Good morning, I thank the Chairman, Deputies and Senators for giving me the opportunity to speak on this topic. I believe that while this State faces many very serious challenges, the single biggest challenge is jobs. We have in excess of 400,000 challenges, which must be solved in a world that is short of jobs. We must realise the shortage of jobs does not just apply in Ireland but that the world is short of jobs. The United States, which has been the single largest source of foreign direct investment in Ireland over four decades, has 7 million fewer people working in the economy today than in 2007. The world needs jobs and the only countries where I see the creation of a significant number of jobs are in Germany and China. I will come back to Germany a number of times in my short presentation.
I believe no country or society can prosper with high levels of unemployment. Our No. 1 national objective should be jobs and not our national debt. We need jobs and more jobs of every description and we cannot afford to be selective. We need a national effort to focus on job creation and it should start with all the Oireachtas elected representatives, and members from employers, unions, and sporting organisations. No single Department or Minister can solve this problem. We need to adopt a radical approach. We must recognise that unemployment in Ireland is not a cyclical but a structural problem. We have had structural unemployment for decades, but it was hidden for a decade by the mirage of the Celtic tiger, where far too many were employed in the construction sector. In excess of 20% of Irish GDP for a decade came from construction whereas the long-run average for a well-balanced OECD economy is just under 10%. That is the reason our structural problem was hidden when we thought we had full employment. During that period our economy was completely unbalanced.
What we need is a broadly based, well-structured and sustainable economy. It is not simply about a smart economy. The smart economy and a knowledge-based economy make a great soundbite, but they will not solve the problem. We need knowledge-based and smart economy jobs, but they are only part of an overall well-balanced economy.
Spain, like Ireland, trotted out the line that it wanted to go down the smart economy route and today nearly 50% of its people between 25 and 35 years are unemployed. Let me emphasise again that we need all types of jobs, smart jobs, knowledge jobs and jobs in manufacturing, services and construction. Our construction sector, which has been pilloried for very good reasons, is now running at about 2% to 3% of our economy when it should be running at 8% or 9%. I am not talking about building new houses, but looking at the existing housing stock and doing something about it.
The role of manufacturing in this economy has been neglected for far too long, particularly indigenous manufacturing. What has been forgotten about manufacturing is what I describe as its multiplier effect. Every manufacturing job creates 2.5 indirect jobs whereas every service job creates 0.7 indirect jobs. Manufacturing has a very considerable multiplier advantage over the services sector. Every time we lose a manufacturing job, and we lost 80,000 in the first decade of this century, it takes another 2.5 jobs with it. The worldwide statistics are that manufacturing represents 70% of all research and development spend worldwide. The service sector is 30%. One cannot have a research and development society unless one has a manufacturing base in that society. That has been forgotten. Retailers will come to a community if there are manufacturing enterprises that have created wealth. One does not see manufacturing industries following retailers into a particular community. Manufacturing is an area which we as a society and from an industrial policy point of view have neglected for far too long. Of course we need service sector jobs. People must clean hotel bedrooms and wait on tables in restaurants, so the service sector is a fundamental part of a balanced economy. We need the jobs of the future, the new industries such as social media, but what is forgotten about these new industries is that they are not capital intensive and are not significant creators of employment. A company like Google or Facebook will never create the number of jobs that a pharmaceutical industry or the automotive industry will create as they do not have the multiplier effect of those industries.
We need a construction sector. It was reported earlier this week that there were 235,000 fewer people working in the construction sector today than there were at the peak. We must get a percentage of those to return to work in the construction sector. We need to look at the education system in solving unemployment, whether youth or long-term unemployment.
We regard education as a social need but do not put enough emphasis on it as an economic need. It is both. The countries that do it best are Germany, Finland and Singapore. Until very recently Finland was at the bottom of the class when it came to education. In the space of two decades it has risen to the top of the class. In Ireland we have an obsession with wanting to send all of our children to university. Germany does not think like that. Germany has what it calls the dual system, where in their equivalent of secondary school, students are streamed and two thirds go down the apprenticeship and vocational route, and go to institutes of technology. As part of their education programme, they will work in industry. Today our company employs 65 of those apprentices in Germany.
