The Programme for Government 1981-86, contains as a major commitment the establishment at an early date of a Youth Employment Agency.
The establishment of the agency has to be looked at against the persistent growth of youth unemployment in Europe since the early seventies. This position obtains despite various policy interventions in favour of young people by Governments. There are, unfortunately, relatively few exceptions to this depressing picture and in 1980 the unemployment rates for the 15-25 year age group were as high as 15.1 per cent, 15 per cent and 24.8 per cent in the UK, France and Italy. In the seven largest OECD countries, youth unemployment accounted for a staggering 42 per cent of total unemployment.
The best estimates of youth unemployment in Ireland are those available from the live register with the most recent figures being for November 1981. On that date, there were 36,839 persons under 25 years of age unemployed. This represents 27.6 per cent of the total unemployed. Our data on youth employment and unemployment are bad but I hope that a significant improvement will result in our information as a spin-off from the proposals which I will be putting forward later.
Unemployment among young people is high because unemployment is high in the community overall. The level of unemployment has risen rapidly in the present recession which began at the end of 1979. By the end of November, seasonally adjusted unemployment was 58 per cent higher than in December 1979. Youth unemployment has risen even faster; while seasonally adjusted figures are not available, the actual number of unemployed aged under 25 is now more than 80 per cent higher than in January 1980. Experience points to young workers faring relatively badly when there is a sharp, sudden rise in overall unemployment.
In addition to the present unsatisfactory position regarding youth employment, account must also be taken of the future demographic picture and its implications for the labour force. The most recent labour force projections by the ESRI point to an annual average increase in the region of 1.5 per cent to 1.8 per cent in our labour force. Around 65,000 young people leave our educational system annually and most look for work. Retirements from the labour force are nowhere near this figure.
The implications for policy of the present level of youth unemployment and the expected labour force increase to which I have referred are many, but two major conclusions can be drawn. First, even to keep the number unemployed at its present level means that we must create more jobs than are being lost. Secondly, our labour force is becoming younger and those entering it have different qualifications, attitudes and aspirations from those who are leaving it. I am not overlooking the fact that our middle-aged and older workers are faced with similar problems. In the present difficult and uncertain economic climate the analysis which I have presented, particularly the sheer scale of the youth employment challenge, clearly points to the need for special solutions.
The main thrust of our efforts to reduce youth unemployment must be a sustained attack on the scourge of unemployment at all levels in our society. This requires continued growth in our exports of goods and services. Increased exports are vital in view of the sharp deterioration in our balance of payments position in the last few years. Export growth must also be the engine for the creation of new jobs which will be needed in the years to come.
We will, of course, continue with the existing and new forms of job creation centred on the activities of the IDA and other development bodies and on the expansion of our productive capacity by increased sales in home and export markets. Research has shown that around 50 per cent of the jobs generated by the IDA are filled by young people. The National Development Corporation when established will constitute a major new initiative of significant long-term importance in the task of increasing productive employment. It is envisaged that much of the corporation's investments will be directed to the new growth sectors where progress in the past has been inhibited by a lack of risk capital, but profitable investments in the more mature industries will also be considered.
Balanced and self-sustaining output and employment growth will do much to improve the youth unemployment situation. It will, however, still be necessary to adopt special measures to overcome the problems that are particular to young people. There is a clearly identifiable youth labour market.
A range of training and employment opportunities exist for helping young people arising from initiatives by successive Governments. The present position in relation to such schemes is that roughly 20,000 young people will be catered for in 1981. The schemes concerned are the National Manpower Service work experience programme with 5,000 young people participating in 1981; AnCO's general training programme with 12,000 young persons, including 2,000 young apprentices participating; and the Department of Education's temporary grants scheme and the Department of the Environment's environmental improvements scheme with 1,000 participating. Allied to measures taken within the educational system, such as the introduction and expansion of pre-employment courses, these programmes constitute a sizeable effort to aid young people.
I would make several points in relation to existing efforts. Firstly, the continuing high level of youth unemployment indicates that more needs to be done. Secondly, the schemes are not properly co-ordinated. They were introduced on a piecemeal basis in response to emerging problems, in many cases to meet what was seen as a temporary need. Differences in allowances and wages between schemes, and lack of co-ordinated promotion of programmes, have led inevitably to a degree of confusion in the minds of those intended to benefit.
