Jobs Potential in Services Sector: Motion.

Dr. Henry

I move:

That Seanad Éireann, recognising the urgent need to create jobs in the services sector, calls on the Government to implement immediately the recommendations of the National Economic and Social Forum Report No. 7.

I thank the Minister for Enterprise and Employment, Deputy Bruton, for coming to the House tonight. Rarely has anyone put down a motion so long in advance and had such good fortune in terms of what was announced in the newspapers today on the same topic as I. We tabled this motion on the jobs potential in the services sector some time ago. Today we had welcome news in the labour force survey about the increase in employment. There has been a real increase of 49,000 jobs. This must be very satisfactory from the Government's point of view given that the number on the live register has gone up and down so much and has not shown a great improvement. It shows that, although the number on the live register is regrettably high, there has been a welcome increase in the number with jobs in the past year. I gather it is the largest increase in the near history of the State and it is the largest increase per capita in the European Union.

It was interesting to note that, of the 49,000 jobs created, 38,000 are in the services sector. Most surveys I have read on jobs in the services sector have suggested that they are all low paid and mainly for women. However, this survey showed that 50 per cent of the jobs were for men. I have no idea how well paid they are, but I will address that later.

The services sector is an important area of employment in a developed economy. The more developed an economy the more likely it is to have plenty of jobs in the services sector. We pride ourselves on becoming a more developed economy. It is a labour intensive sector and there is normally a lot of room for expansion. We have the smallest proportion of employees in the services sector in the European Union. We are far behind the United State where 70 per cent are employed in that sector. The public is beginning to realise the importance of this sector.

Recently when the jobs at Intel in Leixlip were announced, one of the first things we heard was that it would create at least another 1,000 to 2,000 spin off jobs in the services sector. I was delighted to see a young man who owned a small Italian restaurant in Leixlip being interviewed about the possibility of increasing the size of his restaurant. He said he would increase its size and he would go up market. He pointed out that if people were employed in manufacturing in the area they would come out at lunch-time and in the evenings for celebrations. He graphically illustrated how improvements in employment in the manufacturing sector can have a spin off effect on the services sector.

I am a member of the National Economic and Social Forum. The most useful report we produced was that on the jobs potential in the services sector. As I said, the jobs potential in this sector is well known. However, such jobs have always been looked down on because they were often part-time, temporary, with low status and considered of little value to the economy. I believe this has been due to poor employment practices. Now the quality of service has been improved, many jobs have improved. It is difficult to categorise whether a job is in the manufacturing or services sector because so many services are involved in industry today. I do not see why we should look down on part-time jobs because it is likely that there will be fewer 39 or 40 hours per week or 52 weeks per year jobs for life. We should remember that Denmark has a high number of part-time employees and it is a prosperous economy.

One of the most important elements in the forum report was the urgency with which the Government must tackle the development of closer co-ordination between taxation and social welfare services. We were promised a social welfare-taxation card, although I have not yet seen it. This is a serious impediment to people accepting jobs which may not be long-term because they are afraid of losing benefits and they will need to be on unemployment benefit for weeks before they return to their previous situation. It is not the money which worries people but the loss of fringe benefits, in particular the medical card. I asked previous Ministers when discussing unemployment to try to ensure that the position of children is not affected so that parents would be encouraged to take up even short-term employment.

The public sector has a considerable number of employees. I am fascinated when I hear people calling for cuts in the number of people employed in the public service. Are they calling for cuts in the number of nurses, medical personnel, gardaí or teachers? I will spare civil servants' blushes by saying they are also valued members of the community. Earlier today we spoke about the establishment of the Irish Medicines Board — an area in the State service where there is enormous potential for job creation. Dossiers on the evaluation of drugs valued at £50,000 each will be sent out from the Central Medicines Evaluation Agency in London. Because these drugs will be partly in the public service area, will we say we cannot do these evaluations when we know it would create an enormous amount of employment for those in the technical and professional areas?

Sometimes I think it is amazing that there is a private services sector in this country because we have done little to encourage it until recently. The setting up of the county enterprise partnership boards was a good move and the much maligned FÁS has done a lot in terms of training. A large part of this report on the jobs potential in the service industry focuses on training as well as taxation. Unfortunately until recently we looked on training as something which people picked up as they went along. Someone once said to me that most waiters in this country appear to be waiting to go back to college. However, with the improvement in the tourism industry and the demand by visitors for improved services in hotels and restaurants, we have had to set up better courses in CERT and Cathal Brugha Street. I commend both on their efforts. Without high standards in these services we will not get return visitors and that must be an important aspect of education and training.

Manufacturing firms devote too little time to research and training. It is important to remember that both areas provide employment. Very little time is spent in firms on managerial reorganisation and think tanks.

The area of help with domestic chores within the home has been seriously neglected. I ask the Minister to look at the taxation situation in this regard. We spend an enormous amount on carers and some very highly paid people have to give up work to care for elderly people, in particular. It must be within the remit of the Department of Finance to make tax exempt the employment of those who look after the elderly in their home, so that the person whose responsibility they are can go out to work. The same applies to the employment of those who mind small children. That would allow people who have to give up lucrative jobs, where they contributed a great deal to the economy from the point of view of taxation, to stay in their jobs and to employ someone else who will be paying taxes.

I cannot understand why there are such difficulties with this, but it is an area which needs to be addressed. The report strongly recommended that this should be made possible and that child care provision should be made affordable, accessible and available to parents and their children. It is important to remember that these child care facilities will employ other people.

I received the banks' charter for small business customers in the post this morning. People have great difficulties in getting bank loans or financing to start small service industries. It appears to be easier to borrow £1 million than to borrow a few hundred pounds to buy a sewing machine in order to start a small repairs business which might employ one or two people. I strongly suggest to the Minister that he should try to make the banks more realistic as they seem to look on such people as bad debts. I know that one must save with a credit union before one can borrow from them. However, they have told me that they frequently give loans to people to set up small businesses in the services sector and that they have a 100 per cent repayment record. Therefore, such potential borrowers should not be automatically regarded as liabilities.

I wish to commend First Step, which was set up by Mrs. Norma Smurfit and some friends and which has done some of the most imaginative work in this country in giving small amounts of money to people wishing to set up small enterprises. They say that they have an enormously high success rate and very little defaulting on repayments.

I know that it is important to employ 200, 300 or 1,000 people. However, if one reads the report in todays newspaper and considers how many small enterprises were involved in creating those 38,000 jobs, one realises that far more attention should be paid to promoting in every way possible the services industry.

Mr. Quinn

I second the motion, on which Senator Henry has very competently and capably spoken I am delighted that this Minister is here tonight because he does not need to be educated in this area. He has clearly identified that jobs in the future are unlikely to be in the manufacturing area.

In 1985, I visited the company in Japan which makes the weighing scales for my supermarket company. I had never before seen robots in action and they took the sight out of my eyes. The weighing scales moved along a plant line and in two seconds a machine with eight arms screwed in eight screws to join two plates together. The owner of the factory explained to me that not only was this more efficient in time and, therefore, less costly, but he did not think that the most sldlled craftsman could do the job as accurately and well as the robot could. On that day ten years ago it jumped out at me that jobs in manufacturing would be threatened unless they could rely on crafts which could not be done by machines. However, there are very few such jobs as it seems that machines are capable of doing a large amount of the work in manufacturing. Therefore, most manufacturing jobs in the future will be threatened.

