectors closed nearly 4,000 inspection cases and carried out 5,800 inspection site visits. They recovered €1.4 million in unpaid wages, and that was returned to employees, and 89 employers were prosecuted in 2022. The WRC publishes the full range of sectors and the inspections that it undertakes, and it also undertakes quite a bit of risk-based assessment of sites and employers, etc. Those facilities are available for any workers or employees who feel in any way exploited, or that their rights are not being protected. I assure the Senator that those supports, action and infrastructure are there.

Senator Paul Gavan

That is very welcome. At the same time, Mr. Hughes has not given me anything specific with regard to the issue of bogus self-employment, which is an absolute plague across the construction sector. Does the Department have any plans for a specific campaign around that issue?

Mr. Dermot Mulligan

In early 2022, we established a determination of employment status working group to look at this issue specifically. The group consisted of individuals from the Irish Congress of Trade Unions, IBEC, the Construction Federation of Ireland, Irish Small and Medium Employers, ISME, and officials from our own Department, the Revenue Commissioners and the Department of Social Protection. That was a cross-agency group that was set up, with representatives of business and employees, to look specifically at issues around employment status, the scale of misclassification, and to discuss the potential to improve systems by which the correct employment status can be determined. We had presentations from, in particular, the Revenue Commissioners and the Department of Social Protection, which look carefully at what the status of people are. The scope section of the Department of Social Protection, in particular, has updated its systems in that regard. We also had presentations from the Revenue Commissioners on the way it has developed its systems in that space.

We had a number of meetings last year to look at this issue. We got those presentations, and we got some statistics that I could pass on to the Senator regarding the number of investigations carried out by the Department of Social Protection and the Revenue Commissioners. Where there was an issue raised and an investigation was carried out, the number of misclassifications that they found was a relatively small one, given the number of investigations they had done. I am happy to send that information on to the Senator. A specific multiagency group whose membership included representatives of the social partners, looked at this in a fair bit of detail. That work is ongoing, but the numbers that we were presented with did not indicate a significant issue.

Senator Paul Gavan

I have one last question, if I may. I want to understand where we are up to with the issue of collective bargaining. I know the LEEF talks have produced recommendations in that regard. As the witnesses will know, we are an outlier in Europe in terms of not having a right to collective bargaining in this State. When are we going to see draft heads of the Bill to implement a strategy for collective bargaining and transposing the EU directive around adequate minimum wages?

Mr. Declan Hughes

I thank the Senator for the question. I will ask my colleague Mr. Mulligan to come in on that but I would just say I was at the LEEF meeting last week and significant progress is being made. There is a dedicated subgroup under LEEF which is looking at the range of issues and recommendations. That work is ongoing and I think it is progressing well.

Mr. Dermot Mulligan

There are two significant things we are looking at in the space of collective bargaining. First, there is the European directive on the adequacy of minimum wages and collective bargaining. As part of that, we have a responsibility to prepare an action plan to promote collective bargaining in the country. We have been very involved in the making of the directive and the European Commission has been holding a number of workshops for member states to help them in formulating their action plan. That work is still ongoing and we are still participating in the process. The process will hopefully be finished by the autumn and we will then proceed to develop our own action plan in that space. We are doing that in close consultation with social partners.

The other piece in the collective bargaining area is the preparation of a high-level report as part of LEEF, which was prepared by the social partners. It is an agreed report on how to change the system so it assists with collective bargaining and it makes a number of changes in that regard. There is a working group including the social partners chaired by the Minister of State, Deputy Richmond, and a meeting took place two weeks ago to review how to progress that. As Mr. Hughes said, work is well advanced but there is still a lot to do in relation to that. There are quite a number of legal issues to analyse and examine, some of them constitutional, as part of that ongoing work. We have committed that we will bring a memorandum to Government by the end of the year on the proposals around that. That is what we are working to.

Senator Paul Gavan

Do the witnesses expect to see legislation, that is, heads of a Bill, forthcoming and, if so, when? That is my final question. I thank the witnesses again.

Mr. Dermot Mulligan

The intention is that our memorandum, which we have committed to bringing to the Government before the end of the year, would include proposals for legislation.

