Thank you, Chairman. I am glad of the opportunity to deal with the Estimates as well as dealing with whatever questions Deputies would like to ask.
Growth in employment is the real fundamental of our economy and current indicators are positive. The preliminary estimates from the 1994 Labour Force Survey show an increase in total employment of 30,000 or 2.6 per cent over the previous 12 months. A further significant rise in the numbers employed is expected when the preliminary results of the 1995 Labour Force Survey are issued later this year.
The Central Bank in their most recent bulletin are forecasting that non-agricultural employment could grow by 37,000 persons in the period to April 1995.
While some commentators have drawn attention to the fact that the Central Bank have revised downwards their employment projections they may have failed to notice that this revision was based on what was then anticipated as a significant reduction in Government-funded job schemes. The situation has now changed. You will be aware that I announced on Tuesday, 16 May, that the Government approved proposals of mine to increase funding for the Community Employment Programme so as to increase the average number of places to 40,000.
Unemployment continues to fall. The number of registered unemployed declined by 5.7 per cent in the 12 months to end December 1994. This trend is continuing in 1995 with a further reduction of 11,200 in the registered unemployed in the first five months of this year.
It is also reassuring to note that there has been a 28 per cent reduction in the number of redundancies notified to my Department in the first four months of this year compared to the same period last year.
The continuing increase in employment and reduction in the number becoming unemployed is to be welcomed. However, I have to say that I am unhappy with the rate of decline in the number of registered unemployed. The recent trends in outflows from the register suggest that the unemployed are not benefiting in full from the improved jobs market. That is an issue that we will return to when dealing with the local employment service which is one of the initiatives that we hope will help to tackle that.
As Members of the Committee will be aware, the new industrial development agencies, Forfás, Forbairt and IDA Ireland commenced operations on 1 January 1994. The Industrial Development Act, 1993, provided that the powers and functions of the former IDA and Eolas would initially be vested in Forfás and then devolved to the executive agencies Forbairt and IDA Ireland. During 1994 that process of devolution was largely completed.
I am currently carrying out reviews of policy in the areas of both inward investment and the development of indigenous industry. It is important that the new agencies have a fresh policy impetus and that there is coherence in the various strategies being pursued by them.
Forfás, since its establishment, has made a significant contribution to maintaining the broad policy focus recommended by Culliton and Moriarty, particularly in respect of the wider business environment. The issues being addressed by Forfás — industrial cost, taxation, telecommunications and finance for industry, to name but a few — are crucial to the competitiveness and growth of Irish enterprise.
Forfás's policy and co-ordination functions include an important science and technology component. This includes co-ordination of Ireland's involvement in the EU Framework Programme for Research and Development. In addition, Forfás provided extensive back-up to the recently published report of the Science, Technology and Innovation Advisory Council, STIAC. The Minister of State, Deputy Rabbitte, will be available to deal with issues in that area. In the coming year, Forfás will continue its involvement in the STIAC processs and the Forfás chief executive officer, Mr. John Travers, will chair the task force which has been established by the Government to examine and respond to the STIAC recommendations.
I launched a new operational programme for industrial development covering the period 1994 to 1999 in January this year. The new operational programme is setting itself explicit targets, not just in gross job creation as in the past, but other targets that must be achieved if we are to make our industry competitive. These include: 1. Increasing indigenous exports by 66 per cent in value, almost twice as fast as the overseas sectors (+ 33 per cent); 2. Increasing our share of world trade by 20 per cent from 0.7 per cent to 0.84 per cent; 3. Increasing the share of raw materials used by foreign companies sources in Ireland by 15 per cent, from 27 per cent to 31 per cent, and 4. Increasing the share of GDP devoted to R&D by 30 per cent, from I per cent of GDP now to 1.3 per cent.
While the gross job target of 20,000 is the same as for the last operational programme, the greater emphasis in strengtening the long term capability of Irish industry — and indeed its profitability — will help reduce job loss and give a more secure long term employment base. It is worth recalling that during the previous five years there was a loss of 59,000 jobs in our indigenous industrial base.
The task force on industry adjustment should also make a significant contribution to the development and expansion of a more secure employment base by identifying areas at risk from competitive forces and proposing competitive renewal strategies. This innovative measure will combine up to £22 million of Structural Funds with a participative approach supported by IBEC, ICTU, LRC, the industrial development agencies and my Department in a process that will identify priorities and bridge the gap between analysis and the implementation of change.