Senator Henry referred to the United States, where smaller and smaller numbers of people are needed in agriculture to produce enough food for the world and where very small numbers are needed to produce enough products for the world. People will be needed in the services sector, where the United States has been so successful. Senator Henry is right that Ireland has one of the lowest levels of service employment, which is an opportunity rather than a threat. We need to ensure that is understood around this country because many sectors of the economy do not believe that jobs in the services sector are real jobs. That is a selling job which we must do as a nation if we are to overcome the hurdle of recognising that jobs in the future will be from the services area and that such jobs are real jobs. However, they must give a value, which they have not always done in the past.

Tourism is one of the areas with the greatest potential for jobs. I arrived at a very big, multistorey American hotel last year after travelling to San Diego via Dublin, London and Los Angeles. As our taxi pulled up at the door of the hotel, the boot opened automatically. The doorman opened the door and said "Mr. Quinn, you are very welcome, delighted to have you here". I was very impressed that he recognised me and was very puzzled how he did it. He asked me where I had come from and I said from Dublin. He asked if it had taken a long time and I said that it had taken 16 hours and my wife and I were quite tired. He said for me to go straight to the reception desk and they would bring my bags to my room. As I walked to the desk the receptionist looked me in the eye and said "Mr. Quinn, you are very welcome, we are delighted to have you here. You must be exhausted having come all the way from Ireland. Did it take you about 16 hours?"

I was very impressed with the level customer service, but I was puzzled. The following morning I strolled down with my newspaper under my arm and I watched what happened. The driver of the taxi which pulled up to the door automatically opened the boot so that the doorman could see the name on the luggage. He opened the door and said "Mr. Butler, you are very welcome, glad to have you with us". As Mr. Butler unloaded his golf clubs the doorman asked if he had stayed there before. Mr. Butler replied that he stayed there in November when he had shot a marvellous round of golf. The doorman asked him about this and he said that he had shot his best round of golf ever and was only two over par. As Mr. Butler went into the reception area I could see the doorman speaking into the little microphone inside his jacket pocket. He was telling the receptionist that was Mr. Butler who shot a round of 72 in November.

That is a marvellous story because it shows how technology helped customer services which were beyond what the competitors were able to do. We are in danger of not recognising our competitors and, therefore, losing out to them. The French Minister for Tourism undertook a bon jour campaign to try to make visitors more welcome because the French doormen and waiters have a name for not being the most hospitable. Ireland has fewer returning guests than most of our competitors in the tourism business.

We must change the attitude of the powers that be, including the large number of people who do not believe that service jobs are real jobs. We must also change the attitude of those involved in getting customers to return and we must recognise that we need technology to do that.

The Minister for Enterprise and Employment, Deputy Bruton, joined me for lunch two weeks ago in the Dáil restaurant where we met a group of Americans — I met them in June — who were planning to open a factory in Ireland. It was an interesting discussion. I asked them what the most important factor was in setting up their business. They said they were producing a product for a customer in Milan whose most important factor was time delivery. They asked him how long he was willing to wait for delivery of the products to his warehouse. He said he was not willing to wait longer than four days. The Minister heard them say that was why they wanted to set up their plant close to Rosslare or Dublin so that they could get to places such as Milan in four days.

The west is disadvantaged as regards manufacturing services. However, thanks to communications the services industry can now be located anywhere in the country. Opportunities exist to place service industry jobs in the west. The Government should consider decentralising some of those industries which do not rely on transport, but on telecommunications, to the west. We should avail of the opportunities which exist at present.

Minister for Enterprise and Employment (Mr. R. Bruton)

I thank the Senators for raising this issue which is, perhaps, tailor made for me because in Opposition, as Senator Quinn knows, I published a White Paper on the services sector. I was encouraged to do that at the time because manufacturing worldwide was stable, if not declining, and growth in employment was coming from the services sector. That is not to say that manufacturing is not important. Certain services in that area which were provided in-house can now be successfully developed outside it, either in the research and product innovative area, where there might be a buy-in service, or in the marketing and customer services area. Those elements of the manufacturing equation are becoming footloose. Senators have correctly pointed out that Ireland is well placed to avail of the opportunities of the growing footloose nature of those services. They can now travel across the globe and locate in countries which offer the necessary supports, including talented people and a proper working environment. There are great opportunities in this area.

Since the internationally traded services became an area on which IDA Ireland and Forbairt focused — that happened in the past ten years — employment has grown threefold in those sectors. Our focus has been too narrow in the services sector in that we focused exclusively on those relatively limited areas of Internationally traded services. The services sector is larger than that and it is proving to be the dynamic sector in terms of employment growth. It has a lot of advantages. It costs less to establish a job than in manufacturing and it tends to employ considerably more labour as a proportion of sales. It also tends to purchase more materials locally than the manufacturing sector does; it sources its materials closer to home. As a result, it is well placed as a sector which levers up activity in the rest of the economy.

For those reasons, it was appropriate that the National Economic and Social Forum addressed this issue in its report. I was on the National Economic and Social Forum when it first approached this matter. There was a lot of commitment by members to develop this opportunity. I have the privilege of being the person who is trying to put into operation some of the principles it suggested.

Senator Henry mentioned that 49,000 extra jobs were created, which is unprecedented; we have never enjoyed that much growth before. It is notable that of the 49,000 jobs created, 36,000 were in the private market services sector, which is represented by Senator Quinn, among others. It is clearly a dominant sector. That growth is not just a flash in the pan this year. Over the past 20 years employment in the services sector grew by approximately 54 per cent, while industrial employment grew by only 1.5 per cent. It illustrates that it has been performing well over a long period. The ESRI predicts that will be repeated in the future and that we will continue to see the bulk of extra employment coming from the services sector.

It is also interesting to note that we tend to have lower employment growth than the other OECD countries. There are reasonable grounds for hoping that although services have been exceptionally strong in Ireland in recent years, they are still performing short of their full potential. That background gives us a great platform from which to launch an aggressive policy on the services sector and to release its potential. At a time when we recognise that unemployment is still our top priority, it is an important sector which is well suited to the comparative advantage of the people and is well attuned to addressing our employment needs.

A Government of Renewal also recognised that in the past we ignored the potential of the services sector. It states:

The traditional approach of supporting industrial development has been expensive for the taxpayer, but has failed to produce sufficient jobs or a strong indigenous sector. It ignored the potential of services, by focusing primarily on manufacturing. Alternative approaches will be examined. These will embrace increased attention to services, including tourism, as well as manufacturing. Here will be a concerted programme to help small business in the creation of enterprise and employment.

We have consistently addressed that agenda since we took office. Senators will be aware that in the last budget we addressed one of the critical issues for the services sector, the cost of employment. If a sector for which the wage bill is two and a half times the importance of the manufacturing sector, it will be more sensitive to wage costs. The measures we took in the last budget, including the reduction of employers' PRSI, the introduction for the first time of an allowance for employees' PRSI and the extension of the employers' PRSI exemption, were designed to narrow that critical tax wedge.

We have also for the first time recognised it is anomalous that heretofore the service sector should have paid four times the rate of corporation tax of the manufacturing sector. We have started to address that by reducing the standard rate of corporation tax from 40 per cent to 38 per cent. There is a clear recognition that what we have started in the tax area must continue in the future.

However, we are also trying to introduce specific measures that will help address the needs of the service sector. Many Members will be familiar with the small business operational programme, which I launched recently. A key measure in it is what is called the access to finance scheme. To answer Senator Henry's point, it does address the issue of access to bank loans, which can be a problem for emerging businesses. It is essentially a subsidised loan scheme with money at 6.5 per cent over seven years. For the first time this scheme has been opened to include the service sector as well as traditional manufacturing. It is a breach in the dams in that we are openly recognising that the service sector has as much to offer as the manufacturing sector.