Senator Garret Ahearn

I welcome all the witnesses. I congratulate Mr. Hughes and wish him well in his new role. I did this when all the Ministers came into this room. Sometimes we can focus on the challenges quite a lot and that is really important but we need to take a step back sometimes and see what is being achieved. In the last 12 years, the role the Department has played in creating employment in this country has been quite impressive. Mr. Hughes spoke about creating full employment in all regions. When some people look at it they just see full employment around the country but certain regions are a little bit behind. Which regions are those? What do the witnesses think the Department can do to focus on those regions? What initiatives can be brought forward to create full employment in those regions?

Mr. Declan Hughes

I thank the Senator for his good wishes and for the questions. Figures from the January labour force survey indicate that nearly all regions are at or below the State unemployment average of 3.84%. I mentioned the south-east region, which is now at 3.7 %. That is very significant as there was always a gap of 2% or 3% between the south-east region, the west region and the north-west region. There would have been a gap in the mid-west region previously as well.

There are two parts to this. The first was getting to where we are and the second is the significant upgrading of the industrial base in every region. That is where we have specific initiatives around regional enterprise plans, which are linked to the national planning framework in terms of population growth, where the jobs of the future are going to be and how we ensure we are supporting entrepreneurship and supporting entrepreneurs to develop and scale their businesses. As mentioned, Revenue is now saying we have 2,800 Irish multinationals which are in Ireland and trading internationally. We want those to be coming from all regions and we need to support those businesses to grow and scale from the regions. It is also about having that continuous flow of new technology coming from the universities and technological universities that are being developed within the regions. They can act as an attractor and to upgrade the FDI base in the regions as well.

The Senator will have seen some of the recent announcements, such as Dexcom going into Athenry and Eli Lilly into Limerick. Significant investments are being made by companies such as Listal in Kerry and Cork and again in the south-east region. We are certainly not resting on our laurels. Significant upgrading is now needed. That is where we have regional enterprise plans and a smart specialisation strategy. That is really important as well. We are focusing on what sectors and technologies are really important and the clusters we can develop in particular regions for the future. That is in addition to managing the climate transition, for example, in the midlands region to ensure that is a just transition and we expose new opportunities in renewable energy. That is happening right around the coast.

As I mentioned, the launch of the Shannon Estuary task force on Saturday was a very significant landmark for the mid-west and for the southern region. It is also the start of exploiting the full potential for offshore wind as well as onshore value-added activities, whether that is hydrogen, green energy or grid connections. It is also about the users and where the demand would be for that clean and green energy into the future. That is coming on stream from 2028 to 2030. Some of those proposals from the Shannon Estuary task force were around the new wave of data centres and the new wave of pharmaceutical and ICT businesses but also around transitioning our manufacturing base and many new opportunities in terms of ammonia, etc. There are lots of opportunities for the future. We are focused on the medium to longer term and ensuring we have the jobs for the extra 1 million people that will be in the country over the next ten years.

Senator Garret Ahearn

With regard to supports for businesses, we gave huge supports during Covid and most businesses were really appreciative of that at the time. There is certainly a feeling when I talk to businesses that the supports given to businesses in the UK are much more supportive of business and enterprise than those given in Ireland. Do the witnesses find that is the case? There are probably budget negotiations taking place at the moment and anything the Department proposes has to be approved by the Department of Finance. Is there a challenge within the Department of Finance in terms of putting proposals forward to support businesses? Obviously it is looking at how we can get more revenue coming in whereas from the witnesses' perspective, we are trying to ease the pressure on businesses. Are there challenges for the Department in getting support from the Department of Finance?

Mr. Declan Hughes

The UK went through quite a bit of adjustment, and that is for the authorities there to comment on. The support we have for businesses has probably never been stronger. We mentioned the reforms we have done with the local enterprise offices, the engagement that is now available and the supports that are available. We need to do more to ensure ease of access to those and that there is an understanding of them. We have a range of supports, as I said, around everything from start-up to scaling and growing and from digital to the green transition. There are any number of schemes, including the new energy efficiency grant for small businesses which was increased from €5,000 to €50,000 and is available to any business. There is the new solar PV scheme we brought out last week. That is up to 1 MW. In some of those areas we are probably ahead.

What we do directly with grant support sits alongside the taxation system.

