I apologise for being late. I mixed up the times.
I welcome this opportunity to address the House on the quarterly national household survey results. It is important sometimes to reflect on our achievements and to pause for a moment to understand what is happening in our economy. The figures published by the CSO last month tell a compelling story of transformation in our economy.
The figures from the latest quarterly survey are marked proof of the effectiveness of Government policies in the areas of employment and the labour market. Our recent economic success has been remarkable. The so-called "jobless growth" of the early 1990s has long since been replaced by consistent employment creation.
Employment increased by 93,000 in the 12 months to August 2005 bringing the total at work to 1,929,200. This is the highest annual growth rate in five years and is an increase of 31% or 461,500 since 1997. Women have particularly benefited from the very significant growth in employment during this period. The number of females in the workforce has increased by 39% since 1997, while the number of male workers has increased by 26%.
The figures also show a strong regional performance with employment in the Border, midlands and western regions increasing by almost 6%, giving employment to an additional 26,000 people. Moreover, we have seen employment increase in most sectors of the economy with financial and business services showing strong growth. This strong employment growth has been based on a strong and vibrant economy. With favourable economic growth forecast to continue, the indications are that employment growth will be maintained in 2005 and 2006. Employment is forecast to grow by approximately 2.9% in 2005 and by 2% in 2006.
Unemployment continues to be maintained at a low level of 4.2% and is forecast to remain close to this level into next year. Our unemployment rate is currently less than half the EU average of 8.6%. Our current rate compares with an unemployment rate of 10.4% in 1997. The numbers unemployed have decreased by 50% in this period, from 171,200 to 85,600. Long-term unemployment has dropped from 90,000 to 27,000, a decrease of almost 70%. It now stands at 1.4%, which is approximately one third of the EU average.
The consensus approach, under social partnership, of involving employers, employees and the Government has been a major contributor to Ireland's economic success. This has been backed up by a well-balanced suite of employment rights legislation, which together with measures designed to stimulate employment, provide an appropriate framework for the purpose of achieving an efficient and competitive business environment.
In addition to employment growth, the partnership agreements have also been effective in securing improved economic performance and raising living standards. In the ten years to 1987 inflation was running at an average of 12%, while the current rate is just 3%. The pay terms of the two most recent national agreements have given workers pay increases of almost 30%.
The Government will continue to implement policies that lead to higher levels of employment. We will strive to reach and, if possible, exceed, the EU employment rate targets for 2010 of 70% for overall employment, 60% for female employment and 50% for employment of older workers.
As pointed out by the enterprise strategy group, the policies adopted to date have proved very successful but if we are to move forward in the context of a knowledge-based, innovation-driven economy a new set of challenges awaits us which require a different approach. In the labour market context this means that we need to maintain a strong focus on education and training, including lifelong learning, to ensure the development of a highly skilled, adaptable workforce. We must ensure an adequate supply of labour to meet the needs of the economy and to sustain economic growth. Labour will be supplied through a number of sources, namely, the underlying population increase, increased participation by the unemployed and those outside the labour force, and migration.
Education and training have been central to our economic success. Our future prosperity will depend on workers acquiring the knowledge, skills and competencies required to compete in an increasingly global economy. The enterprise strategy group's recommendations made it clear that lifelong learning will be key, as the nature of the workplace requires that workers be ever more flexible and adaptable. More than in the past, people will need to upskill and reskill throughout their working lives. This can only be achieved by introducing new approaches and by putting in place the necessary delivery structures. The One Step Up initiative, which I announced recently and have substantially resourced, is an important element in this process. This initiative will promote lifelong learning, in-company training and upskilling of our workforce by providing easy access to a range of training and learning initiatives, including tutor-led training and e-Iearning. It will also assist employees to obtain a recognised qualification within the national framework of qualifications.
Attention must be devoted to ensuring an adequate supply of labour. To increase the numbers at work in the context of the decreasing numbers of young people coming into the labour market, we will need to mobilise labour supply from other sources. This will mean encouraging increased participation in the domestic labour market. It will also mean adjusting economic migration policy in Ireland to address identified labour shortages and skills needs.