Of course, we have to be sensitive to what the economists would describe as displacement. We cannot use State money to subsidise a service activity that is in direct competition with another service activity. There must be a test to ensure there is no wasteful use of such money. The four banks involved have to look at what is being proposed and ensure that no copycat enterprise, which may put another firm out of work, is set up. It has to add value and employment. However, the principle is important.

There are two other important measures in the small business operational programme. The first is the opening up of public procurement to small companies. There is great potential in the Public Procurement Bill, which it is estimated will run to £500 million a year — I am not speaking ex cathedra— and that will open up opportunities for our smaller companies; they are our most predominant service companies. We have a thriving small native software business and we need to open up public procurement for those businesses. The measures in the programme will first be designed to provide the information sought by the public sector and second to assist the smaller companies in preparing successful tenders.

The other important element of that programme is a new innovative programme which will be run by Forbairt. It intends to look at the new service business opportunities that are emerging. Technology in particular is throwing up many new activities where Ireland arguably has strong opportunities to advance. This programme will identify those opportunities; promote new startups and develop existing service businesses into the identified areas; try to build networks, business alliances and partnerships across Irish service firms and look at the electronic information services area where there are undoubtedly new and exciting opportunities.

Since I am working on the NESF and am putting together a response for the Government in this area, I have been looking at the many recommendations that refer to the services sector. Senators will be familiar with the proposal that surfaced on a few occasions in different reports — developing a threefold categorisation of support to services. Traditionally, manufacturing was the dominant sector while all others were left out. Internationally traded services were then allowed to qualify. What is now sought from Government is the idea that there would be fully and partially eligible activities, activities that would qualify simply for information purposes and broad, not specific, types of supports within the company. There would be access to information and mentoring, but specific support would be confined to areas where we saw potential. That area has been recommended by both the task force on services set up by the previous Taoiseach and the small business task force. It is a challenging area and is one I would like to address.

This also throws up the difficult issue of designation because one has to find out what activities should be singled out. However, it is exciting because there are exciting opportunities in the environmental and energy management services, media design and logistics and other services that have been spawned by technology. We need to recognise that we should be trying to support them and help them get off the ground.

Senators will also know that the services are fully eligible for support under the county enterprise board. We are pushing the boat out in supporting service industries and not confining our attention to the traditional manufacturing area.

The tourism operational programme is a significant vehicle for employment opportunity in the service sector. Under that operational programme it is planned to invest £652 million in Irish tourism by the end of the century. Some £84 million will come from the Exchequer while £369 million will come from the EU. It is the largest ever planned investment in Irish tourism.

The programme has set itself ambitious targets. It wants to achieve annual foreign exchange earnings of £2.25 billion by the end of 1999, create 35,000 jobs in the sector, improve the seasonality factor — 75 per cent of visitors to come outside the peak as compared to 70 per cent at present — and improve the product range and quality and improve the service standards and value for money. Senators recognise that this important area should be addressed.

Unfortunately, we still have remnants of anti-competitive and restrictive practices and they often make it difficult for people to establish their businesses and get them up and running. We should strengthen our existing competition Acts in this area. We are unique among European countries in having a competition authority that cannot pursue third party complaints and take enforcement action against cases of believed anti-competitive or dominant practice. We should have a competition authority that can, fearlessly and independently of any political party, pursue an agenda of opening up competition and prevent artificial barriers to entry for people who want to get started. Legislation on this matter is currently before the House and I hope to press ahead with it. It has been held up because of difficulties with the merger area, of which many Senators will be aware.

What will ultimately drive the services, like any other sector, will be profit and the opportunity to compete vigorously. As a Government, we must ensure we do not put obstacles in the way through our tax laws or other actions of Government or tolerate anti-competitive practices.

Senator Henry raised the question of training and research. Anyone looking at where Ireland Inc. will be in the next ten years will see that our main challenge is to reposition our economy. We are facing global competition from lower cost countries. The only way we can stay ahead of the posse and continue enjoying our current living standards is to invest in training, innovation and research. That requires not only spending in this area but a change of management approach.

The recent studies of world competitiveness revealed that Irish management tends to have poorer capability to frame long term business strategies and as a result downgrades innovation and investment in human resources. However, it is those factors which will at the end of the day maintain our competitive position into the next century and ensure we are a vibrant economy. My Department is keenly addressing those areas. The research side is the responsibility of the Minister of State, Deputy Rabbitte, following on from the STIAC report. In the training and human resource area I am involved in drawing up a White Paper to address those extremely challenging issues ahead.

I thank Senators for raising this issue because it is important we keep it before us in this manner. There is always a danger that reports will fall by the wayside and be forgotten but I can assure the House we will endeavour to put in place clear and positive responses. We have already taken some measures and will continue to build a coherent response to the challenge and opportunity offered by the service sector.

Mr. Fahey

I support the motion put down by the Independent Senators and I am glad they raised this most important issue. I welcome the Minister and his officials to the House. On the last occasion we debated the industry sector, I said one good development in terms of job creation in the last few years has been the setting up of the small business section in the Department of Employment and Enterprise. The work done by the section is bearing fruit and I compliment the Minister on his initiatives in this regard; those of his predecessor were also most welcome.

However, this report points to the major difficulties facing the small business service sector. It outlines the many barriers to employment creation, such as the competitiveness of the sector; the anti-employment bias of our taxation system, mainly the preferential treatment of manufacturing over service industries; and most importantly, the heavy compliance costs of small industry, which applies to both manufacturing and service companies.

The report states that many of the services mentioned are currently carried out by people from their homes or in the black economy. Unfortunately, the message from the Seanad tonight is that those people must stay in the black economy — and I do not make that comment lightly. Unless and until we politicians come up with fundamental, radical changes in those three areas, there is no way anyone from this sector can come out of the black economy. It does not matter whether the Minister is from Fine Gael, Labour or Fianna Fáil, we all stand indicted in our failure up to now to make those changes. I hope we see in the forthcoming budget the changes necessary to bring people out of their homes or the black economy to create sustainable jobs in this sector, because we all know it has potential to do so.

The forum's main concern is:

to decisively alter the anti-employment bias of our taxation and social insurance systems... Against that background, and in the interests of moving forward from the present ad hoc and piecemeal adjustments made each year at budget time the Forum recommends that a medium-term tax strategy should be put in place, with more clearly defined targets over the next few years[.]

I hope in the budget next January we see fundamental changes in the taxation and social welfare arrangements which are the most significant barrier to the creation of jobs in this sector. The report goes on:

the aim should be a further reduction of the tax wedge at low income levels through reductions in income tax and PRSI burdens, including greater integration between the tax and social welfare systems[.]

That is the major inhibiting factor to job creation in the service sector. In my clinic this week I heard two examples of the practical position which applies at present. In the first case, a woman recently obtained a job in the service sector. Prior to her employment, her husband was in receipt of £147 unemployment assistance plus a mortgage subsidy of £30 per week. Her employment in a nine-to-five, 40 hour a week job gave her £177 gross pay and her husband's unemployment assistance was reassessed so that he received £18. The net difference of his wife working a 40 hour week was £18. The obvious message from us politicians to that woman is that she should stay at home for the sake of £18.

I was involved on the previous Joint Oireachtas Committee on Unemployment and one initiative we recommended was that the husband should be allowed to work one or two days a week and earn perhaps £60 instead of the £18. Every Department we dealt with, save the Department of Enterprise and Employment, came up with obstacles which prevented such a person working on a voluntary basis for some of the unemployment assistance he received, or obtaining more assistance money for work beneficial to the community.