Senator Garret Ahearn

I would not say we are ahead on the solar PV panels scheme. Seeing as Mr. Hughes brought it up, the scheme was introduced last week by the Ministers, Deputies Coveney and Eamon Ryan. It was welcome. They spoke about it at a committee meeting a few months ago. The funding for it is through the temporary business energy support scheme, TBESS. Mr. Hughes will be aware that many businesses installed solar panels in the past year because of the rising cost of energy. The Government and Mr. Hughes's Department recognised that businesses needed support last September by putting in the TBESS. The Department of Finance set it up. There is frustration in some businesses that installed solar panels in the past year that the scheme was not in place, because it had not been prepared on time. The Government set the date of September 2022 when we recognised that businesses were under huge pressure. Businesses have put in solar panels at a huge cost to their businesses and only received €2,400, whereas the new scheme offers up to €160,000, depending on the kilowattage the system produces.

I understand the Department has been allocated approximately €15 million for it by the Department of Finance. There is a good argument for it to be backdated to September 2022 and that funding from the Department should be made available to support the businesses that invested in the past 12 months.

Mr. Declan Hughes

I will answer the previous question about our engagement with the Department of Finance for the record as the Deputy raised it. We have a strong relationship with the Department of Finance. Mr. Hegarty leads the engagement on our pre-budget submission, tax and so on and we always find the Department to be open to ideas. We have worked closely with that Department on the changes at OECD level and that development. There is a commitment across both Departments and in the Government to ensuring we have the right grant and taxation supports for companies at the various stages, starting, growing and scaling, where there is a disposal and mergers and acquisitions. We will be engaging again as part of the forthcoming budget process. Ministers have already given some indications of their thinking on that.

The take up of the previous solar PV scheme was quite low.

Senator Garret Ahearn: I do not think it was low.

Mr. Declan Hughes

That is why we have introduced these changes working with colleagues in the Department of the Environment, Climate and Communications and with the Sustainable Energy Authority of Ireland, SEAI. It was opportune. We had a scheme that was not being taken up so we asked what more we could do and how we could increase the scale of the deployment. That is where our focus was and why we introduced those changes. Working with colleagues in the Department of Expenditure, National Development Plan Delivery and Reform, we managed to secure some of the TBESS money for it. It is a forward looking scheme. We have not been getting that feedback from companies that deployed solar panels earlier. As I understand it , the numbers were quite low. It might not have been as attractive as it was a capped scheme. It now goes up to 1 megawatt, which is fantastic. We want to see how it rolls out in the next six months. The message to businesses is to engage with the SEAI on deployment to try to get that infrastructure in place in the next few months.

Senator Garret Ahearn

At the start of the meeting, Deputy O'Reilly raised the level of employment for people with disabilities, which is lower than we want it to be. It is approximately 32% or 33% nationally. The EU average is roughly 55%. A strategy plan is in place. My question relates to reserved contracts for companies more than 30% of whose staff are people with disabilities. It is done quite a bit in Scotland. I recently visited the Rehab Group National Learning Network centre in Tallaght. It has some HSE contracts, but will potentially lose them because other companies are coming in at a lower rate. Almost 100% of the staff of this organisation are people with disabilities. Losing that type of contract is not where we want to be. Scotland has a good initiative. I think it is called section 21 or something like that. Essentially it allows for reserved contracts for companies more than 30% of whose staff are people with disabilities. Is that something we could do as part of promoting that companies employ people with disabilities and to support organisations like Rehab Group and the National Learning Network?

Mr. Declan Hughes

There are restrictions in public procurement rules. We need to ensure they are respected but at the same, we have quite a good system of including social clauses in contracts, which may be analogous. I am not familiar with the Scottish example. We can certainly look at it. Where social clauses can be included with other development, social or local priorities, they are being used, for example in the construction sector to promote local employment and so forth. There probably is room for it. It probably falls under the remit of the Office of Government Procurement. I am happy to follow up on that and to look at it. I thank the Senator for the suggestion.

Deputy Matt Shanahan

Will Mr. Hughes reflect on a few points? The Regional Group has engaged with a number of foreign companies in the modular building space. One of the issues that has been raised is the certification of their products. When engaging with the National Standards Authority of Ireland, NSAI, they are told that the engagement to get their products certified will take anywhere from one to two years. Will the Department talk to the NSAI to see how it could take so long for the certification to be given, considering they are provided in other countries?

We have spoken a few times about the insurance sector. Occupiers liability is now going through. It will be signed off and that is probably the final leg of the insurance reform we asked for. Has the Department plans to review judicial guidelines on the level of award that will happen in the next six to 12 months, after this comes into being? I am thinking specifically about commercial insurance, for example in the adventure and outdoor area. I am sure Mr. Hughes saw that some high-profile closures were announced recently and events were cancelled. I am flagging that to the Department to ask what we are doing about it.