Since January 1995, 12 greenfield projects from the US with a job potential of 2,000 have been approved by IDA Ireland, with two projects having a job potential of 2,500 awaiting Government approval. The combined job potential of these projects together with others in the pipeline is in the region of 7,000 over the next three to five years. Furthermore, there is a number of substantial expansion projects from US companies already established in Ireland that should create a further 2,000 jobs over the next three to five years. This builds further on the very good results in 1994. A total of 9,740 new jobs were created and recruited in 1994 — 8,200 of these are wholly new first-time jobs and the remaining are accounted for by the recovery of jobs lost in earlier years. Job losses were at their lowest level since 1990, at 4,470. In addition to the new jobs created, contract and temporary employment also increased significantly this year with 3,000 more such jobs in IDA-backed companies in 1994.
Forbairt's role is to develop indigenous industry and to strengthen its technological base and its capacity to innovate. Earlier this year, the board of Forbairt adopted a range of ambitious targets for the development of Irish industry up to the start of the new millennium. The agency has committed itself to assisting indigenous industry to increase its sales from roughly £11 billion in 1994 to £15 billion in the year 2000. To achieve this growth, exports by Irish manufacturers will have to grow from £5.7 billion last year to £9 billion in 2000. It is hoped this improved business performance will, over the next six years, result in an increase of 12,000 in the total number of people employed directly in Irish manufacturing and internationally traded service industry and that this will have a knock-on effect on employment levels in other sectors.
Forbairt's strategy for the future also involves a move away from simple grant packages to a more balanced mix of grants and preference share investment. While grants will continue to be used as the key incentive for start-up busineses, the new approach will involve Forbairt investing in specialist funds to provide equity finance to industries which are not, at present, adequately supplied by private operators. The agency will also use long term repayable credits more extensively to co-finance major investments by established Irish businesses.
A small net increase in employment, the first in four years, was recorded by Forbairt during 1994. The agency has now to build on this beginning by helping companies which are prepared to reach out for growth. The agency's target for this year is 6,500 first-time jobs and a higher net increase than achieved last year.
Shannon Development, as a central task in its integrated regional development mandate in the Shannon region, continued to promote the growth of the Shannon Free Zone, the National Technological Park and indigenous industry throughout the Shannon region, creating 414 more new jobs in 1994 than in the previous year. New approaches to financially support the indigenous industry base were initiated by Shannon Development in 1994. The company was given a pilot role by the Government to develop and test new equity investment systems and approaches as a means of pioneering early stage and venture capital funding by the State for enterprise development. Shannon Development is aiming to create 400 new jobs on the Shannon Free Zone in 1995 and a further 800 in indigenous industry in the Shannon region.
The objective of the county enterprise initiative is to develop an entrepreneurial culture at local level, with the intention of generating the maximum number of viable businesses and sustainable jobs. The boards have been given unequivocal enterprise and job creation objectives, and are providing a new source of funding and other supports for local enterprise initiative in business areas not already covered by the State industrial development agencies.
The rate of drawdown of grants has speeded up on 1995 with £5.5 million being drawn down in the first twelve months of this year compared with just over £0.4 million in the same period in 1994. Figures supplied by the boards indicate that from their establishment to the end of 1994, 1,776 full-time and 263 part-time jobs were created in CEB-supported projects. Close to £5 million was drawn down by the boards in grant supports in 1994.
The boards work closely with the other industrial development agencies, and also with the Leader groups and area partnership companies. Each board is assisted by an evaluation committee, the purpose of which is to provide technical assistance to its board on the evaluation of projects with a view to ensuring the commercial viability of projects. Now that the interim stage of the county enterprise initiative is drawing to a close, I hope within the next few months to grant boards the autonomy they require to move the county enterprise initiative into its fully operational stage.
My Department will be considering, in conjunction with the other Departments concerned, how best to avoid the danger of duplication of support and displacement of existing enterprises by the various local development initiatives, including Leader and the area based partnerships.
It has been recognised by Government that one of the main inhibiting factors restricting the growth and development of small business and service firms has been the shortage of affordable medium to long term fixed rate finance. In order to build on the £100 million pilot small business loan expansion scheme, I intend to introduce a larger, wider and more flexible loan scheme as the principal measure of the operational programme for small business. It is intended that this new scheme will be co-funded by the EU, the Exchequer and the banks and it was for this reason that I invited all banks to tender for the scheme at the beginning of May 1995.