The second example concerns two brothers, one of whom had left a job as an electrician while the other had sold his house in Dublin to return to Galway. They wanted to set up a small business and went to one of the four commercial banks. The brother who sold his house had lodged the £25,000 proceeds with the bank and wanted to borrow on the strength of it — he did not want to put the proceeds into the business. The most the bank would lend him was £20,000, even though he had £25,000 on deposit, and would give him no other assistance, even by way of overdraft or a leasing arrangement for a vehicle critical to the business.

There was no mention of the subsidised finance for that type of start-up small business. I approached the bank, who told me it operated the same lending criteria for such a start-up business — it did not feel this was appropriate to the start-up finance scheme. Those two brothers have been given no incentive from that banking arrangement to start a small business and they now have to rethink it.

The four banks came to the Oireachtas Joint Committee on Small Business and Services to tell us about the progress they were making in the allocation of that money. It was clear they were not prepared to take risks for jobs. They will give that money to the best customers which will give them the safest risks. Unless we can get over our difficulties on taxation and the banks' approach to lending money to small business people, we will not get the jobs in the service sector for which we so earnestly strive. I hope a radical approach will be taken in January which has not been taken by either party in Government up to now. If that is done, some of the practical difficulties on the ground may be overcome.

Mr. Farrelly

I welcome the Minister to the House and I compliment the Independent Senators for the opportunity to discuss this important issue which all Members encounter daily. Senator Fahey mentioned some of the problems which arise.

During the debate last week I commented on the cost of employment. All Members are aware of the real problem encountered by people who wish to employ others. Up to recently if one spoke to anybody in the employment sector, such as small business operators, one would hear that at the end of any given year they hoped to reduce the number of people they employed over the next 12 months. This problem arose as a result of the cost of employment.

I recognise the work carried out by the Government this year in reducing the cost of PRSI. This will give an incentive to employers to take on extra workers. However, it would be welcome if a once off major injection of £200 million or £300 million was made available by the Government for a budget provision towards reducing the cost of PRSI to employers totally. This would be a major step. It would be a statement by Government that it wants employers to take on extra people and that this employment will not be taxed.

We should consider the number of people employed in the services sector in recent years and the figures produced yesterday. Approximately 39,000 people are employed in this sector and it shows the initiative of many people throughout the country. It also demonstrates the efforts of the many agencies in helping those people to get off the ground.

The county enterprise boards have been a help to individuals who wished to start their own small business but who were not in a position to receive help from the IDA or others. The boards have not solved all the problems and they are sometimes wary of allowing somebody to start up in competition to another operator. However, as I pointed out previously, competition is the life of trade and if people have a good idea they should be given an opportunity and help to get up and running.

Many people have been helped recently by schemes and the county enterprise boards. Some Members of the House have complained bitterly about the lack of progress being made by some of the boards, but it ultimately comes down to the amount of funds made available to them. Nevertheless, they have made an input to helping some people start their own business and it would be wrong not to recognise this point.

Other speakers mentioned the banks and the difficulties faced by individuals who do not have bank records in getting funds to start their own business. There is an old saying that if one owes millions of pounds to a financial institution, the institution will play ball because that is the only chance it has of getting its money back. However, if one seeks £4,000 or £5,000 or one owes that amount, the institution is in daily contact by telephone. If somebody is overdrawn by a small amount of money, the institutions almost live with them. People who want to start their own business are frightened and decide against taking out a small loan to do so.

The figures produced indicate the number of people who have started businesses or who are employed in the services sector. They show that many of the jobs which were in the black economy have been removed from there because of the help provided by the county enterprise boards and others. Progress in this area has helped to reduce the numbers in the black economy.

I agree with Senator Henry about the position of individuals who take up jobs but immediately find that their medical cards are withdrawn. The Government should decide that the children of these individuals will continue to be covered by the medical card. If that were the case the people concerned would be quite happy; they are left in a difficult position when they are cut off completely once they go over the limit. This affects many people at present and prevents them taking up employment when they consider the overall costs involved and the loss of the medical card if they have a young family.

The Minister mentioned tourism. I have a deep interest in this area and I have had the opportunity to examine changes the industry should make. There are plans to invest £653 million in the tourism industry under the operational programme up to the end of the century. Of this, £84 million will come from the Exchequer and £369 million from the European Community. However, I have major difficulties with the way in which assessments are carried out with regard to tourism investment.

We have reached a position in October 1995 where many foreign companies are willing to consider investing in this country's tourism sector. Many companies are around as result of the huge increase in the number of tourists who visited Ireland this year and the fact that the ceasefire is heading into its fourteenth month. We hope it will continue and that further progress will be made in that area. I have no doubt the Taoiseach and others are working diligently in that regard.

More than 4,000 boats used the recently reopened canal between the Shannon and Ballinamore. It is mind-boggling when one thinks of what can happen when proper foresight is available and proper investment made. There is no doubt this area will reap the benefit of the investment made there when one considers the number of boats which used the canal this year. It is quite staggering.

If investors are available, particularly foreign investors and the many companies in Ireland which are willing to invest in improving the tourism base and product which exists, there should be no delay in dealing with and approving their applications if the proposals stand up. The powers that be should be allowed to get on with investing foreigners' money in this country. This will ensure that when the extra people arrive we will get the benefit of the extra jobs those investments create. There are undoubtedly some people who would prefer developments to go down the tubes rather than get behind them and give them the push they require. I hope attitudes will change in that regard, as has been the case in the past.

Miss Ormonde

I am pleased to speak on this motion dealing with the enhancement of the growth of jobs in the services sector. I deal with young people in the transition from school to work and it strikes me that the financial services sector provides a great opportunity for those who are inclined in that direction and great potential for job creation, particularly in light of ever increasing links with Europe. Another area of potential employment is tourism. Tourism provides opportunities at all levels in the food and hotel industries.

I congratulate the National Economic and Social Forum for its recommendations. Hopefully, we will find a way to have them implemented. We must also examine the leisure activities sector which has great potential for job creation. So many people from all walks of life are stressed out nowadays and here is a golden opportunity to develop that industry. There is potential for young people to get involved in many related courses now coming on stream.

There should be jobs available in what I will call household services — helping the old, providing cleaning services and household repairs, for example. We all know how difficult it can be to find a carpenter or a plumber when we need one. There are untapped opportunities in this sector. There should be a list of such services available in every area.

In considering how we can implement the recommendations I would approach the matter from an education and training viewpoint. There are opportunities for the long-term unemployed to get back into the workforce via the link between education and work. Courses should be available in each area aimed toward child care services. There should be a national policy involving the local authorities and every time there is jobs development in an area a créche should be set up. There should be a local child care service for people in the area.

We have to start again at local level. Small is beautiful; if we adopt too centrist an approach we do not always succeed. The county enterprise boards provide an opportunity to involve all the local initiatives — the banks, the unemployed and local representatives — toward identifying what job creating services may be viable in their areas. This report provides an opportunity to move forward quickly. It is not a large programme but it is a question of resources. The main employment growth is to be found in this sector. It has increased by 54 per cent over the last 20 years and it should grow further over the next 20 years.

With regard to the social economy, child care and education, there are many new courses coming on stream but it can be difficult to get accreditation for the courses. The Minister cannot work alone on this matter as it is slightly outside of his remit, but FÁS, which is the Minister's responsibility, and the Department of Education could work together. When some people complete a course they should have an opportunity to move into a training programme with FÁS who would have links with industry. That is not happening in relation to apprenticeships. At present if one does not have an employer as sponsor one cannot get an apprenticeship. No matter how well we educate our young people with technological and hands-on skills they will be lost if they cannot get an employer to sponsor them. We have an obligation to involve local industry and FÁS. There is an imbalance between FÁS training and industry.