I will make two more points, one of which I brought up with the Taoiseach when he was Minister for Enterprise, Trade and Employment and then with the current Minister, Deputy Coveney. It is regarding the participation of the Irish SME Association, ISME, on the Labour Employer Economic Forum, LEEF. The reason I have mentioned it several times is that IBEC and the small firms are represented but we are not getting a good share of representation of the SME groupings on the LEEF. Will the Department look again at allowing ISME to participate? If it does not, it is excluding a large number of SMEs from collective bargaining. It is as simple as that.

Finally, I will go back to Waterford because that is my job at the end of the day. I will speak about IDA activity visits to the south-east corridor. I have tried to engage with the IDA and I hope to engage with the new CEO. It might be known in relation to Tipperary and it is the same for Wexford. I will give the figures for Waterford for recent years. In 2019 there were 284 IDA visits to the country, 18 of which came to Waterford. In 2020, there were 121 visits, of which nine were to Waterford and in 2021 - which is the latest figure I have - of 153 visits, eight were to Waterford city. It is interesting that there were three or four times more visits to Limerick, Cork and Galway. That might be a reflection of where the foreign direct investment, FDI, space is. We must take the concentration of Dublin. I know a little about how the IDA works. I know the difficulties and how it pitches different areas, but a greater focus must be put on regional levelling up, as I stated earlier.

Mr. Declan Hughes

I welcome the Deputy's focus on modular building and off-site manufacturing. We see it as a significant transformation of the construction industry, especially for house building.

Many of those companies and the sector have gone through huge transformation in terms of commercial and industrial buildings over the past ten years. Trading internationally, we see the same potential now with our construction sector. The manufacturing piece is a key part of that. There are better careers also, with no-rain days and so on. We are working very closely with the modular build sector, which is the off-site construction and manufacturing sector, and certification is a key part of that. The NSAI has increased its resources for agrément certification and certification generally. It has expanded the relevant unit. I would be surprised if those timelines are still the practice. I have met a number of companies that have gone through the process. While that has taken time, they are very satisfied now that they have certification, which then gives them assurance on new products or new systems of construction. We will certainly continue to provide the NSAI with additional resources for that. We will come back to the committee again on that.

I will ask my colleague Mr. Newham to comment on the insurance question. Significant progress has been made on the employer liability side, which is very welcome.

On the membership of LEEF, I will take the Deputy's point back to the Department. Chambers Ireland is also a member of LEEF, so it is also represented. I thank the Deputy for the point.

The figures for IDA Ireland site visits show that in the first half of the year, Waterford continued to be in a strong position. If the trend continues, it will be ahead of where it was previously. Who knows what the second half of the year will bring? As the Deputy is aware, this depends on the stream of investment coming in, what investors are looking for and the range of options that is put to them. IDA Ireland is trying to push out to the regions. As I mentioned, it is with capital-intensive and large-scale projects that we are having most success now in the regions. Looking at the figures, the numbers for Waterford so far this year are good.

Deputy Matt Shanahan

Perhaps the Department would share those figures with the committee secretariat. I do not have them.

Mr. Declan Hughes

I will do that.

Mr. John Newham

On the insurance question, colleagues in the Department of Finance working in the office to promote competition in the insurance market have conducted some analysis of the sectors in question, which are often niche areas, and the difficulties they have encountered in insurance. It has narrowed. The sector the Deputy is referring to may be motorbike racing, and I know there have been difficulties there. There have been new entrants into the insurance market and new offerings by the insurance sector. Groupings have also come together to negotiate insurance. This is where we see good progress being made. Generally, the number of those niche areas has declined considerably. The Department is monitoring the issue and the Minister of State, Deputy Carroll MacNeill, has been discussing these areas with the insurance companies and encouraging further offerings in that respect.

With regard to a review of the personal injuries guidelines, I will need to check into that. I believe a review of the legislation has been conducted by the Department of Justice. The personal injuries guidelines and other issues are the subject of an appeal to the Supreme Court in the Delaney case. We are waiting awaiting the result of that case shortly. I understand that, under the legislation, the guidelines will be reviewed by the Judiciary.

Deputy Matt Shanahan

What I meant was a review by the Department of the payouts to try to understand which claims are not going through the Personal Injuries Assessment Board, PIAB, and what the general trend is in regard to those claims. We want to see uniformity of awards in the courts. We do not want to see outlier cases because they upset the whole thing.

