Everybody has had an opportunity to make a contribution. Before Deputy Bruton begins I would ask you all to confine their remarks to the section and the amendment because we have to get through the business as efficiently and as expeditiously as possible.
SECTION 2.
Can we all contribute?
Yes, but perhaps the Minister would wait until the conclusion.
I move amendment No. 1:
In page 3, subsection (1), line 15, after "employer" to insert "who is employing five or more persons".
The point I wish to raise is whether we should attach a levy to all businesses regardless of size. Everyone is aware of the additional bureaucracy being created and the Government has set up a task force specifically to look at the problems of small enterprises in dealing with levies, bureaucracy and red tape of all descriptions. The previous FÁS levy had an exemption at the lower end to try to prevent small businesses getting tangled up in such levies.
The argument still deserves examination. I have put forward the idea that because small businesses are in a particularly difficult position at the moment — and we are trying to relieve them of their burden — we should not at the same time impose this burden on them. I would like to know how the task force responded to the Minister when it was explained to them that the new levy being introduced would apply to small businesses as well. The Minister dismissed my point concerning the other two levies — the youth levy, which raised £150 million, and the new employment levy, which raised £130 million — as being of not great significance to the issue.
The Deputy asked where they went to.
They were introduced on the basis that they would be used to fund training and we find a number of years on or a number of months on that neither of them is being applied for that purpose. I accept the argument that this 0.25 per cent levy will go directly to the apprenticeship programme but I question the merit of levies as a principle. What is the merit of levies as a principle? What beneficial effect does the Minister foresee by imposing levies of this nature?
Deputy Rabbitte made the point that traditionally employers in Ireland have been very slow to engage in training, but it is a non sequitur to argue that because employers have been reluctant to commit themselves to training, suddenly the introduction of a levy will alter their attitude. I do not think it will alter their attitude and may, in fact, have the opposite effect. The Minister will be familiar with the previous levy system, which in one sense met Deputy Rabbitte’s point to an extent in that it was a levy grants system — in other words, if employers who were paying the levy wanted to get back some of their money they had to engage apprentices or the equivalent. We have not put that structure into this levy. We are not saying to employers who pay their 0.25 per cent levy that there is a surrender and regrant. We have not built into that structure a system where you force people——
There was no regrant in historical terms.
The previous levy had a built-in incentive. For those who paid, it was dead money; but the quid pro quo was that if employers were willing to commit themselves to training they got relief for that money. In that way the levy was used to tackle the issue, raised by Deputy Rabbitte, of employers in Ireland being traditionally reluctant. It might be counterproductive in this instance that we have not built in any such incentive scheme. I ask the Minister why that was not considered as part of it.
The major issue is that we are imposing this 0.25 per cent levy but the price employers are exacting is the critical one, in that they insist on selection. It is that that has scuppered the notion of equity in access. Employers through the 0.25 per cent levy are gaining a stranglehold on selection to apprenticeships. Everyone of us know that thousands of young people want to get on apprenticeships but they are told that unless they can produce a sponsor they cannot get in. FÁS have abandoned all notion of sponsorship. Perhaps the Minister would respond to those points.
In the course of her remarks the Minister said she was considering the tender price embracing a requirement on taking up apprentices.
In public tenders.
There is a need for some legislative underpinning for such a move. In justice, the Minister could not impose on a tendering procedure something that was not related to the project in practice, particularly because we open tenders to all comers. How could you insist that a German, a Dutch or a tenderer for a project was complying with an apprenticeship?
They do it in Germany.
I would like to consider whether a legislative base would be needed because it is questionable. They may do it in Germany but it is not done in Holland, Luxembourg or Greece. If we introduce it into our legislation the EU will ask whether there is a deliberate attempt to keep the Greeks out of tendering for Irish produce. Perhaps the Minister would elaborate on how she is going to do this. It has initial attractions, but I do not think it should pass without our teasing out whether it is a viable option particularly if the Minister is saying that is the way she is going to tackle some of the defects that many Deputies have raised about the present scheme.