The new leaving certificate applied programmes have not been fully tested as yet so they cannot be used to side-step FÁS. That will happen: education will side-step FÁS if we do not get cooperation. I ask the Minister to look at how FÁS links in with the educational sector. This is a way in which these recommendations can be implemented in relation to marketing, management and language skills which involve a continuity from the education sector. We have to see how best we can link in with young people who are not necessarily academically oriented but might be very good in hands-on apprenticeships. Such apprenticeships would tap into a much needed resource.

We need local initiatives which are small in scale and are involved with local industry, banks. FÁS and education authorities. That would be a good recommendation to put in force.

Ms O'Sullivan

I thank Senator Henry and Senator Quinn for putting forward this motion and giving us the opportunity to discuss this report. The Minister played his part in the NESF when he was a member of it.

It is important to record a welcome for the figures of the labour force survey which show an increase of 49,000 in the number of people at work in the financial year from April 1994 to April 1995. As Senator Henry said, it was the biggest annual increase recorded in a labour force survey and the highest growth rate of the industrialised OECD countries. It is a remarkable increase which sheds some light on the gloom and doom of unemployment figures. However, the number of people on the live register is a source of serious concern.

On the Order of Business this morning Senator Mulcahy indicated that the number of people unemployed was 300,000. He grossly exaggerated the figures; they are nowhere near 300,000, although they are high. Unemployment has to be the major focus of our attention. The labour force survey put the figure at 192,000 at the end of April 1995 and the live register at the time put them at 276,000. We must examine how these statistics are compiled as there seems to be a disparity between the labour force survey and the live register figures for unemployment. Questions have to be asked as to what are the correct figures. I think such an investigation will be undertaken.

I welcome the fact that the Government will meet tomorrow to discuss long-term unemployment. While these figures, together with the general growth rate, indicate that there is good news on the jobs and economics fronts, there is also a sector of society, the long-term unemployed, which appears to be completely untouched by this good news. I am aware that actions have been taken, especially in response to the National Economic and Social Forum Report No. 4, such as the local employment service, which has been put into operation this year and is now beginning to have an effect. However, there is a need to focus strongly on this sector of the community, as it is still very much untouched by many of the good things that are happening.

The labour force survey indicates that the highest growth rate in employment is taking place in the services sector, the sector we are focusing on this evening. We are right to do so as this sector is very labour intensive and, therefore, has the greatest potential to create jobs.

It is not true to suggest that Government policy with regard to tax, PRSI and so on has not been helpful in this area. Other Senators, especially Senator Fahey, have indicated that the Government has not been taking much notice of the problems of job creation in the services sector. However, the last two budgets — the Senator's party was involved in formulating one of them — have made considerable progress in this area, especially with regard to employer's PRSI and other areas the Government was asked to address by the task force on small businesses. In the last budget, for example, a new employer's PRSI rate of 9 per cent was introduced in respect of those being paid annual salaries of up to £12,000. This includes those who are paid up to £231 per week, which represents a big step in making it easier for employers to employ people in that wage bracket. It encompasses many of the kind of employees we are addressing. It is, therefore, not fair to say that the Government has not been addressing this issue. I hope it will continue to address it in future budgets.

It is important that we focus on lasting jobs, because many jobs are created that do not last. Figures indicate that of the jobs that were grant aided in 1983, half had disappeared ten years later. It is, therefore, important that there are proper business plans and access to help and assistance when it is needed, not when the jobs are on the line and almost gone, as it is often too late at that stage. There must be a system in place to ensure that those who create jobs can be supported when they need it, whether it be in terms of clustering or help with marketing, research and development and so on.

In this respect I take issue with Senator Ross, when, in a debate in the House last week, he launched a tirade against the need for any State involvement on the basis that those engaged in job creation should be let at it. However, the fact is that indigenous industries did very little when we let them at it in the past. It is not, therefore, fair to suggest that interventions are not doing any good: they are doing a lot of good.

I support Senator Ormonde's remarks on training and the trades and the need to have the educational and training services, whose ultimate aim is employment, linked together, so that we are training people for the kind of jobs that will be available. It is especially important not to let people out of school without trying to focus on where they are going. Many young people leave school and perhaps go into a youth training scheme or whatever, but often they fall into the big black hole of unemployment which they find very difficult to climb out of. It is, therefore, important that such people are held on to and that they are guided in some way into something that may be marketable in the jobs market.

It is important that there be a good infrastructure. For example, a number of services industries from abroad have located at the Plessey Technological Park because everything was laid on for them — they were located close to the University of Limerick and so on. The availability of money is also important.

With regard to the kind of jobs that are available in the services sector. Senator Quinn focused on tourism. It is important that we have good jobs in tourism as opposed to any old jobs. Many people are being taken on in the tourism industry and they are not being properly paid. They do not have proper hours of work and are very unprotected. In this respect we must focus on the area of protection for workers. We must also focus on the need for marketing in the tourism industry, as evidenced by reports yesterday, where people in the UK were unaware that there are hotels in Ireland.

This brings us back to the question of the black economy. When employers take on people in the services sector, much of the time they are competing with others who are employing people in the black economy. It is, therefore, very difficult for them to compete. We must look at areas where people are working but are not registered as working. They are claiming unemployment benefit with the collusion of their employers. In addition, the areas of the black economy identified by Senator Henry with regard to personal services, such as child care and work being done in the home, must be challenged in some way. The report makes reference to, and a recommendation on, a home service system that the Danish Government is trying to implement, where it would be advantageous to people to employ others in these personal services in the real economy. We should consider this. It has not worked very well in Denmark, but we have such a big black economy in Ireland that perhaps it may work somewhat better here.

Much of the time we appear to suffer from what has been described as paralysis by analysis, and many of these reports are left on shelves. I therefore welcome the fact that the Minister is actively pursuing the recommendations in the report and that he will be reporting back to the Government with regard to the specific recommendations. I hope they will be acted upon.

Mr. Mooney

I am pleased the Minister acknowledged that in a previous life he sat on the forum. Both of us sat on the forum and I could not help thinking that he has done well since. In the best competitive spirit, I hope I can aspire to at least a part of what the Minister has achieved since we both soldiered together on the forum.

I am still honoured to be a member of the forum and wish to commend my colleague, Senator Henry, for taking the opportunity of providing us with a debate on the report. It is timely, because I attended the first meeting of the reconstituted forum yesterday and the question of the media perception of the forum arose. It was the subject of some weighty debate. The point was made that perhaps the forum's reports were gathering dust, were not being analysed and were not being acted on to the extent they should be, considering the amount of time, effort and energy that had gone into them. It is a subject the forum will be returning to during its term of office. It is not a priority, although it will be discussed.

The main priority of the forum is concentrated on the question of job creation. In discussing our work priorities for the coming session, I proposed that education and skills training should be a priority for debate, and this was adopted. In this I am grateful to my colleague, the Government representative on the forum, the Minister of State at the Department of Enterprise and Employment, Deputy Fitzgerald, who was anxious that this issue be dealt with sooner rather than later. There was a great deal of consensus across the three strands that these issues be considered.

The question must be asked: are we educating our youngsters to meet the challenges of the modern labour market? Two areas especially have received significant Government support over the past ten to 15 years — tourism, and, more recently, the film industry and the arts generally. CERT has an enviable record — almost 100 per cent — on placement, while Ireland is fast developing as a major location for feature films.