Mr. John Newham

Absolutely. Under the new Personal Injuries Resolution Board Act, the board, which will known as the Personal Injuries Resolution Board, will have additional functions in generating information on that. It is assessing the awards on a constant basis.

Deputy David Stanton

I have just a few brief questions. In 2019, a casual trading and occasional licensing Bill was promised. There has been no sign of that legislation since. I raised the matter with the Minister recently and he said he would look into it. The legislation relaters to local markets and casual trading. There are a few anomalies in the current system. A review at the time proposed that the Department update the relevant Acts. Are there any plans to move that legislation forward or has it been scrapped? This issue impacts on single traders, farmers markets and a small businesses that sometimes struggle to make ends meet.

The witnesses referred to the statement that the Department is contributing to and leading on ten sustainable development goal targets. What are those ten goals and how is the Department doing in achieving them?

The committee recently received a briefing from IBEC on the National Training Fund. From memory, it told us there is approximately €1 billion in the fund. It made a number of recommendations on establishing a national training voucher scheme under the National Training Fund, which were linked to the need to keep upskilling. I am aware that another Department administers this scheme but the officials are obviously aware of the fund. Does the Department have any plans to link with the Department of Further and Higher Education, Research, Innovation and Science to use some of that money, which seems to be just sitting there? Businesses are paying into the National Training Fund and the amount in the fund will further increase in the years head as a result of the fantastic success we are achieving with businesses and in employment.

To go off the reservation slightly, a lot of businesses are doing extremely well. I was at the AGM of the Open Doors Initiative recently and a comment was made that a healthy society equals healthy business. Many businesses want to contribute towards addressing the ills of society, such as they are, but do not know how to do so. I wonder if we could link those two together. For example, if a business wants to do something to help in the local community, how can it do so without standing on toes? I spoke with some businesses which are interested in doing this but they do not know who to contact and how to make it happen. This can make a difference in sporting clubs and other voluntary organisations which are crying out for money, land, premises and so on. Some large businesses could contribute. The Open Doors Initiative is one way of doing so. The various diversity initiatives are another. Maybe this is a conversation that needs to be started with some large businesses and corporations.

When we discussed disability recently, I asked about the various funds and whether employers were aware of them and are being encouraged to take them up. We must consider also refugees and asylum seekers. This links to the many employers who say there is a lack of workers and they cannot get workers. I hear this from many employers I meet and I am sure my colleagues hear the same. Employers cannot get workers and it is a big issue. As the Department indicated, the unemployment rate is between 3.5% and 3.7%, which is virtually full employment. We have a whole cohort of people available, including asylum seekers and refugees. For example, we have 80,000 Ukrainian refugees here. Many of them are women with children who receive social welfare payments. If they work, even part time, they would lose those payments. Is there a way of allowing them to work? People on disability payments can work for a number of hours a week and retain their payment. Maybe something could be done in that area.

Perhaps a cap could be applied once their income reaches the living wage or minimum wage. It would appear there are a lot of people in this situation. I recently met a lad from Ukraine who was an architect out there. He showed me some of his work, which was absolutely amazing. I have never seen anything like it but he cannot work here. There is a whole cohort of people who could work. Language barriers may need to be overcome but that can be done.

Mr. Declan Hughes

We had intended to review casual trading, as announced in 2018. The world changed dramatically during Covid. As the Deputy mentioned, the range of entrepreneurship we see is very impressive, as is the facilitation by local authorities in particular. They are due great credit for the way in which they have facilitated good businesses to have options for off-site and on-street trading.

The same applies to entrepreneurs starting new businesses and who have gone on to scale. We all know those examples, which are good models and fully digitalised as well. We might come back to the committee on this or my colleague might come in on this matter later, if we have time.

Turning to the two points made on corporate social responsibility and the sustainable development goals, as part of our trade strategy, Value for Ireland, Values for the World, we have placed our focus on the SDGs as part of our trade and investment focus for the future. We are working with countries that have shared values, especially concerning the protection of workers' rights and the prevention of forced labour, and the checking of those, as well as in respect of climate and adherence to the Paris Agreement. Particularly notable in that context is the new trade agreement between New Zealand and the EU reached on Sunday. This has gone further than any previous trade agreements, of which there are over 40 with more than 70 countries. This sets a template in respect of the context in which we will negotiate with countries that have shared values, especially relating to the Paris Agreement, forced labour, the protection of workers' rights and a whole range of other areas in terms of digitalisation, etc.