The size of the loan fund is expected to be over £250 million. I propose to reduce the minimum size of loans from £40,000 to £20,000 and to leave the maximum at £500,000. In addition, I propose to open up eligibility for the scheme to certain small businesses in the services sector, subject, of course, to restrictions where there is a danger of displacement. This new scheme will build on the success of the small business expansion loan scheme. Under that scheme, funds were provided — mainly in 1994 — for up to 10 years at a fixed rate of 6.75 per cent.
The amounts loaned range from £40,000 to £500,000. The small business expansion loan scheme operated by the ICC on behalf of my Department was substantially oversubscribed and was a cost effective intervention. It has led to the creation of 3,716 jobs at a cost of £4,897 per job and the maintenance of a further 1,098 jobs. The average cost of jobs created and maintained is £3,780.
The importance of the small and medium enterprise — SME — sector has been recognised by the EU in its adoption of the SME initiative which it published last year. The initiative aims to stimulate small and medium sized businesses to adopt to the single market and to ensure that they become internationally competitive. Indeed, the agenda of dealing with small business is central to the work of our Department at present and we are addressing not only funding needs but also other areas where there is potential for small business, such as in public procurement. Members will also be aware of the establishment of the Joint Oireachtas Committee which is making a significant contribution. There is also the adapt initiative, which will be a training initiative geared specifically to the support of SMEs.
I am pleased that the Government has endorsed my proposal that the average level of partcipation on community employment should reach 40,000 this year, which compares very favourably with last year's average participation level of 30,960. I inherited a very serious problem of under-funding in this programme on taking office. I have since secured additional funding of £23 million in the budget and Government approval for a further £10 million in May of this year. As most Members will be aware, numbers on the programme had reached 40,000 by the end of last year and the level of demand remains very high, which is testimony to the extraordinary success of the programme with local community and voluntary groups sponsoring projects and with unemployed persons seeking a placement on the programme.
This year's Exchequer allocation of £244,845,000 for community employment, which is some £70 million higher than last year's outturn of £174,785,000, reflects the very substantial increase in activity which will be achieved under the programme this year and is but one of a range of measures which have been put in place by this Government to assist the unemployed.
My Department is currently working on a White Paper on human resource development and training which I intend to have completed as a matter of urgency. This issue is one of the critical challenges for business if we are to improve our competitive advantage. The White Paper will focus on all aspects of training and will outline policies for the future development of training for new entrants to the labour market including early school leavers and the long term unemployed.
It will also outline policies for the future development of training for the employed. In this area, research has unequivocally established that there is a clear relationship between skills enhancement and improved competiveness in industry. Accordingly, one of my aims is that it will serve as a blueprint for the promotion of a training culture in industry.
Arrangements are in hand for the establishment of the Local Employment Service announced earlier this year. Local management committees have been set up in all partnership areas and plans are being drawn up for the operation of the service in their areas. I am confident that the new service when operational will ensure a better and more co-ordinated service for the long term unemployed.
My Department is the national authority for the European Social Fund and in this regard has responsibility for coordinating and reporting on expenditure across nine Government Departments and approximately 50 training and employment programmes which receive support from the ESF. The amount of ESF expenditure being invested in the economy is considerable, representing 35 per cent of total Structural Fund transfers from the European Union. The total ESF allocation to Ireland approved for the 1994 to 1999 period amounts to £1.6 billion. The bulk of this expenditure is channelled through the Human Resources Development Operation Programme, which accounts for £1.3 billion. Very significant levels of Exchequer funding are also applied to the measures under the Human Resources Development Operational Programme, bringing the total investment over the period to £3.2 billion. These funds are applied to vocational education, training and employment programmes delivered by FÁS, the Department of Education, the NRB and the Department of Justice.
The main objectives of the Human Resources Development Operational Programme are: to improve radically the quality of training provision to best international practice; to increase the level of recognised certification within the education and training sector and promote progression and career-long training; to promote greater equality of opportunities to allow women and the disadvantaged greater access to training and the active labour market; to enhance employment prospects of the unemployed, particularly the long term unemployed and socially excluded groups; and to encourage industry and services to give training greater priority as a key element in securing long term competiveness.
My Department is responsible for the co-ordination of two human resources initiatives: Employment which comprises HORIZON for the disabled and the disadvantaged, NOW for women, YOUTHSTART for disadvantaged young people, and ADAPT which aims to promote adaptation to industrial change and the promotion of new forms of employment. Total funding for these programmes up to the end of 1999 will be £73 million. An intensive information campaign on these initiatives was organised early this year. Nearly 1,000 project applications have been received and these are currently being reviewed.
