Is an-onóir dom bheith ar ais sa tSeanad ar an díospóireacht an-tábhachtach seo faoi na fostaíochta, an chánachais agus na chuimhsithe shóisialta.
I welcome this opportunity to address Senators on the themes of employment, taxation and social inclusion. Employment is the key to the strength of our growing economy and the Irish economy is going from strength to strength. We have enjoyed strong economic growth in recent years, averaging in excess of 8% per annum in GNP over the past three years.
This growth has been translated into unprecedented levels of additional jobs. Increased employment is manifest across a wide spectrum of our economy and people are sharing in this excellent performance. That is the key element. The policy of this Government is to ensure that every citizen on the island, irrespective of age, physical situation or otherwise, can be actively engaged in mainstream economic activities in so far as we can achieve that. Jobs growth underpins the substantial improvements we have achieved in our standard of living and provides us with the resources to tackle social exclusion.
It is worth remembering some of the more positive indicators which underline the improvements achieved during this Government's tenure of office. A total of 290,000 more people are in jobs. This means that the number of persons at work has grown by one fifth or 20% in this short timeframe. A total of 110,000 people have signed off the live register, a decline of 43% in the numbers signing on in June 1997 when the Government took office. Most of the fall in unemployment has been from among the long-term unemployed. The long-term unemployment rate is down to 1.6% and the release last Friday by the Central Statistics Office of the live register data for the end of September shows that the unemployment rate is now down to an historic low of 3.8%.
These are extremely positive achievements and help underpin our strategic goal of full employment. This substantial progress has been achieved based on a coherent strategy of sound macroeconomic policies, on a consensus approach developed through successive partnership agreements which has provided a framework for economic and social development and given our strategy both stability and credibility, and on structural reform policies.
This strategic approach provides the framework for the development of our employment policies. Of course, the rapid changes in our labour market have brought with them many new challenges. The transformation of our economy requires ongoing review and appropriate shifts in policy in order, for example, to ensure that labour force expansion requirements are met. Tapping into labour supply is the key new challenge for policy – how to mobilise people and ensure they have the skills and competencies relevant to a modern economy.
These policy challenges are recognised and a rational response is in place and is embodied in the national action plan for employment for the year 2000. I will quote the first two strategic goals set out in the national plan. These are to "mobilise labour supply by tapping into potential pools of labour to support low inflationary sustainable growth" and to "enhance the quality of labour supply through investment in education and training and, in particular, through developing a strategic vision and framework for lifelong learning".
I welcome the students and teachers in the Visitors' Gallery today. We are proud of our education system and we want to ensure that those who did not get the opportunity in the past to pursue higher education will get that opportunity in the future.
The national plan sets out a comprehensive response to these objectives. In the first instance, it recognises the need to improve the reward from, and attractiveness of, work. Taxation impacts in a fundamental way on labour market behaviour. Clearly, Government initiatives over recent budgets have resulted in significant alleviation of the tax burden on labour. This is a key goal of Government. Several of our European partners, including the larger member states such as Germany and Italy, have embraced our approach with recent announcements of substantial tax reductions on employee incomes. I will refer further to the substantial improvements which we have implemented when I address the taxation theme later.
Besides an employment friendly taxation policy, other fundamental structural adjustments aimed at enhancing labour market participation and increasing the employment potential of the economy include the removal of persons from the tax net with earnings below certain income thresholds; the restructuring downwards of payroll levies; improvements in the operation of the family income supplement – an in work benefit to encourage increased access to jobs; and positive adjustments to the welfare system in the areas of the qualified adult payment and in the tapering of secondary benefits aimed at assisting welfare dependants on their transition from unemployment to work.
We want to enhance our labour supply. The overall strategic orientation of Government policy is aimed at increasing labour force partici pation among key groups of our population. Policy initiatives have been particularly focused on increasing the number of women in employment – despite our dramatic improvements over the last decade, we have come from a low base – and continuing to pursue policies and actions aimed at reintegrating the long-term unemployed and other disadvantaged groups into the open labour market. We currently have in place a wide range and scale of active labour market programmes which are targeted at specific groups, including the long-term unemployed, to assist them in their transition to employment.