However, a recent FÁS report, published before the summer, and which the Minister is probably familiar with, stated that Ireland was losing big budget feature films to the UK and other European countries due to the lack of availability of a skilled workforce in the various areas that are particular to the industry. On the one hand, therefore, while we have been welcoming the advantages that have accrued from the implementation of section 35 of the Finance Act, the industry has, on the other hand, become something like our burgeoning tourism industry. We are fast reaching a point where perhaps we have not got the workforce or the skills necessary to take advantage of this phenomenal growth. It must start in the schools.

As a member of the board of studies and communications and the arts at the National Council for Vocational Awards, the question of providing suitable modules in our vocational schools sector to respond to the changing nature of the jobs market is now a matter that is exercising the minds of the various boards of studies, who are, in effect, establishing the modules that will be providing the educational vehicle for those in the post leaving certificate phase.

That topic has been touched on by practically everybody tonight. It appears that education is where we must concentrate our energies and we must look at it in much more detail. An inter-departmental approach between the Department of Enterprise and Employment and the Department of Education is required to analyse if we are doing the right thing in the education sector. Only last week Kieran McGowan raised the spectre of an immediate future where we would be unable to take advantage of our economic growth because we would not have the skills necessary to adapt to changes in the labour market. The acknowledgment in the late 1960s of the then changing needs of the labour market resulted in us having a skilled and educated workforce readily available and that was the priority in selling Ireland as an industrial location. Those now involved in attracting inward investment are sounding alarm bells and the problem can be traced back to the educational sector.

The results of the annual CSO labour survey published today confirm what many of us have believed for a long time. There is no doubt that the major growth in jobs in the Irish economy is in the services sector. The figures confirm that 39,000 new jobs were created in the services sector on a year to year basis up to April this year. This growth has been achieved despite Government neglect of a sector which has been positively discriminated against by successive administrations. In that regard, however, I acknowledge, as the Minister said earlier, that one of the most significant initiatives adopted recently has been the small business operational programme he launched last month. I wish it well.

The Minister, in referring to the operational programme, talked about inculcating best practice among small businesses. Best practice is a term I have heard my colleague, Senator Quinn, use ad nauseam, and I mean that in the nicest possible way. He is involved in the commercial sector and I know what he means. I hope the Minister's term coincides in meaning with Senator Quinn's interpretation of best practice — to improve and enhance rather than have the dead hand of bureaucracy falling across the services sector under the operational programme.

During the debates in this House about bureaucracy in the State and semi-State sector the activities of the county enterprise boards, which are the responsibility of the Minister's Department, have received a certain amount of criticism. The Minister is aware of these criticisms and I hope he will address them. The bureaucratic overhang that is now inculcating itself into the county enterprise board culture is having an inhibiting effect on people who wish to get involved in the industrial sector and create jobs. That attitude started many years ago in our society. The Minister mentioned the anti-competitive nature of Irish society. It is no secret that the lack of enthusiasm for recognition of the valuable contribution which the services industry is making to the Irish economy emanates from a culture in our Civil Service that does not understand how the industry operates and refuses on some occasions to encourage it to grow by placing obstacles in its way. I do not subscribe to the view Senator O'Sullivan ascribed to our colleague, Senator Ross, which is to "let them at it". I agree that one does not "let them at it" but at the same time there must be balance and sometimes the balance is not achieved. Sometimes, when a quango is set up, the dead hand of Civil Service bureaucracy lets the Department get its hands on it and ensures, come hell or high water, that whatever the Minister's or Government's views or proposals are, they will be obstructed in some way.

I endorse the conclusions and recommendations of the forum report, especially in the following areas: a thorough reassessment of the underlying policy approach to the non-trading sector; a definitive declaration of the distinctions between some services in the manufacturing sector; a definite policy commitment to supporting the further development of the sector by ending the relative neglect by successive Governments through a more balanced treatment of all sectors in the areas of taxation and State aid. This strategy should be implemented across all areas of policy and any resistance among individual Departments to this new approach should be ruthlessly overcome in the interests of tackling more decisively our unemployment problem. Bord Tráchtála should be made available to the services sector, with the board acting in concert with individuals and/or firms in identifying areas of import substitution and overseas consultancy services.

I asked a question at the forum yesterday and perhaps the Minister might answer it. Why is it that the United States of America can operate on the basis of a 6 to 7 per cent unemployment rate — it rarely has a high unemployment rate — yet we in this country and in Europe have endemic unemployment? Why is it that the wealthiest region in this country, Dublin and the east, still has the highest level of long-term unemployment? Perhaps if we looked at these comparisons we might address the issue. The culture the Minister and others referred to is not healthy in any society and the sooner our leaders understand this the better it will be for society generally.

Mr. Sherlock

I welcome this debate on the National Economic and Social Forum Report No. 7 dealing with the jobs potential of the services sector. The report emphasises once again the value of this broadly based forum which includes not just politicians but also representatives of the social partners and various interest groups. The report is a credit to all those involved. It is not just a valuable contribution to the debate on job creation in this area but it also provides a clear programme of action and sets out many logical and practical proposals for job creation.

This debate is particularly timely following the publication of the annual labour force figures which show an increase of 49,000 in the numbers at work. It is worth recalling that unemployment reached over 100,000 in the 1970s and there has been a rapid and constant growth in the following two decades. A major feature of the problem is the existence on the live register of a substantial number of long-term unemployed. Of those who have been out of work for a long period, almost half have been out of work for more than three years.

I refer to the 1970s because the problem started in the 1970s and 1980s. The employers in this country decided that whatever else they would do, they would reduce the numbers employed. They had the assistance of the State in doing that. People were made redundant on the one hand, but on the other hand were re-employed within months by the same employers on a seasonal basis. These instances were scandals in their own right. Jobs were being lost but it was a deliberate strategy by the employers to reduce the number of people in employment. They planned it and got away with it. They are getting away with it to this day under the guise of the cost of employing a person. That aspect of the issue must be examined. There was the same experience in the dairy industry. It was making huge profits but laid people off for three months of the year to draw unemployment benefit and get a tax refund — to think that such a thing can happen in a country whose economy is only trying to get going.

Training and targeting are the keys to getting people off the dole and into productive and useful jobs. In this regard the recent establishment by the Government of the local employment service is particularly welcome. I hope it will shortly be extended to all areas of the country. The focus on training must begin before people leave school. It is not acceptable that so many should leave school with little or no qualifications for employment and that as many as 6 per cent are leaving without even the junior certificate.

A swathe of economic and social devastation is being cut, not just through areas of our cities but also through many towns and villages in rural Ireland and it has to receive the political priority it deserves. In this regard I welcome the decision to hold a special Cabinet meeting on the whole unemployment issue.

There is no simple solution to the problem of unemployment. Any effective strategy will have to be carefully thought out and will need long-term political commitment. A start can be made, however, in next year's budget by focusing resources on the long-term unemployed and in particular by ensuring that school leavers have access to job related training. The present level of unemployment cannot be allowed to continue. This Government promised to make jobs a priority and it is now up to all of us on this side of the House to ensure that this promise is honoured.

I have read page 31 of the report with great care. It shows that the European Commission estimates that up to 3 million jobs could be created in the European Union in the areas of local services. They include home services, neighbourhood shops, counselling and assistance for young people and house improvements. It is about time the Government introduced a home improvement grants scheme; we have not had such a scheme for a number of years. Many jobs could be created if the Government put a home improvement grant scheme in place.