I will allow the Minister respond to the points raised at the end of each section.
I wish her luck.
I support the amendment. I anticipate the Minister's response will be that agreement had been reached at the central review committee of the Programme for Economic and Social Progress. That agreement is far removed from the ordinary contractor who operates as a sole trader. He feels somewhat aggrieved that decisions taken in the smoke-filled rooms of the central review committee of the Programme for Economic and Social Progress will impose additional costs on him.
There is flexibility in regard to the number of people employed but contractors who have a good track record certainly have potential to create apprenticeships within their own business. The imposition of additional costs has been one of the reasons they have been so reluctant to take on apprentices. Despite what the Minister may say this levy will be a further obstacle in his way. Many of those who sit on the central review committee of the Programme for Economic and Social Progress— which has had certain benefits — tend by and large to reflect the larger interests and do not take on board the concerns of small and medium sized enterprises, particularly contractors involved in plumbing, carpentry and constructions who have potential for increasing employment and offering apprenticeships. The biggest obstacle to creating additional apprenticeships has been the cost factor and the proposed levy would be an additional burden. The Minister should look at this particular amendment and see whether she could introduce an exemption on turnover or on the numbers employed — a matter on which we should have flexibility — but I certainly think the point is worth considering.
Before I call the next speaker, I would like to have agreement on time. I thought we would have made more progress but, unfortunately, we spent a lot of time on section 1. Is it agreed to adjourn for lunch at 12.45 p.m. until 1.45 p.m. Agreed.
I have a very open mind on this amendment. In normal terms I would be the first to support the exemption of small operators from any general kind of levy but when we are talking about a very small amount of money for the training of the next generation I am not sure. I am particularly mindful of the fact that we have talked during the course of the introductory debate on the practice, particularly in the construction industry, of subcontracting and further subcontracting. Many small operators in the construction industry undertake very highly specialised areas of work and do very well in overall terms, sometimes financially better than some of the bigger operators because they have a very small area of operation. They can move in and out very quickly and have smaller overheads. I am not sure I want them exempted from this levy because the overall concern is not the size of the levy or its impact but the lack of places and the reluctance to take on apprentices. We will have to go to the small contractors and attempt to tie them in to the whole apprenticeship and training programmes as well as to every element of the legislation, and this is only a small element of overall legislation. I am mindful of the fact that sometimes in the very highly specialised crafts many small operators work very successfully in areas where apprentices would find gainful apprenticeships. It is not necessary to subject all these people to the levy but if you engage them at the levy stage, the dialogue is opened with a view to tying them into a new and intensified programme or campaign to create more spaces for young people at every level in every craft and trade.
I suppose self praise is no praise but I have been branch secretary of the Limerick branch of the stone layers' trade union for 34 years, during that time I served on the national and local apprenticeship committees so there is little or nothing I do not know about apprenticeships, especially in the building industry. While the Minister has very good intentions she is entering a minefield, especially in relation to apprenticeship in the building industry, because it is a jungle. I have vivid memories of my own apprenticeship of dealing with tough, unscrupulous employers who were part and parcel of the ethos of the building industry. You must be tough and rugged to survive because of the tendering process and the stop/go nature of building. In that situation, apprentices are often discarded, especially at present when we have a glut of tradespeople. Therefore, apprentices are seen as unnecessary or superfluous and employers do not have the commitment, determination or will to train them, they often see them as a nuisance imposed on them by the trade unions or FÁS. In addition to production methods in the building industry being speeded up we have subcontracting, therefore, apprentices have been the biggest casualty because people will not take time to instruct them. The employers see them as a disruption to their work, going on off-the-job or on block release courses. Instruction to apprentices about safety on scaffolding is seen as a nuisance and liability hazard. In this case the Minister must tread warily.