Finally, I think it is fair to say that existing schemes do not have a sufficient impact on the position of disadvantaged young people. Part of the problem has been one of identification of the young people concerned. Teenagers with the most pressing employment problems may also be difficult to cope with in structured training and experience courses. Programme sponsors have made considerable efforts to respond to these difficulties, but I feel that further initiatives are called for.
These points serve to illustrate the need for the initiative being taken in the form of this Bill and the setting up of the agency. I have discussed the proposed agency with, among others, representatives of the Irish Congress of Trade Unions, the Federated Union of Employers and I have taken their views into consideration in formulating the proposals before Senators.
Certain conclusion can be arrived at from what I have been saying up to now. Firstly, we have a sizeable number of our young people unemployed. Secondly, labour force projections point to a continuing situation of more young entrants to the labour force than retirals. Thirdly what has been done up to now is not an adequately comprehensive and co-ordinated response to the problem. It does not cover the entire transition from school to full integration in the workforce and it is of limited benefit to disadvantaged young people.
The Government in their programme for 1981 to 1986 recognised these considerations and the need for special provisions to deal with the acute problem of youth employment. The Government therefore decided to establish without delay a Youth Employment Agency to integrate and radically extend the schemes that exist under the separate auspices of a number of State enterprises. The Government intend the new agency to move as rapidly as it physically can to the point where an additional 20,000 young people will be catered for by existing and new schemes.
I repeat this figure of 20,000 since some confusion arose in the Dáil over the number of young people to be assisted by the agency and the type of operations involved. The argument has been that the agency will cater for much the same numbers of young people as in 1981. I should like to put the record straight on these two points.
As regards numbers, it is my intention that about 40,000 young people will be catered for in 1982. This will be an increase of 20,000 or, in fact, a doubling of what is being done for young people at present in 1981. In addition, the agency will intensify their efforts on behalf of those who are more than six months out of work; it is among this group that the most acute problems of disadvantage are concentrated.
These measures will be designed to ensure that no young person is left without some form of work, training or work experience within a relatively short period of having completed his or her education.
I should like now to give the House an indication of my proposals for dealing with the problem. The Youth Employment Agency Bill before us is intended to implement these proposals. In brief, the Bill has two parts dealing firstly with the establishment of the agency itself, and secondly, with the collection of the levy.
The first part embraces sections 2 to 14. These sections provide for the formation and registration of the agency, their constitution as a limited liability company under the Companies Acts, their memorandum and articles of association, the board of directors, the holding of shares and the furnishing of balance sheets, the winding up of the agency and the usual provisions under which directors and employees of the agency cannot be Members of the Houses of the Oireachtas or of the European Assembly.
The levy to finance the agency and the schemes is dealt with in sections 15 to 26, the main points being the methods of collecting the levy and the channelling of funds to programme sponsors. The European Social Fund will also be involved in the funding of the programmes concerned.
The Youth Employment Agency must be competent and efficient and have a flexibility to contemplate initiatives and embark upon new departures. With these considerations in mind I am proposing to establish the agency as a limited company. Approval of the Oireachtas to this approach is required in the legislation which we are now discussing. Its advantages lie in that the agency can be quickly established and operative and can also have the flexibility not alone to assess, co-ordinate and expand existing activities to make a distinctive contribution in their own right towards alleviating the problems of youth unemployment.
I propose to appoint a board of 11 members to direct the agency's operations. Two of these would be representative of employer organisations and two of youth interests. In addition a representative from the Ministers for Education and the Environment respectively will be appointed, also two members of the Irish Congress of Trade Unions and, finally, three board members including the chairman, will be appointed directly by me as Minister for Labour. I am confident that this board can make a most fundamental contribution through directing the activities of the Youth Employment Agency towards fully realising the objectives for which they are being established.