We underestimate and undervalue engineering. Engineers make things, they make things happen and create things. In the process they create value. This year 800,000 engineers will graduate in China, 80,000 engineers will graduate in Germany, and in Ireland, the figure is in the low thousands. If it was within my gift, I would say that all fees, including registration fees would be waived for those going to university to study engineering or the sciences. That would not be discriminatory because the cost to the taxpayer of somebody studying medicine is significantly higher than the cost of somebody studying arts.
The IDA is a world class organisation but it is significantly under resourced. IDA Ireland will do very well if in a decade from now it can maintain the levels of employment from foreign direct investment at the same level as it is today. Every country in the world is looking for jobs. President Obama has challenged American industry to bring jobs home and to create 2 million new jobs. We need to be like a good fisherman and go out and look for the opportunities. The opportunities are in Asia and in my opinion in Germany. The unemployment rate in Germany in percentage terms is at a 20 year low. Fewer than 3 million are unemployed, but the figure that does not get enough attention is that Germany has 1.1 million open positions as of now, while we sit here today. We can help solve Germany's problem. How do we get those jobs and bring some of them back to Ireland? When did a German company last make a significant foreign direct investment in Ireland? The money is in Asia - in Singapore and China. I spent the past three days travelling in the greater Shanghai area. I visit China probably four or five times a year and I never cease to be amazed by the money that is there. There is just so much money.
I will now discuss regulation, because Members of the Oireachtas make the regulations. Good regulation is not the same as no regulation, but it is certainly less than what we have. We all hear people speak about senseless regulation. Mindless regulation is the equivalent of carbon dioxide to a human, it is the silent killer of jobs. This time last year I had the opportunity to speak to the chief executives of what would be described in the media as the quangos. I challenged them on senseless, mindless regulation. Their response was they did not make the regulations, they implemented them. When I asked if they thought it was good regulation, they said "No". When I asked them what they had done about it, they responded that they had no way of getting it back into the system. What would I do about regulation, if I had my way? First, how many regulations do we have? I believe nobody knows. We should do an inventory of regulation and then do an audit of that inventory with a view to having only regulation on the Statute Book that is there for the safety, security, health and well-being of the citizens of the State. France is a country that uses regulation very intelligently in the promotion of its own economic interests. We do not.
My message to members of this committee is that it is they and their colleagues who make these regulations and it is within their gift to take back some of those regulations. Bureaucracy is preventing the creation of jobs. We have 400,000 plus reasons to ensure that we obliterate bureaucracy in Ireland. For short-term job opportunities, I suggest we look to Germany. How can we solve Germany's job problem? We have complementary problems. We have a very well educated workforce. How do we identify the sectors where there are 1.1 million jobs? The German economy is very structured. It has about 100 clusters of different industries, so it is very easy to target those clusters and see where we can participate and help them in the process.
Let us consider what we can do for the 235,000 people who no longer work in the construction sector. I am in the energy area, which is part of the Glen Dimplex business. I look at the single biggest transfer of wealth out of this country every year - it is not the interest on our national debt - but the €6 billion that we transfer to the Middle East and Russia each year for fossil fuels. In one hour the sun will create more energy than the world will consume in a year. Where are our policies on solar thermal, solar photovoltaic and geothermal heat pump technologies? We have approximately 2.1 million houses and in the region of 50% of them are heated by oil. We have the crazy situation where we are buying oil and then transporting it across the country. For many people suffering fuel poverty, who are unable to come up with the money to pay for a fill of oil, they must buy it on a needs be, weekly basis. Based on the figures we have for the UK, we believe that 30% savings on energy consumption in homes is easily achievable. A figure that might surprise members is that 40% of all energy consumed in the world is consumed in buildings and 70% of that is consumed on heating and water heating. This presents a major opportunity if we go about it properly. There is significant waste. For example, how many public buildings in this country are energy efficient?
Unemployment is the single biggest national challenge. Our national obsession must become the answer to the question "How do we create jobs?".
