The meeting is now in public session. The Chairman is unavoidably detained and in the circumstances a temporary Chairman must be elected.
Business of Select Committee.
Clerk to the Committee
I propose the vice Chairman, Deputy Sheehan.
I second the proposal.
Deputy Sheehan took the Chair.
It should be noted that he was proposed by the Opposition.
(Carlow-Kilkenny): I knew the Deputy was magnanimous so I did not wish to interfere.
I remind Members that the committee's next meeting is at 2.30 p.m. next Wednesday to consider the Supplementary Estimate of the Department of the Marine. A suggested timetable for the committee's discussions today has been circulated. I suggest we conclude at 5 p.m. at the latest. Is that agreed? Agreed. The meeting today will deal with Vote 34, Supplementary Estimate for the Department of Enterprise and Employment.
Estimates 1996.
Vote 34 — Enterprise and Employment (Supplementary).
I am pleased to have this opportunity to elaborate on aspects of the Supplementary Estimate of £40,533,000 for my Department's Vote. It is useful to point out that this Government can point to the rapid rate of employment growth. The latest labour force survey figures show that 51,000 more people were working in the industry and services sectors in just a single year for the period to mid-April 1996. This has been a record year in respect of employment growth and this reflects the results of careful and prudent management of the economy which has led to sustained high levels of growth and corresponding employment growth.
The purpose of the supplementary grant allocation in the area of foreign direct investment is to provide an additional £25 million to IDA Ireland in respect of its capital grants expenditure to ensure that client claims and commitments can be satisfied on a timely basis. In the original Estimate for the year ending 31 December 1996, IDA Ireland has been approved grants of £105 million towards its capital grants budget. In addition, IDA Ireland is permitted to avail itself of £7 million of own resources income, consisting of grant repayments amounting to £2 million and transfers from the European Structural Fund of £5 million. This comes to £112 million in all.
The IDA requires additional funding of £25 million for its capital grants budget because of its success in winning a significant number of foreign direct investment greenfield and expansion projects. In addition, provision has to be made for the continuing impact of large projects that were approved a number of years ago and which have been coming on stream at a rate faster than expected such as Intel, Motorola and Gateway, necessitating a faster drawdown of funds. In this regard, IDA Ireland had already set ambitious targets for 1996 in terms of job approvals totalling some 15,000 of which 11,000 were first time jobs, and the projected net change in employment of 8,000. These targets have to be seen against a three year rolling target for the creation of 31,000 new first time jobs, itself a 22 per cent increase on the previous three year period. The corresponding target for net increase in employment was 20,000.
IDA Ireland is quite satisfied with progress to date in 1996. To the end of October, 46 new greenfield projects have been approved by IDA Ireland and the Government. These include projects such as Eastman Kodak, Alps Electric, American Airlines and AOL Bertlesmann. In addition 56 new projects have been approved for existing clients, including Hewlett-Packard, Wyeth Medica and Oracle. It is not yet possible to talk about precise numbers of first time jobs or the net change in employment but the extent of positive progress can be gauged by the fact that the combined job potential for these projects is over 16,000 in the year to date.
Forbairt requires supplementary funding of £10 million in respect of its capital grants activity. There are three principal factors that have given rise to the need for this additional funding. The first is the increased level of approvals in recent years over and above that which obtained in respect of indigenous industry in previous years. This has been due, in the main, to the buoyant state of the Irish economy which has resulted in many Irish-owned firms being in a position to bring forward expansion projects. The second contributory factor has been the establishment, in recent years, of a number of important overseas projects in the timber processing sector such as Medite, Louisiana-Pacific/Coillte and Masonite. The final factor is the ongoing switch from grants to equity as an aid measure. This results in more of Forbairt's capital being invested at an early stage of project development.
What have been the effects of this increased investment in indigenous industry? The drive towards growth spearheaded by Forbairt since its establishment in 1994, combined with the increased level of investment, is now beginning to make itself felt in one of the most tangible ways possible — in terms of job creation. In 1994, the decline in employment in the indigenous sector was halted for the first time in many years and we witnessed small but significant growth. This trend continued and improved in 1995 and, although all the figures are not yet available, Forbairt confidently expects that there will be a further net increase in employment in its client firms this year, probably in excess of 2,500.
In a similar vein, the number of first time jobs in Forbairt client companies rose from 6,472 in 1994 to 7,100 in 1995, with the outturn for this year expected to be in the region of 7,500. Forbairt continues to be fully committed to its role in relation to indigenous Irish industry and has, in this connection, begun to implement the recommendations made in the ADL consultancy report, commissioned by the agency as part of its reappraisal of activities and development of a new strategic direction since it took over the brief for indigenous firms. Full implementation is expected over the next year.
County enterprise boards were set up in 1993 to provide a new source of support for small business and to act as a catalyst for local development. The boards were primarily established as companies limited by guarantee during 1995 and became fully operational as local development bodies on 1 January of this year. The £1.5 million supplementary funds now sought for the boards reflect in part a speedier drawdown by approved projects. It also reflects the impact of the boards' first full year in delivering their soft supports package to promoters. Building an enterprise culture, review of plans, business information, advice, mentoring and counselling and management development training are among the supports available under that element.