In the area of industrial relations my Department's Estimates include funding for the institutions that have the task of supporting the promotion and maintenance of good industrial relations. The main institutions which are entrusted with this responsibility are, of course, the Labour Relations Commission and the Labour Court. The contribution which a healthy industrial relations environment can make to our efforts to maintain and create employment cannot be over-emphasised. In this regard, it is fair to say that industrial relations in this country have improved considerably over the past decade. This is evidenced by the dramatic reduction in strike activity in recent years. The number of work days list due to strike activity reached an all-time low in 1994 — only 24,000 work days were lost in 32 strikes. This represents a major improvement since 1984, for example, when 380,000 work days were lost in 192 strikes.
I am of the view, that too many disputes that should be settled at local level are being referred to the Labour Relations Commission. Mangement and unions should not allow themselves to become overly reliant on third parties but should make greater efforts to settle their differences in direct discussions. In order to improve industrial relations structures and practices at the level of the work place, the Labour Relations Commission established an advisory service in 1992. It offers employers and trade unions a range of advice and guidance on specific issues as well as long term assistance and involvement in complex strictural/organisational industrial relations problems. In order to identify organisations that could benefit from its assistance, the advisory service monitors usage of the commission's dispute settling services. The success of the advisory service in this regard can be gauged from the impact on conciliation referrals over a three year period of the 12 most frequent users of conciliation. In 1992, these 12 organisations were involved in 249 referrals to conciliation. Comparative figures for 1993 and 1994 are 174 and 140 respectively.
The Unit for Partnership Enterprise, recently established in my Department, is exploring ways and means of assisting the social partners to promote and encourage greater participation by employees in the development of the enterprise in which they work with a view to meeting the challenges of a continuously changing and increasingly competitive market place through more efficient and effective work organisation.
During 1994, the Health and Safety Authority, continued to develop new legislative proposals implementng 11 EU directives on matters such as the protection of pregnant workers, exposure of employees to biological and chemical agents and the classification, packaging, labelling, marketing and use of dangerous chemicals. The authority also continued to devote a large part of its resources to informing, advising and educating employers and workers on the proper management of occupational safety and health issues and promoting the message that an accident-free workplace is entirely consistent with best business practice. Legislative priorities for the authority in 1995 include the introduction of legislation implementing the EU directive on construction sites and a major repeals and revocation order that will significantly simplify the task of business in complying with occupational safety and health legislation.
While I am conscious of the necessity to eliminate any undue burdens on employers that may impede their competitiveness and their capacity to provide employment, standards that are legally established to safeguard the interests of workers must be maintained in certain occupations that are vulnerable to exploitation. The provisions of six conditions of employment statutes that date from the 1930s and 1940s are generally outdated and inoperable and it is envisaged that they will be repealed by new legislation which is required to give effect to the Council Directive on the Organisation of Working Time. The directive deals with the provision of minimum daily, weekly and annual rest periods, maximum working time and maximum duration of work. My Department is engaged in a widespread consultation process with all interested parties in formulating proposals to implement the terms of the directive.
A discussion paper on the review of the holidays legislation was published in November 1994, the objective of which was to provoke wide debate and seek views from a wide range of interested parties on the nature of future legislative arrangements in this area. I am glad to say that the discussion paper was successful in achieving a response from many interested parties and these views are now being examined. Of course, a major factor that is central to the review of the existing legislation is the Council Directive on the Organisation of Working Time. The directive provides for minimum annual rest of four weeks which is one week in excess of the current statutory annual entitlement of three weeks.
I would like to turn briefly to the recommendations of the Company Law Review Group whose report was published in February. In its report, the group made more than 100 recommendations relating to changes in company law. Recommendations that are considered desirable will be implemented on a phased basis. In this regard it is intended to bring forward proposals in relation to the areas of examinership and the Task Force on Small Business immediately.
At present, proposals that have been prepared by my Department in consultation with the financial services industry to provide for the establishment of a take-over panel with statutory backing are under consideration. The establishment of the Irish panel will have two main objectives. One is to protect shareholders in merger and take-over situations. The other is to provide support and credibility for the Irish financial market following the separation of the Dublin Stock Exchange from London.
The Director of Consumer Affairs' responsibilities will be increased considerably following the enactment in the near future of the Consumer Credit Bill, now at Report Stage in the Dáil. The Bill represents a major reform and consolidation of consumer credit legislation and will give the director increased responsibility in the licensing of moneylenders and credit and mortgage intermediaries. It is also the director's intention, during 1995, to open regional offices in Cork and Limerick.
That was a thumbnail sketch of some of the work going on in our Department. We will obviously be at the committee's disposal to deal with issues Deputies want to discuss.