The memorandum and articles of association of the company will incorporate the following detailed terms of reference:
(a) To review the effectiveness of youth employment, work experience and training programmes with particular reference to their impact on disadvantaged youth;
(b) to extend existing youth job creation, training and work experience programmes, while also providing for increased penetration for such programmes among disadvantaged youth;
(c) to arrange for assistance to be given to voluntary, social or community organisations to provide employment for young people where this is not possible under existing programmes;
(d) to arrange assistance for young people with the establishment of an enterprise in areas other than those in which existing bodies, for example, the IDA, county development teams and AnCO, operate; in particular the agency should promote, through education and publicity, the concept of self-help and enterprise amongst young people, either individually or in co-operative endeavours;
(e) to carry out and administer youth employment and training schemes where there are gaps in existing programmes;
(f) to co-ordinate and integrate the various schemes, ensure there is no duplication between them and, in this connection, to set general standards for the various schemes in relation to such matters as the ages, wages and allowances of participants;
(g) to identify areas outside the scope of existing programmes into which Government aid to young people could be extended, for example, agriculture and other primary activities;
(h) to consider the possibility of improving the access of unemployed young people to a range of educational and training courses in the private and public sectors possibly by means of a voucher scheme for eligible youth;
(i) to submit views, as appropriate, on educational policy and its effectiveness in preparing young people for working life.
As regards the detailed activities of the agency, this will be a matter for decision by the board. The composition of the board, representative as they are of a broad spectrum of society, will put them in a position to devise and implement new programmes where existing schemes are deficient. The proposed terms of reference leave scope for such an approach.
Equally important is the need to maintain and, indeed, improve the quality of existing schemes as they are expanded. I regard this as being one of the central roles to be entrusted to the agency.
I can see scope for the agency to take new initiatives in a number of areas. For example, there are many new areas of social and community work emerging. The agency could take the initiative in looking at young peoples involvement in the growing field of child-care services, home care for the aged and similar activities. Assistance will also be given with the development of enterprises.
While dealing with the question of new initiatives by the agency, I would like to refer to the assistance which the agency will give to local areas and rural areas. The register of young job seekers prepared by the NMS will indicate the areas where excess labour exists and where there is a need for assistance for young people. The agency will then arrange for programme sponsors to come forward with the necessary programmes.
I could envisage here the local organisation of an integrated series of activities which take account of local circumstances, in particular building education and training elements into all programmes including those now providing only short term employment. This will involve cooperation between, for instance, local authorities, programme sponsors and VECs. It is fair to say that existing schemes and arrangements do not cater for local areas and there is a clear need for the type of overall approach that will result from the activities of the Youth Employment Agency.
The agency will also help rural areas. One of the terms of reference is to identify areas outside the scope of existing programmes into which Government aid to young people could be extended. Under this heading, I anticipate a concentration on employment in agriculture and other primary activities.
In carrying out their activities the agency will, of course, be in continuous consultation with development bodies, including regional and local development bodies.
The overall objective is to equip young people to enter working life, and to take emphasis off "make-work" schemes. The agency's composition, and their ability to take an overview of the whole area of the transition from education to working life, put them in a unique position to make improvements to existing schemes and to devise new programmes.
The Bill provides also for the collection of a 1 per cent levy on all income. It is my intention to devote proceeds of the levy as far as possible directly to the Youth Employment Agency in the normal manner. I will make funds available to the agency following their submission of an annual outline programme to the Minister for Labour and subsequently following receipt of regular progress reports.
The subhead in my Department Vote will also contain a provision covering the direct channelling of funds to youth training and employment programmes with the sanction of the Minister for Finance. This provision is intended to cover any difficulties which may arise in channelling funds to programme sponsors in 1982.
I intend, for a number of reasons, to finance both the existing schemes catering for 20,000 young people and the additional schemes for a further 20,000 young people from the proceeds of the levy. I considered financing the existing 20,000 figure from general taxation and the additional 20,000 from the levy. I can say immediately that I cannot accept this proposition. Such an approach would quite simply waste money, lead to a large bureaucratic structure and would, worst of all, lead to confusion about what we are doing. I want a co-ordinated approach between what has been done in the past and what will be done in the future. My present proposals are for a new start that will be cost effective, avoid duplication and give the best value for money.
As indicated in the Government's programme it is intended to defray the cost of the operations coming within the scope of the Youth Employment Agency through the medium of a 1 per cent levy on all income. This 1 per cent charge will be collected by means of an appropriate increase in persons health contributions and the machinery used to collect the health contributions will also be used to collect the levy.
Three different types of income are covered, referred to in the Bill as reckonable earnings, reckonable emoluments and reckonable income, all of which will be defined by me in regulations which will follow the precedent set in the case of health contributions.
Briefly, all income to be levied will consist of income which is assessable for income tax. Reckonable earnings will cover income from insurable employment. This category refers to the PAYE sector. Reckonable emoluments will cover income from non-insurable employment and from occupational pensions. The non-insurable employment category refers to the self-employed, certain farmers, directors fees and so on. Reckonable income will cover income from all other sources such as income derived from the profits or gains from farming, income from investment and so on.