Migration, combined with the natural increase in the population, has resulted in an increase in the population by 87,000 to over 4 million in April 2005, the highest it has been in almost 150 years. This is an historic milestone. It is a very positive trend for Ireland in view of our labour and skills shortages. The high level of immigration in the past year, with over one third coming from the ten new member states, is a result of our non-restrictive policy to those who wish to work in Ireland from these countries. There is no doubt that for most of our skills shortages, appropriate EEA workers are available.
The total population today is the highest since the census of 1861. The historic nature of this population increase should not be lost sight of. The CSO estimates that in the next 15 years, our population may reach 5 million. The Employment Permits Bill 2005, which was introduced in the Dáil last month, includes provision for a more managed economic migration policy, including a continual assessment of skill and labour needs. Research carried out by the expert group on future skills needs will continue to inform Government policy in this area. The focus of this policy will be to facilitate efficiently and effectively the entry into Ireland of people with skills that we need, but which we cannot source from either within Ireland or the EEA.
The high growth in employment indicates how well the economy is doing and how important it is that we can absorb increases in the labour force both from the domestic front and from abroad. The strong employment growth suggests we have put in place the right enterprise policies to build a strong economy. Through lower taxes, we have given individuals more choice over how to spend their incomes and we have nurtured a culture of enterprise where people with new ideas can see those ideas turn into value. We are seeing the growth of an enterprise culture everywhere from software to sandwiches, which shows that innovation is not just the domain of research scientists.
In a decade, our approach to risk-takers has changed and no longer are entrepreneurs left with the option of having to emigrate to innovate. Ireland has been transformed from a country where many young people had to leave to find jobs to one where young people from across the world are now contributing to our economy. We have implemented broad economic polices that have changed the business environment. This is not just our own analysis. After eight consistent years of managed growth and prosperity, the International Monetary Fund is still able to commend Ireland's continued impressive economic performance, the result of sound economic policies.
In the space of fewer than 15 years, we have built a very different economy, one that has the inherent capacity to sustain growth rates that are the envy of some and a sought-after example for others. At the root of this exceptional employment performance is a deeply-embedded commitment to pursue policies across Government that boost our competitiveness. This is underpinned by recognising that we must constantly change, adapt and reform if we are to stay ahead. I am realistic enough to know that keeping, let alone expanding, our share of world trade and investment will not be easy. Our competitors are no more than a mouse click away.
Competitiveness is as easily lost as it has been hard won. While we are no longer a low cost economy, the recent annual report from the National Competitiveness Council recognises we retain some fairly impressive and significant national strengths. For example, we have achieved remarkable rates of economic growth over the past decade and we have recorded one of the best economic performances in the world. From 1997 to 2004, Irish GDP grew by an average of more than 7.5%, compared with an average of just over 2% in the EU I5. Under the sustainable growth heading, Ireland's living standards as measured by GDP per capita,the NCC calculates we come first out of 15 countries and for GNP per capita we are sixth out of 16 economies it looked at. GNP per capita has almost doubled since 1997.
However, it is not all about arcane economic numbers. Real progress has been achieved in improving living standards and this is reflected in Ireland's strong performance in the UN's Human Development Index, which is a good indicator of general quality of life. Here we came fifth out of 15 comparable countries. In addition to the decline in unemployment and long term unemployment, the ESRI has shown that, over the period 1994-2001, life chances improved significantly. This is a trend directly related to declining unemployment and reduced levels of dependence on social welfare in a period of economic boom.
Maintaining our competitiveness is of great importance for Ireland because we are one of the most open economies in the world. In terms of trade performance, we come second out of 16 nations in the NCC's league table, with much of this driven by our strengths in the foreign investment sector. We have one of the most favourable taxation regimes in Europe and have put in place enterprise policies that support investors. This makes Ireland a secure and profitable location from which to do business globally. The combined effect of these policy strands has ensured that Ireland has consistently been an attractive location for foreign direct investment for a considerable period and we have successfully won more global and EU foreign direct investment than our size would naturally suggest.