We have now established, with a colleague, Ronnie Downes, a new subgroup of our enterprise forum to specifically look at the topic of responsible business to ensure there is an awareness of the range of initiatives coming at EU and broader international levels and what these will mean for business. The subgroup is also exploring what initiatives businesses can take. We previously had a unit in the Department looking after corporate social responsibility. This provided the templates, the case studies and the learning for how businesses can engage effectively with their local communities. Enterprises undertaking such initiatives need to be clear about what it is they want to do as businesses and to have a clear strategy concerning why they are doing it and the reasons for the undertaking. Are these genuine or will they be seen as greenwashing, etc., as well? There is also the question of how companies wish to give back and what their priority areas are in this regard. I say this because every company will be different in terms of the needs of communities. If companies have a clear plan and engagement, then there are networks and other aspects in this regard that I will be very happy to provide the detail of to the committee. The new subgroup will be helpful addressing responsible business as part of the enterprise forum because this includes all our business representative groups. Consideration will be given to how it is possible to cohere the initiatives and ensure we are not tripping over each other.

I will quickly mention that my colleagues, David Hegarty and Jean Carberry, have been working with colleagues in the Department of Further and Higher Education, Research, Innovation and Science and stakeholders specifically on the issue of the National Training Fund. Employers are contributing to this fund. We see it as essential because we have a young population and these young people will be in the workforce in the next 20 to 30 years, but the world of work is going to change dramatically in this time. The importance of upskilling and reskilling, which are already important, will be even more so in the context of digitalisation, including things like artificial intelligence, AI, and green skills. I mentioned the transformation happening in construction. This is happening, however, across all our sectors. Whether we are talking about advanced medtech, pharma or engineering, there is a need for significant reskilling.

On the disability side and access in this regard, there are many initiatives in this context now. The first port of call is the Intreo offices in working with Skillnet Ireland and SOLAS and the skills audits. Other initiatives being taken, especially in terms of language skills at local levels, are being supported by the Department of Children, Equality, Disability, Integration and Youth to ensure that people coming here with skills will have an opportunity to work either full or part time. Some of these initiatives are well documented but this is something we will take up with the Department of Further and Higher Education, Research, Innovation and Science to see if there is more untapped potential and more we can do.

Mr. David Hegarty

As the Secretary General said, we are working with the Department of Further and Higher Education, Research, Innovation and Science on the issue of the National Training Fund surplus and developing proposals in conjunction with that Department in respect of how it could be utilised. Obviously, this is an issue that will have to be considered in the context of the budget but we are working on this issue.

Deputy David Stanton

Of course.

Mr. David Hegarty

We see the need to use this surplus effectively. In our case, that will probably involve making progress in the context of looking at this through the prism of the White Paper on Enterprise 2022-2030 and contributing to the goals in this regard.

Deputy David Stanton

I thank Mr. Hegarty. The local training initiatives are another niche group. These often work with people from disadvantaged backgrounds and bring their skills levels up to enable them to get into employment or further education. These initiatives need some tender loving care, TLC. Many of the staff working in this challenging area have no job security. They sometimes go from year to year and have to sign on and sign off. There is no career progression or development, yet they are often working in areas that are frequently very challenging and with people who are challenged in all kinds of ways. They do this very successfully as well. There are overlaps between the Department of Enterprise, Trade and Employment in all these areas, so I just bring this context to the attention of the witnesses. It is a niche area but it has potential. I thank the witnesses.

Mr. Declan Hughes

Where there is untapped potential and an available pool of people, we are always interested in looking at developing routes to the workplace and back into employment.

Deputy Richard Bruton

To return to the issue of sustainability and the Department's strategy in this area, from the published data it seems that Ireland is out of line in material use and poor waste processing. We have the lowest reuse level in Europe, other than Romania. We now see that we will not hit the target for plastics set at EU level. We have not seen the wide deployment of smart controls, namely, the sorts of things that can allow more sustainable management. We do not have the infrastructure for much of the expected reuse of materials that could be undertaken. We simply have not installed any of that infrastructure for the recovery of materials at the level we need.