Since the early 1980s Cork County Council has submitted a document to the Minister for Social Welfare, which we have updated in recent years, which shows that if there was some consultation between the Departments of Enterprise and Employment, Finance, Social Welfare and the Environment, a large number of people could be employed by the local authorities. The difference between the rate of social welfare paid and the basic rate paid in the local authority is not great. If somebody worked on that aspect a great number of jobs could be provided by local authorities. This is a fairly well researched document. We have given a copy to the Minister for Social Welfare and I will send the Minister present a copy within the next couple of days. Our experience of FÁS and community employment schemes indicates quite clearly that large numbers of people are willing and able to get out there and work.

NESF points out that the service sector can play a crucial role in job creation. There is clearly considerable scope for expansion in the sector and the report highlights the fact that services in this country account for 58 per cent of gross domestic product compared to the EU average of 64 per cent. I discussed this with some people who are worth talking to in matters of employment. The way the use of technology has developed in this country is crazy. The cost of installing, improving or increasing technology seems to mean nothing to employers. The cost of maintaining it seems to mean nothing, so long as it will result in fewer people employed. Somebody must look very seriously at this question because many people are put on the dole queues as a result of the introduction and development of technology which is not always necessary, and they cannot be absorbed into the workforce. There is a need to look at that situation as well.

Jobs in the services sector have often been regarded less favourably than those in productive or public sector areas. Part of the reason for this has been the perception that pay levels for service jobs are automatically lower than those in other sectors. While this is not true of all service jobs, it has to be acknowledged that pay rates in some parts of the services sector are below the levels required and this often reduces the attraction of taking up these jobs for the unemployed, particularly when the loss of other benefits is taken into consideration. That was mentioned here previously.

The Minister for Social Welfare, Deputy De Rossa, is currently engaged in a wide ranging review of the various obstacles facing unemployed people who are presented with job opportunities with a view to removing these obstacles and making it more worthwhile for them to take up employment. The Department of Social Welfare pays £23 million to 11,000 employees supporting around 31,000 children because their pay is so low. There is clearly a need to look at extending to the services sector the concept of minimum wages, which we have in particular industries covered by the joint labour committees.

Professor Lee

I welcome this report which seems to be a very good report. I would like to make a number of comments, however. I welcome the stress in the report on the interdependence between the service and manufacturing sectors because occasionally they can be portrayed as being almost mutually exclusive. It is a mature way of looking at the interrelationship between the manufacturing sector and the service sector but I am a little hesitant about some of the comparisons, about the percentages of the service sector ascribed to various countries and the imputation that Ireland is lagging a bit behind. It may be that we are, but it is very hard to know what the correct criteria are, if there are correct criteria in comparisons of this type.

I do not know if this will come as a shock to Senator Ross, but our public administration and defence sectors lag well behind the average size of those sectors in the EU which, of course, is mainly ascribable to defence——

Mr. Ross

We could remedy that.

Professor Lee

——as we have had the great foresight to let others look after us.

Our service sector has done remarkably well given the hindrances and obstacles it has had to overcome and which, no doubt, have been described and discussed in detail so far. However, the way we should look at it is not that we are doing badly but that if we can do this well, given the number of problems which the sector faces, we could do exceptionally well if a number of those obstacles were removed. I am encouraged by the performance of the sector so far.

A feeling of déjá vu is beginning to hit me this session. It is as if one were going back over the same reports time and time again and finding the same arguments coming up time and time again. There is, for instance, a tribute to the Conference of Major Religious Superiors and to Seán Healy's work which, I think, is actually very impressál ive and potentially a very important work, but it is pretty well the same reference we had to it about a year ago, and I remember asking then whether this was being expanded if it was successful, and if it was not successful why it was being kept on. The figures quoted in this report are much the same as the figures quoted a year ago. I wish to ask the Minister what is happening in that direction and if there is the potential the report says for the developments in that area.

The social economy sector which is stressed here is one of the most encouraging emphases in the report. One can have quibbles about individual aspects of it but the emphasis in this carries one back 35 years to one of the first economic books one ever read —The Affluent Society by Kenneth Galbraith — where the whole question of social economy was addressed in his inimitable prose. Since it takes about 30 years for an idea to penetrate through into policy making consciousness one is pleased to see that, by the early 1990s, it is beginning to achieve a foothold in our thinking; that is commendable. I will not linger over the details again, but I would be supportive of developments in that direction.

I have two questions. The first is about the emphasis on home services. That has social as well as economic implications and there is a way of looking at home work here. Paragraph 3.23 of the report states that "There are considerable labour resources tied up in unpaid work in the home.".

That is an interesting phraseology for that particular issue. At one level one might say that the Government and the rest of us ought to grateful that there are considerable labour resources tied up in unpaid work in the home, because if that labour supply was on the market, as it is in most other OECD countries, our unemployment statistics would look distinctly worse than they do, whether one is talking about those released yesterday or those given for the live register. There is, of course, an ideological perspective involved in that phraseology as well with which I do not entirely disagree, but that needs to be teased out, and the implications need to be teased out, in terms not just of the type of economy but in terms of the type of society we are thinking of.

The final point I want to make concerns the role of education and training. If we look at paragraphs 5.10 and 5.11 of the report, under the heading "Education and Training", what do we find? We find there is virtually nothing about education; it is virtually all about training. We have a way of blurring these two as if they are the same thing. There is an overlap between them, but they are conceptually quite different. Important though training is — let me not be misunderstood because I am not for one moment speaking against training — thinking in training terms is not sufficient for the rapidly changing world in which we find ourselves. It may be that for the unfortunate current long-term unemployed that is, in a sense, the best one can do because, if they are to have any chance of getting back into the job market, they must have training. They must have short-term pressurised input to try to make them employable but, if we keep thinking of training as the ultimate we are aiming for in terms of many of the least privileged in our society, then we will inevitably, over time, condemn them to the scrap heap.

Training, in the sense of technical skills and competence in a fairly specific narrow area, however useful to an employer in the short term, will have those people on the scrap heap quickly again. Retraining and retraining will not make them long-term employable. There must be an education input in terms of a concept of what they are doing, why they are doing it, other ways of doing it and so on. Therefore, I urge that, for the younger people, we think of training as far as possible in a wider educational framework because, in a world of such rapid change, specific clusters of skills will inevitably become obsolescent relatively quickly. Unless there is the capacity to readapt to those changing circumstances, one is building labour obsolescence into even the most intensive and, in the short term, best devised training programme.

Let me finish with the observation that, in the context of the services sector, where so much depends on interpersonal relations and the capacity to relate to other human beings — it is much more a personality driven area than is manufacturing industry in the classic industrial revolution sense — the education system must take more on board at all levels the topic of personality development. We used to call it character development; "character" has prejudicial implications nowadays. At both youth and adult level education that is a dimension that must not be neglected or the fruits of the investment will be much less than they could be.

Mr. Ross

I would like to say how grateful I am to Senator Lee because, if I had to listen to him in full flow, I would find it difficult to follow. It was the only speech I heard — and I have heard them all — which has not, on this particular motion, taken the opportunity to weep crocodile tears for the unemployed, congratulate everybody in sight for producing the report and identifying with the good parts in it. I personally feel that debating this report in the Seanad this evening is a waste of time. It is simply a means for everybody, once again, to express their own point of view, reaching a consensus and saying something nice about the National Economic and Social Forum, which we are all supposed to believe is a good thing.

What is the National Economic and Social Forum? It is a group of 49 people brought together by the Government in 1993 to paint the picture that politicians were concerned about unemployment. The 49 people went to Kilmainham, in front of the cameras, they sat around and talked about unemployment. Guess who was the first person to be thrown out at the first meeting? It was a member of a group for the unemployed; he was not allowed in because this was for people to impress the press and the public that politicians and others actually had a great concern about those who had no work. It is a bogus organisation. It was set up as a cosmetic organisation and now we are wasting the Seanad's time debating its reports.