Our commitment to developing a modem high technology and competitive economy is winning where it counts — in the marketplace. The export performance of the high technology sector is powered by the skill and ingenuity of a productive and competitive workforce. Chemical, pharmaceutical, medical devices, electronic and e-commerce sectors would not consistently choose Ireland as an investment location if we did not provide solid competitive advantages. We all know that global competition for prestige and high value mobile investment is intense, yet global businesses continuously choose to invest here because we are competitive for these high end industries.
Not only is foreign direct investment crucial to maintaining economic vitality, how we manage the transition to a different portfolio of foreign investors is a key challenge that we are meeting. Manufacturing is still the engine driving our economy and represents by far the greater part of the exports of €68 billion and local economy expenditure of €15 billion by overseas companies in Ireland each year. The type of manufacturing investment being secured for Ireland has changed. Many Western-type economies are seeing a gradual loss of low level, labour intensive operations to lower cost countries. However, innovative economies, like Ireland, continue to attract advanced manufacturing operations that are at the cutting-edge of technology, where high productivity output is heavily reliant on the skills and capability of a highly educated and agile workforce. These investments may not have the headline grabbing head count of previous years, but their massive capital investment per employee shows that we are serious contenders when it comes to winning sophisticated, technology-driven, mobile investment.
We will continue to encourage manufacturing. It provides the test bed for innovation and ingenuity. Developing new products, creating new processes and achieving greater productivity is an integral part of manufacturing today.
Helping us further along the road of transformation, the enterprise strategy group's analysis of our enterprise performance made a very strong case. It showed us how and where we need to be creative in policy thought and deed. I referred earlier to the One Step Up initiative and the upskilling of the workforce and population. This is one part of our response to the enterprise strategy group.
A second key plank in our response to the O'Driscoll report has been the new Enterprise Ireland strategy to help transform Irish indigenous enterprise. The vision set out in the strategy is the support and creation of a dynamic indigenous firms sector engaged in high value added activities. Enterprise Ireland's clients will become more intensely market focused and innovative, providing new and proprietary products at premium prices. The strategy has a heavy emphasis on research and innovation, exports, competitiveness and entrepreneurship to deliver greater numbers of new high growth companies with strong potential to win increasingly profitable contracts in global markets. It aims to help Irish companies grow into self-sustaining enterprises of sufficient scale to compete internationally.
Driving the competitiveness agenda and keeping us ahead of the curve was very much at the heart of the ESG's recommendations. We have a broad and diversified enterprise base that has expanded with the help of constructive economic and business policies and we have one of the best possible international locations from which to do business. As I want to keep it this way, I am determined we maintain this competitive advantage.
I wish to recall the important contribution the European Union has made to the economic and social transformation in this country. Our membership of the Union has been an important catalyst for the broadening of our export markets and has created common rules which benefit citizens and business. Moreover, the Union has brought significant benefits, not just to the performance of our economy, but also the welfare of citizens. I only need to mention decent working hours, safer food, portable pensions, cheaper flights and cleaner beaches to give some idea of the benefits Europe has brought to citizens.
There has been much comment on the sluggish performance of the EU as a whole. Growth in 2005 is expected to be somewhat over 1%. While some of the larger member states are undoubtedly underperforming, we should not lose sight of the spectacular successes. The recently published world competitiveness rankings show that 13 of the EU member states, including Ireland, are in the top 30 and the three Scandinavian member states of Finland, Sweden and Denmark are in the top five. The UN Human Development Index, published earlier this year, ranks 12 EU member states, including Ireland, in the top 20 in terms of quality of life. Clearly, the EU is doing something right.
We can be justly proud of the achievements of the past decade. There is no greater indicator of success than being a sought after location in which to work and live. The total migration flow to Ireland in the 12 months to April 2005 is estimated at 70,000, the highest figure on record since migration estimates began in 1987. As a corollary, emigration is at it lowest since then.
The challenge is one of preparing now for the prosperity of next generation and to manage the transformation of our economy through that process. This demands hard choices as we must at the same time seek to further improve the life chances for all our citizens, not just those in employment. From my perspective, a successful society needs a dynamic economy, which constantly responds to the evolving demands of international competitiveness. We have proved that we can meet this challenge.