To complement this approach, we now have in place a comprehensive support programme under the employment action plan which results in intervention by FÁS early in the unemployment period with young and adult unemployed to prevent their drift into long-term unemployment. The results of this approach have been very impressive with substantial numbers of under 25 year olds and adult unemployed leaving the live register. The data reveal that consistently of the order of 65% of people who leave the live register, following the referral process under the employment action plan, depart for positive reasons. They take up a job, a FÁS training course or go into an education programme which is a very positive indicator of their commitment to embracing the opportunities which are being presented.
A strategy focused on tapping into available pools of labour supply is being combined with the pursuit of policies designed to enhance and upgrade the skills and competencies of the existing workforce. Here the emphasis is on increasing the incidence of in-company training and developing a framework for lifelong learning. The task force on lifelong learning has been established by the Government within the framework of the Programme for Prosperity and Fairness. It is considering measures required to improve access to learning and upskilling opportunities and aims to bring proposals to Government early next year. In addition, the Government proposes to introduce legislation to establish the national training fund before the end of the year.
The expert group on future skills needs represents a further element in our response to meeting skills needs. The expert group helps identify the needs of industry across a range of sectors and has issued two reports to date on its findings. The Government response has been swift to help overcome identified skills bottlenecks. For example, 5,400 additional college places have been provided in the third level system and extra FÁS training places established to meet the shortages in specific sectors such as in the IT software and technician sectors.
Investment in the apprenticeship system to meet the increasing demand for training and reduced waiting times responds to the needs of our economy and, in particular, will help meet the needs of industry and the construction sector in the delivery of our national development plan. In September 1997, there were 8,600 places for apprenticeship training. Currently core capacity stands at 17,220, a doubling of apprenticeship capacity in this short period.
Of course, there is always more we need to do. For example, we can better facilitate women's return to work. Child care provision is a constraint in that regard. This Government has over the last three budgets introduced measures to increase the supply of child care places through the provision of tax incentives to employers and direct support to disadvantaged communities in particular. However, more needs to be done and I am confident that the next budget will see a significant initiative in this area.
The importance of older people in the workforce will grow in coming years as the population of young people declines and that of older age groups grows. Given these trends, we must consider ways of encouraging older people who wish to do so to remain in or return to work. The Government policy of reducing the overall tax burden on labour is an incentive for older people to continue working, particularly those who wish to work part-time to supplement their income. As part of further initiatives in this area, employers' representatives will be consulted to see what practical steps can be taken in this regard.
During the term of this Government there has been a substantial increase in real living standards. Leaving aside taxation, real manufacturing wages have increased by more than 7% since 1997. When taxation changes are factored in, the increase in living standards is even more dramatic. The average single person has enjoyed an increase of over 15% in real income since the Government assumed office in June 1997. A married one-income couple with two children has fared even better with an increase of over 19% in real terms. In all three of our budgets to date, the Government has acted to fulfil its mandate to reduce personal taxes. Beginning with budget 1998, tax reductions amounted to £517 million; in 1999, tax reductions amounting to £581 million were provided for and in the most recent budget, a further £1,067 million was given back to taxpayers.
These reductions in taxes have gone a considerable way towards fulfilling the objectives in the programme for Government in relation to rates of taxation. Both the standard and the top rates have been cut by 4%. The Government will complete the move to a tax credit system from the beginning of the new tax year next April. The first phase of individualisation has also been put in place and has been broadly welcomed by many people throughout the country and the European Union. It has been endorsed by the European Commission as being one of the most innovative and equitable ways of dealing with taxation.
The combined effect of the measures taken by the Government from the last budget alone has been to remove 70,000 people from the tax net. It removed 125,000 people from the top rate of tax. These are real and substantial improvements in reducing the burden of taxation which underpins Government policy of reducing the tax burden on labour, increasing the incentive to work and contributing substantially to the improved numbers in employment.