While efforts are being made to address this, it is very fragmented. The Department is not leading this endeavour and does not seem to see it as important as other areas. It is, however, as massive as AI and its potential impact on enterprise in terms of competitiveness in ten years will be much dictated by whether we have rectified many of these indicators. Perhaps it is unfair to ask the witnesses about this area because under the allocation of responsibilities this comes under the remit of the Department of the Environment, Climate and Communications, but I believe we will not crack this problem unless the Department of Enterprise, Trade and Employment is leading the initiative.

The Dutch, who are the leading exemplars of what can be done in this regard, have started with industrial sectoral compacts. The food, construction and other sectors all sat down with their parent departments and other stakeholders and asked what needed to be done and what needed to be fixed, which involved examining the whole supply chain from design right through to the tailpipe. This is a missed opportunity in positioning Irish enterprises and in mobilising the wider community to buy into the idea that we all have to get onto the pitch to address climate change and the loss of biodiversity and the degradation of our planet.

Is the Department moving towards a circular economy compact for food, electronics, white goods and durables? According to the statistics, enterprise is the worst in the rankings. Our hotels are deplorable in managing food waste. A significant portion of our emissions annually is generated directly as a result of food waste. Who is the driver in this regard? I am sure the officials will point to Fáilte Ireland but there needs to be a central Department that feels this is going to impact the way enterprise survives and thrives.

Am I mistaken? Is there a bigger strategy hidden away that we have not quite seen?

Mr. Declan Hughes

I thank the Deputy. I assure him that the circular economy features in a whole range of our discussions. Perhaps there is a need to pull it all together, but we are active in a range of negotiations at EU level on eco-design, repair and reuse. We are trying to move from the model of take, make and waste to design in circularity at the beginning. We have a range of initiatives through Enterprise Ireland and LEOs which are direct supports to companies. The Deputy also mentioned electronics. The National Standards Authority of Ireland, NSAI, which came up earlier, took one of the standards from the US around reuse in the electronics sector and brought it to Ireland. Companies are being certified because they provide full end-to-end recycling of electronic equipment. The real pressure comes from the market and consumers. They want to see companies build in circularity now and reduce waste in the design of products. That is where we are working. We are a member of eco-design working groups at EU level and implementing initiatives through Enterprise Ireland, working with the Department of the Environment, Climate Action and Communications, which leads in that regard.

The Circular Economy and Miscellaneous Provisions Act 2022 was signed on 21 July last year. It was an important step in setting out the national legislative framework and provides a robust statutory framework for moving from a focus on managing waste to a much greater focus on adapting patterns of production and consumption. As I said, we are working on a range of initiatives with the Department of the Environment, Climate Action and Communications in this area. Most recently, we had a meeting with the Environmental Protection Agency, EPA, which is responsible for reducing food waste, and Enterprise Ireland in particular and the LEOs will work with the EPA on reducing food waste. There are specific targets in that area. We have a particular interest in reducing waste from food manufacturing, in addition to the hospitality sector and others, as the Deputy mentioned, which we will also work on. We very much welcome that the EPA is leading on that initiative.

The Deputy is also probably aware that we are leading on negotiations at Council level on the Commission's approach to the eco-design for sustainable product regulation, ESPR, which will cover repairability, recyclability and therefore reduce environmental impact. A general approach was agreed on 22 May at the Competitiveness Council and it will trial out now with the European Parliament. Leading with-----

Deputy Richard Bruton

Ireland's position is way down the bottom. If we are waiting for the Department of the Environment, Climate Action and Communications to internalise it into the thinking of enterprise, it will take an awfully long time. Someone needs to have a big tent, as it were, and bring people together, for example, in food, which is probably the biggest one we have. From farm to fork, there are immense opportunities to better manage that chain. Instead of pointing the finger at farmers all the time that they ought to clean up their act, the reality is that the whole chain must transform itself. I do not know who is going to hold that ring. The Dutch have created this sort of tent. They bring people in and then there is an obligation on all of the different players along the chain to collaborate. I feel that is missing in Ireland.

Mr. Declan Hughes

I take the Deputy's point. It is something we may come back to him on again with a further discussion. To emphasise, and it may have come up before, there are a range of supports available for companies through Enterprise Ireland. There is a toolkit which they can use to check and they can get basic grants for auditing and assessment, etc. The regulation side is important because it drives behaviour. If we can get this suite of initiatives through at European level and cascade them down through to the enterprise sector, that puts pressure on. In the construction sector, which we have been working in over the past year on modern methods of construction, there is a realisation of how the sector can reduce 20% to 40% of waste. You do not bring waste to site; you use and design in circularity, along with the increased use of timber rather than concrete and cement, etc. Everything is cut with precision for installation, as opposed to the previous practices, and then it is an issue of ensuring there are sustainability credentials for the final product. That is where NSAI has a role in providing that support.