I do not need the NESF report to tell me that the services sector can produce employment. It is ridiculous that we should be doing this. This particular body has had one great innovation: it formally allowed three members of the unemployed in to talk about unemployment. Up to then, we had the extraordinary situation where the people in charge of this country and the people in charge of solving the employment problems, excluded the unemployed from even talking about unemployment. Apparently, they were the only people who did not know anything about it. We had the trade unions, the farmers and the so-called "social partners" reaching an agreement on what was good for the unemployed. The NESF was the first body to let them in to talk about it. It did not let many of them in: as far as I know, it let three of them in to what the Minister called "the third strand".

This third strand is the great gesture towards the disadvantaged in our society and it includes the disabled, the unemployed and — guess what? — women. There is a special place in this forum for women. Wonderful; how good of the Government. Unfortunately, women do not need special representation on this group because the majority of the Oireachtas Members are women. I do not know what they are doing at this forum because they have plenty of other forums to talk about unemployment. Yet they must have women in as a women's group to represent women there as well. Since the majority of the members of the National Economic and Social Forum are women I do not know, nor do I understand, why they must have extra representation on this forum. Apparently, they are so disadvantaged now that, even when they are in a majority, they need extra representation. The chairman is also a women.

Mr. Sherlock

Spoken like a true Stock Exchange man.

Mr. Ross

Does the House know what has happened?

Ms O'Sullivan

Is there something wrong with that?

Mr. Ross

There is nothing wrong with it, but I do not see why women, when they have a majority, need an extra three members. They are doing very well. People like Senator O'Sullivan, Senator Henry, who are on the forum, and others are capable of representing women without having extra token women members being appointed to represent women. This is an absurd forum and everybody knows it. I know it is ridiculous because everybody agrees it is a good thing. The one problem with politics in this country is that, when one hits what is supposed to be a national consensus, one must question it.

The National Economic and Social Forum is the great escape for politicians to pretend they are concerned about unemployment. The proof of this particular pudding is in the eating. It is an academically good report but it is a message which, unfortunately, we have all heard before.

It is stated in all newspapers every day that the services sector is the key to resolving the unemployment problem. Unfortunately, despite us knowing what this key is and the massive quango in Kilmainham, we have not solved this problem. Despite the Minister's great success last week in bringing more jobs to Intel Ireland, which I acknowledged, and the extraordinary figures which were issued yesterday and which directly conflict with other figures which have been issued, we have a disgraceful unemployment problem which has not been tackled in a serious way. I was disappointed with much of what the Minister said because the real way to tackle unemployment is by a radical approach.

Mr. Sherlock

The solution does not lie in anything Senator Ross might say.

Mr. Ross

I do not know if this will work but I know that shovelling money at the unemployed and keeping them off the dole queues, which is what Senator Sherlock's party believes in, has not worked. Giving the unemployed what the Minister refers to as assistance or support means giving them grants. It means that every time there is a problem, such as the possibility of a factory closing, etc., we provide money to maintain jobs and do exactly the same when the problem arises again.

This is not the way to tackle unemployment. The way to do that is the only way we have not tried, and that is, to create wealth and not jobs. If we create an environment in which business and enterprise can flourish, jobs will follow. This will not be done by giving grants and creating quango after quango which pretend they are concerned about the unemployed. It will not be done by giving money to the IDA and Forbairt for factories or by giving money to the county enterprise boards to get people off our backs. A radical fundamental approach is needed.

To read the NESF report is one thing but to take it seriously is another. The NESF is a cruel joke; it is an offence against the unemployed to create bodies like this to give the impression that something will be done by them. The forum provides academic reports for this House to debate in a vacuum while everybody knows that nothing will be done at the end of these debates.

Ms Honan

I welcome the opportunity to contribute to this debate. The report of the NESF highlights the importance of the services sector as a source of employment. I am glad it refers to the key role this sector plays in providing job opportunities for women. For many women, this type of employment, which does not have the same rigidity as industrial employment in terms of working hours, provides them with their only means of access to the jobs market.

The report clearly highlights the extent to which the sector's job creation potential is being frustrated by the economic policies we are currently pursuing. As the report illustrates, the services sector is still relatively under-developed in Ireland compared to other OECD countries. Only 57 per cent of total employment here is in this sector compared to corresponding figures of 69 per cent in the United Kingdom and 72 per cent in the United States.

The key issues in creating jobs in this and all other sectors are corporate and personal taxation. We have a serious unemployment problem, although the figures which were issued yesterday, if they are to be believed, seem to suggest we are paying unemployment assistance to people who are not officially unemployed. We impose huge taxes on work and the average employee is liable for income tax, PRSI, and employment and health contributions at a very low level of pay. Somebody who works in a shop, restaurant or factory for £4.50 an hour, which would give a weekly income of £180 a week, pays almost £42 a week to the State. It is hardly surprising in these circumstances that the unemployment problem is as bad as it is.

The report makes sensible and practical recommendations as to how we can facilitate job creation in the services sector. However, we have had many reports but little action, particularly in the areas of taxation and labour market dynamics. I hope we do not continue to produce reports but will act on this report and endeavour to get it right.

Mr. Cotter

May I speak for a few minutes?

Mr. Mulcahy

I wish to raise a point of order.

An Cathaoirleach

That is a matter for the Leader. We must follow Standing Orders.

Mr. Mulcahy

I wish to put on record that I would like to speak.

An Cathaoirleach

I appreciate that, Senator. Other Senators would also like to speak but there is a two hour limit for Private Members' Business.

Mr. Mulcahy

Have we power to extend it?

An Cathaoirleach

No. This is a matter for the Committee on Procedure and Privileges. The Senator has excellent representation on that committee if he wants to raise the matter.

Dr. Henry

I thank the Minister for his reply and the Senators who contributed to the debate. The forum has an importance for those on it who were described by the Minister as the third strand because it is their only opportunity to directly communicate with those of us who are elected. It is important that Members of the Oireachtas who are members of the forum keep their mouths shut because this means we learn an enormous amount from those who can tell us the exact problems on the ground faced by those who are out of employment, are disadvantaged or are part of the 50 per cent of the population who have been granted three additional seats in the forum.

The Minister and others spoke about training. I take seriously Senator Lee's important point about education not being the same as training. It would be worthwhile to make sure our training programmes are up to international standards and have international certification.

We should not worry too much about competition. We spoke about the banks not lending to one group if this resulted in competition which would cause the failure of a similar industry nearby. Everybody said the courier business would be the end of An Post but the company is doing as well as it ever did while, at the same time, there are more and more couriers, whether on bicycles or motor bikes, all over the city and they are part of thriving small businesses. I know a person cannot be a motor bike courier into old age but such jobs are certainly a start and they gave a great deal of employment to people who had few job opportunities at the time. We should not under-estimate any area which can produce employment.

Some women Senators spoke about the home care and child care sectors, which are important. We must also deal with the black economy which is an important source of employment for women. We should make it more structured from the taxation and training points of view and we should provide tax free allowances for those who employ people in that sector. I thank the Minister and I appreciate the initiatives he has taken in this area.

Question put and agreed to.

An Cathaoirleach

When is it proposed to sit again?

Mr. Cosgrave

At 10.30 tomorrow morning.

Seanad Éireann debate - Wednesday, 25 Oct 1995

Jobs Potential in Services Sector: Motion.

Seanad Éireann debate -
Wednesday, 25 Oct 1995