Unemployment, in addition to being an economic waste, is interrelated with poverty and social exclusion, particularly when it is reinforced by being concentrated geographically and when it becomes inter-generational. Reducing unemployment, together with associated issues of reducing early school leaving, tackling the problem of urban black spots and rural poverty, are central to Ireland's anti-poverty strategy. The NAPS recognises that unemployment is the single most important reason, although not sole reason, for poverty. Our success in increasing employment levels and reducing unemployment is now providing clear evidence of reduction in poverty levels and social exclusion. This is evident from the 1999-2000 National Anti-Poverty Progress Report launched by the Taoiseach at the end of last month, which showed that consistent poverty has almost halved from 15% to just over 8% today. Again this is real progress.
We have made significant inroads into reducing structural unemployment with the long-term unemployment rate falling to a new low of 1.6%. This is the result of a combination of factors, including that which arises from increased economic activity together with a concerted programme of direct interventions from within a wide menu of supports to assist persons in their return to employment. Some of the larger support measures include providing work in temporary job programmes such as community employment, or inserting people directly into the open labour market through the support of the back-to-work scheme, as well as training provided by FÁS and educational attainment programmes such as VTOS.
While the scale of the problem with unemployment, and particularly structural unemployment, has diminished, clearly there are groups who remain marginalised and who require supports in their efforts to reintegrate into the labour market. The current favourable labour market provides us with an unrivalled opportunity to address outstanding challenges. This allows us better to design and target supports at key groups who remain at risk of social exclusion. In this context, I refer to the adjustments being made to some of our key labour market programmes, including community employment. The fall in unemployment levels and the need to better target available places at older, long-term unemployed people were taken into account in the restructuring of community employment. This is part of a strategic shift in policy which sees a greater investment in training places, particularly for those under 25 years of age and the long-term unemployed. It also reflects a concern to facilitate lone parents access to mainstream training to a much greater extent than has been the case to date.
More recently we have introduced a social economy programme which will focus on developing innovative, locally-based income generating projects in disadvantaged communities throughout the country. The objective is to create employment for 2,500 people by 2003. The national development plan allocation for this scheme is £213 million.
Creating a more inclusive society by alleviating social exclusion, poverty and deprivation is one of the major challenges facing Irish society over the course of the current national development plan. The plan provides a breakdown of the provisions which will promote social inclusion in each of the plan's operational programmes for which in excess of 19 billion euros is being allocated over the seven year period to 2006.
We currently have in place a very clear strategy combined with the necessary policies and actions which will help us remain competitive, foster further growth in employment and improve living standards. The policy mix will help us to underpin a strong economy by providing an adaptable workforce in the new global environment in which we do business where the key aspects of success remain the ability of our workforce to adapt to change and to encourage an environment of innovation, research and development. A sum of £1.95 billion has been allocated in the national development plan to fulfil our commitment to research, development and innovation over the next six and a half years.
I wish to situate Ireland's employment challenge in the context of the evolving European employment strategy and a new social policy agenda with particular reference to the outcomes of last year's Lisbon Summit. We can align with the social policy agenda in Europe which embraces not just the basic social supports that any civilised society seeks to provide for its citizens in terms of social security nets and health provision but also issues relating to employment goals and conditions and investment in people, our human resources and our intellectual human capital.
The mandate from Lisbon is clear. We are required to grow more and better jobs with the objective of increasing the employment rate to 70% by 2010 across Europe – the EU average is 62% – and the employment rate for women as near as possible to 60%. Employment, therefore, is the key performance indicator against which the success of member states' policies in their implementation of the EU employment strategy will be measured.
Following the substantial growth in employment in recent years Ireland's employment rate in 1999, at 62.5% for the first time, has moved ahead of the EU average. I believe that with the positive achievements to date we will continue to grow employment which will enable us to meet the demanding targets set at last year's Heads of Government summit. The statistics give an opportunity to the Seanad to consider our current employment, taxation and social inclusion policies as having a real effect on the welfare and well-being of all citizens. We will continue with these policies in the next budget on 6 December and in our final budget in 2001 we expect to copperfasten economic growth for the next 25 years.