Certain social welfare recipients will be exempt from the levy as will medical card holders who are not in employment, while for those card holders in insurable employment the levy will be paid by their employer.
In addition, an amendment which I introduced in the Dáil yesterday excluded other social welfare payments now liable for health contributions. Preliminary consideration is being given to exempting low-paid workers from payment of the health contribution. Whatever is decided in that instance will be taken into account in deciding liability for the youth employment levy.
In view of comments made by certain Opposition Deputies in the Dáil yesterday, I would like to emphasise in that section 15 of the Bill, which remains unchanged since the original drafting, makes it quite clear that the levy applies to personal income. Corporate profits, not being liable to the health contribution, are not covered by the levy. Personal income which is derived from profits, such as dividend, and income for investments, will of course be covered.
A levy of 1 per cent on all incomes covered by the health contribution, with certain exceptions for medical card holders and social welfare payments, is expected to yield £63 million in a full year and £40 million from 6 April 1982 to the end of 1982. Between April 1982 and December 1982 we would expect to receive £40 million.
Social Fund receipts will depend upon the mix of programmes carried out by the agency. In brief, we obtain from the Social Fund 55 per cent of our training costs and £11 per week per worker on a work experience job programme.
I have given detailed consideration to the question of having a youth employment fund as suggested by some Deputies in the Dáil. I rejected this idea, however, on the grounds of the complex accounting procedures involved and also because funds would not become available until somewhere towards the middle of 1982. I intend to have the agency in operation long before that date. The method of financing which I have adopted is simpler. It provides for the payment of the levy on reckonable earnings and reckonable emoluments to be paid into the social insurance fund and from there to be paid to me. Levy on income other than reckonable emoluments will be paid direct to me. I will pay all the money into the Exchequer and it will become available to the agency in a subhead in my Department's Vote.
The argument was made in the Dáil that the levy is an additional tax. I would emphasise that the overall level of direct and indirect taxation will be set by Government in formulating their budget. The existence of the 1 per cent levy will be taken into account when this is being done. In this sense the levy is not an additional tax — it is a positive step taken to identify a given amount of revenue as being devoted entirely to the important task of combating youth unemployment.
The use of the moneys raised must be taken into account in looking at the impact of the levy. I intend to improve the concentration of available resources on those most in need — young unemployed people in our poorer areas. By this means, along with the exemption of social welfare pensions and other payments from the levy, I am ensuring that the effect of this new measure will be progressive.
The Bill provides for the variation of the levy. This provision is designed to allow for a reduction of the levy at any time should the proceeds be greater than is felt necessary for the operations of the agency. Such a situation would come about with a reduction in the extent of the youth employment problem.
I would add that an increase in the levy above 1 per cent cannot occur unless the Bill is changed in the Dáil and Seanad. The variation can only be made downwards.
I accept that the agency will not solve all the problems of youth unemployment. There is, of course, the need to do all we can in the normal way to increase employment and so provide additional permanent job opportunities for our young people. We will continue and intensify the traditional forms of job creation and our efforts to increase the productive capacity of the economy through increasing competitiveness. On top of this the Government will be taking a major initiative in the establishment of a national development corporation soon. This corporation will be a major asset in the development and expansion of productive employment. While the agency will be training and investing in our young workforce, the corporation will be ensuring that the exploitation of stable commercial opportunities in either the private or public sector will not be constrained by under-capitalisation or other considerations.
There is a need to develop our manpower as well as to develop our capital structure. Manpower is the area where we have a competitive advantage over other EEC countries. Our young people are our future workforce and, as Minister for Labour, I am proud to have the opportunity of taking a new initiative in the development of this manpower. The Youth Employment Agency, through increasing and improving the training, work experience and other job-creation opportunities available to our young people, will enhance our work force, make it more competitive and increase its earning potential. This must be seen not only in the traditional sense of improving our position as a potential location for new industry. The building up of the skills of our young workers will of itself contribute to job creation by our own people. The work of the agency will, I hope, bring about an increase in the number of young people who have the capacity to start, manage and succeed in their own enterprises.
These are the objectives of the Bill and I hope that the Senators will be able to add to the ideas and the work that will be done by the agency. I commend the Bill to the House.