The electronics industry, as I mentioned, and many of the leading sectors, are also at the forefront because they must have those credentials - I think it is the R2 standard - which is a standard in the US and is now available in Ireland. That is what companies and multinationals look for. That translates all the way through to their supply chains. Every company engaging with them, particularly in Ireland, must demonstrate those circular economy and sustainability credentials, which are green and renewable energy and reducing and minimising waste. I take the point that there is probably more we can do to put a spotlight on that, which we will do.

An Cathaoirleach

I wish to ask about the US Inflation Reduction Act, how it impacts Europe, what the EU response should be and how it should be managed. There has been a lot of talk recently about selective relaxation of EU state aid rules, but we know that such relaxation puts Ireland and other smaller states at a competitive disadvantage and undermines the Single Market. We saw this when larger EU states relaxed state aid rules due to the war in Ukraine and the energy crisis. Larger states subsidised their industries more extensively than we were able to. Does the Department have any ideas about how these matters should be approached?

Mr. Declan Hughes

My colleague Mr. Hegarty may wish to contribute also. A key point is that, in regard to the US, the Inflation Reduction Act, and the EU, we have significant challenges in the transition to clean energy in terms of developing and deploying the technologies needed and building the ecosystems around the key technologies for the future. It is critical. The policy focus is certainly very welcome for areas for collaboration, demonstration and deployment. It will be beneficial. However, the issue of subsidies could lead to significant distortions and is concerning, but in the round, it can probably be managed.

Mr. David Hegarty

I think we have provided a note on the Net-Zero Industry Act to this committee, which is the EU's main response to inflation reduction Act. It identifies seven technologies in the renewable space and sets a target of 40% industrial capacity in the EU in each of those areas. Allied to that, as was rightly pointed out, a more permissive state aid regime is emerging. That presents issues for Ireland about which we have some concerns. It is important to bear in mind that, even at EU level, some leading think tanks have questioned the rationale for some of these targets. Apparently the EU already exceeds the 40% target in some cases. There have been some criticisms at EU level of the Commission's proposals. We continue to engage in the discussion on those proposals.

An Cathaoirleach

Regarding unemployment, the figures are really good. We are down to 3% or 4%, but there are a number of sectors which could be targeted or helped more. Disabilities were mentioned by several Deputies. There are also people in the Traveller community and women who had children and have not been able to go back to work for a number of reasons. I wish particularly to reference my city, Limerick, where eight out of ten blackspots still are, even though the city has done particularly well with FDI recently. The new statistics will be out in November, so we hope it may have changed in some of the areas. I think and I hope one in particular will have changed.

I recently visited a company called Limerick City Build, which is a community organisation. Groups like that reach the most vulnerable people who have been excluded or have excluded themselves. Generations of families have been excluded from the employment market. It is a question of trying to get them back in. Is there any strategy in that regard? I know it transcends a number of Departments and committees. It is to target those unemployment blackspots while we have this opportunity when we are looking for workers.

Mr. Declan Hughes

I thank the Deputy. We are open to working with all groups, especially, as I said, on those routes to employment, be that providing internships, access to sites and facilities or to collaboration. The LEOs operate at local level as part of the local authorities, so the staff are embedded from an economic development perspective. More generally, the full range of schemes are available to the leaders of those programmes, but more particularly in ensuring we have those routes to participation. At local level, the Department of Social Protection especially has good links with companies and the development agencies. Companies themselves are keen to participate.

Senator Ahearn raised the issue of construction projects at the early stage, etc., where there are social clauses either in public procurement or in other projects that can be utilised. The channels generally work well and there are other initiatives with business groups. If there are further ideas there, we are open to them.

An Cathaoirleach

I thank Mr. Hughes. Good work has been done recently, so we are hoping the statistics with come down in some of those areas. The regeneration programme has had job fairs in all the regeneration areas and been very successful. Hundreds of people have turned up to each event and companies have been there as well, so it has been really positive.

That concludes our consideration of the matter for today. I thank all the representatives for assisting the committee. We will be considering this further. I wish Mr. Hughes all the best in his new role. The committee will work constructively with the Department over the next while.

The joint committee went into private session at 11.52 a.m. and adjourned at 12.10 p.m. sine die.