In the past there has been a great resistance by building employers to paying the levy. Oddly, big employers are often the best in this area. It is easy to deal with the large contractors but it is difficult to pin down the medium to small contractors and to make them pay the levy. There are obvious dangers in the amendment tabled by Deputy Richard Bruton although I know he is very concerned and has good intentions in this area. I question whether the levy should be based on turnover, in terms of money, rather than on the number of workers which can fluctuate. The building industry is a transient, nomadic business. During the summer an employer may have 30 employed while that number could be scaled down to four or five in the winter months. That would not give a complete picture and he would just use the small number to justify getting out of the levy — as Deputy Rabbitte pointed out. This matter is open to exploitation and abuse. I would stick with the Minister's figure but it will be very hard to collect it.
Despite the Minister's good intentions it will be very difficult to monitor this levy. Even under the old scheme where an employer sponsored an apprentice for eight months on an off-the-job course in a vocational education committee school or college he was supposed to pay the apprentice a weekly wage but in many cases the employer did not pay the apprentice. Because of the difficulty in obtaining employment now and the pressure on parents to find employment and outlets for their children, they were not in an equal relationship with the employer. They were forced to allow their sons, in the case of bricklayers, plasterers and carpenters, into the industry, in the knowledge that the employer would put down what he was paying the apprentice every week when in fact no money changed hands; that is what happens in a very competitive situation. The building industry is in deep recession and it will be very hard for anybody to get an apprenticeship unless he knows an influential person who can lobby the employer.
For example, in Limerick there are two large housing estates with more than 6,000 people, Moyross and South Hill, both of which are as large as Ennis. Over 85 per cent are unemployed in those estates. I could count on both my hands the numbers from Moyross and South Hill who have been able to get apprenticeships. They have been marginalised and, nowadays, due to huge competition for jobs, those people will not even be mentioned. It is very difficult to police that. I know the Minister's ideas and intentions are good. The percentage of apprentices in relation to the number of jobs looks good on paper but in practice it is very hard to carry out. I will give an example. A new bridge was built in Limerick costing £5.3 million, a large contract. It involved only about 26 workers as it was nearly all mechanised. There was not one apprentice on that because it did not lend itself to apprenticeships. It was mainly steel fixing and concreting and general operative work by mechanised dumpers and JCBs. In that type of situation it would be very difficult to impose apprentices in a job where it was not warranted. A more flexible means might be to set up some local committee comprising the employer, the trade unions concerned and FÁS to monitor the job, to be flexible and where appropriate, to insist upon that, even though the trade unions have been weakened recently by the amount of subcontracting taking place. That would be a better method than having an artificial figure imposed that would not be relevant to the job and which would be difficult to carry out.
We are dealing specifically with the apprenticeship levy. I would ask you to confine your remarks to that area.
I appreciate that. I would support such an aim, but it would be very hard in practice to do that in places.
It is one of the benefits of this kind of committee system that we have the opportunity to have the kind of discussion that Deputy Kemmy has kicked off because he is somebody who has extensive knowledge in this area. I agree with everything he has said, from my own more limited knowledge in terms of selection, monitoring and so on. I would like to hear where he was going in terms of what is the better approach, if there is one?
I do not agree with Deputy Bruton's amendment. I understand the thrust of the argument he has made, but I do not think the argument brings one to the conclusion that one should impose a threshold in the manner suggested in the amendment — in other words, that it would apply only to employers who have employed more than five employees. I do not think it desirable to put that in, although it may well work out that way in practice. I have seen very major projects, for example, in my own constituency, especially in Tallaght in recent times because of the designated tax zone. There have been enormous projects there in what were before now basically greenfield sites. It was quite amazing to anybody with an affection for the traditional form of the building industry to learn of the relatively small number of workers employed and the particularly insignificant and miniscule number of apprentices employed. In any such major project now the contractor will be subcontracting out on such a diverse basis that a great many of the subcontractors on the site will have five workers or less as the case may be. Therefore, since it is admitted that since that the main problem with the apprenticeship system traditionally, and even after this Bill becomes law, is in the area of the wet trades, I would be reluctant to agree to putting in this kind of arbitrary cut off point. As Deputy Kemmy suggested, it may be more appropriate to cater for the thrust of Deputy Bruton's argument by some kind of quantification of the value of the contract and so on, but this is not necessarily the best way to do it.
The construction industry is a jungle and I do not know what arrangements will be put in place to monitor the new system. For example, we all lived through the controversy before Christmas of Mr. Maurice Doyle's views on the application of the social welfare system and so on. The areas where we know that there is abuse and fraud in the social welfare system is the construction industry. The cases which have been unearthed as distinct from the nod and the wink — and we all know people who do nixers and who are claiming social welfare benefits — are in the construction industry. A number of cases have been advanced in recent times as a result of vigorous spot checks. That is only going on because of the collusion of the employer. It could not go on — because there are workers available — if the employer was not facilitating it. Similarly in this situation, as Deputy Kemmy said, one is dealing with a particularly tough employer in particularly cutthroat industry and it will be difficult to make it stick.
I agree with the point made by Deputy Bruton, which is a critical point, that the quid pro quo for this is that the employers have the stranglehold on selection. All of us have paid lipservice to the notion of fairness of access and of equity in access. We have not come up with a great deal to address the question. I am not convinced; I am open to being convinced.
I have an amendment on the matter.
As the Bill stands I do not think it will get to the bottom of that question. I would like to hear the Minister's views on the question of monitoring because it will be a waste of time if the industries and sectors that have traditionally been good in this area of apprenticeships are the ones who end up paying the levy and the rogues continue to be able to avoid it. There are industries such as the construction industry, where for reasons of tradition or because of fixed location, the mobile nature of it and so on, this evasion is facilitated. It is regrettable if we end up ensuring the levy is paid by those who can be got at and who have traditionally paid it, but that those who have traditionally evaded it do not pay it.
Sitting suspended at 12.45 p.m. and resumed at 1.50 p.m.
I call on the Minister of State to reply to the debate on amendment No. 1.
Can we fix a time at which we will conclude this discussion?
I would prefer to let the discussion run on. If we are running late, we can review the situation.
At what time do you propose to conclude? Are you going to fix a time?
We can, if we so desire, but as a rule we leave the matter open. If at all possible, we should conclude the debate on the Bill today, perhaps before 5 p.m. or 5.30 p.m.
We will have to talk fast.
Not necessarily. We had a good discussion this morning and we should endeavour to complete our business as quickly as possible. If we have to reconvene at a later date, so be it.
Will we conclude at 5 p.m?
Let us say 5.30 p.m.
I would be inclined to say 5 p.m. at the latest.
Is that agreed? Agreed.
We were dealing with amendment No. 1 in the name of Deputy Bruton. Like other Members, I appreciate that the purpose of the amendment is to lift the burden from those who employ a small number in their firm, but the purpose of the Bill is to allow apprentices enter the system. We should not confuse two issues. If this amendment is accepted the issue of the perceived burden on people and the need for apprentices could run together. Even if, from a philosophical or an ideological point of view this was the correct thing to do, it would not be feasible under the PRSI system through which this money is going to be collected. As I said earlier, the burden will be carried by employers, not employees. We are trying to preach the creed that there is a need for training, certifiable standards and so on. In this regard rather than exclude certain employers we should increase the number involved in this process. I therefore urge the House not to accept this amendment.
Deputy Kemmy's suggestion of a turnover threshold would be a nice idea but unfortunately because of the way the proposal is structured, one could not combine a turnover threshold with a tax on earnings; this would not be feasible.
At this stage, I am inclined to withdraw the amendment. However, I take issue with the Minister of State who said that the purpose of the Bill is to allow apprentices enter the system; it is not. It is to introduce a tax. As I said earlier, if our aim is to allow apprentices enter the system, then the levy should not be payable where people take on apprentices; in other words, we should adopt the system that is in place in Germany where a levy is only payable when the number of places on offer falls short of what is required in order to fund extra places. I will withdraw the amendment at this stage, but I may on Report Stage introduce an amendment to provide an incentive for employers to take on apprentices.
Amendment, by leave, withdrawn.
Section 2 agreed to.