As Deputies are aware, the recommendations of the Tallaght task force, accepted by the Government, included provision for two new enterprise centres in the Tallaght area. South Dublin County Council intended to purchase an existing premises in Tallaght and convert it to an enterprise centre before the end of 1996. However, this property is not now available. To accelerate the provision of a centre and meet the requirements of small new enterprises, the council has brought forward to 1996 work on the development of the proposed second enterprise centre on its own Brookfield site in Tallaght and expects it to be operational by summer 1997. An amount of £295,000 is included in the Supplementary Estimate for this purpose.
Community employment, with which Deputies are very familiar, is a part time work experience and training programme for the long term unemployed. It offers an opportunity for these people to regain their self-esteem and dignity and provides them with valuable experience and skills that enhance their chances of obtaining a job. In addition, the programme enables a wide range of voluntary and community organisations to employ staff and undertake a variety of socially valuable work in local communities. This year funding was provided for an average participation level of 40,000.
I am now seeking £8.8 million for this scheme by way of Supplementary Estimate. This has arisen because the profile of participants on community employment has changed resulting in a higher than anticipated cost per participant. Deputies will be aware that that the cost of funding each participant is dependent on their status; whether they are married or single, number of dependants, etc. This is the same as in regard to social welfare recipients. In addition I approved an increase of 4 per cent in the supervision grant paid to sponsors from 1 September last, which will cost £395,000 in 1996. The cost of paying a Christmas bonus to all community employment participants will cost £2.85 million.
My Department plays a significant role in encouraging and facilitating trade union rationalisation. It does this through the Trade Union Act, 1975, by making grants available from the Exchequer to help unions defray the costs they incur in the course of mergers. To date, 22 mergers have taken place under the Trade Union Act, 1975 and grants totalling almost £1.6 million have been paid in respect of 18 of these. The success of the policy is evident from the reduction in the number of unions over the past 15 years or so — from 86 in 1980 to 56 at present.
The largest merger to take place since the 1975 Act came into force was the amalgamation of the Irish Transport and General Workers' Union and the Federated Workers Union of Ireland to form the Services, Industrial, Professional and Technical Union (SIPTU). SIPTU has currently a membership in the region of 220,000. This amalgamation entailed very significant costs for the two unions. In 1990 the then Government approved a maximum grant of £1.273 million towards these expenses and SIPTU was paid a grant of just under £700,000 in respect of general expenses. The remaining sum of £573,000 was available to the union towards the cost of severance payments to staff who retired early or were made redundant.
The unions had indicated that there was likely to be a number of staff surplus to requirements when the two organisations were fully integrated. SIPTU introduced a voluntary redundancy scheme in 1992 and this was available to staff up to September 1995. The total severance expenses incurred by SIPTU was £625,828 and it is proposed to pay a grant of £301,660 towards that sum. Accordingly, a Supplementary Estimate of £201,660 is sought.
I now turn to the savings which partly offset the increased funds that are necessary. Savings of £2 million have arisen due to the later than expected start up of the various measures of the EU small business operational programme. In some cases this has been due to the slow take-up by small business whereas, in other cases, there have been delays in commencing activities and programmes. Much of this saving has arisen due to the slower than anticipated draw down of funds under measure 1, the access to finance scheme.
It was also decided to hold detailed consultations with representatives of the private sector and small business in implementing the other measures. These consultations with small business have strengthened the implementation of the operational programme but have resulted in delays in the start up of programmes in some cases. Where there were delays in agreeing programmes, selecting activities or securing the co-operation of agencies, these have now been resolved and all measures under the small business operational programme are operating effectively.
Where savings have resulted this year, these will be spent in future years as activity under the various measures' increases and I can assure this committee that none of this funding, either EU or State funding, will be lost in relation to the small business operational programme.
There will be a saving of approximately £2 million in the budget of the local employment service for 1996. This is due to the slower than anticipated start-up of certain of the LES networks. The Government decision of 14 February 1995 allowed for the establishment of the LES in 14 areas — 12 partnership and two non partnership areas.
During 1995 and 1996, the main work for the LES areas involved setting up a structure locally to deliver the service, developing a bottom up LES plan carefully attuned to local needs, identifying staff resources, training the staff to carry out the new role of counselling and mentoring, securing office accommodation and liaison with my Department concerning the finalisation of the LES plan. The actual delivery of services took some time to organise.
In this regard, my primary focus was to ensure that the service in each area was set up properly rather than quickly. If we think about the people with whom the service will be dealing — the long-term unemployed — this, in my view, is particularly important if we are to avoid further alienation of an already marginalised group.
Ensuring the service was properly established in each area meant long and protracted consultation between different local groups and between local groups and my Department. This was necessary to ensure that local concerns were properly reflected in the area plan and that the area plan fitted with overall national policy. I would envisage that for the future there will be a quicker and more complete draw down of funds as the preparatory stages are completed.
An initial evaluation of the LES has commenced. This is in accordance with the Government decision of 1 August 1996. The evaluation will be finalised by the end of the year and one aspect of it will be to identify the lessons that can be learnt from the start-up of the LES in the original 14 areas and which can apply in the next phase of expansion.
The Government has agreed to expand the service to a further four areas in early 1997, concentrating on the larger urban areas with high unemployment problems and also having regard to areas with a high incidence of drug abuse. I expect the Government to decide on the new areas in the near future.
There is a saving of £800,000 in the allocation for Jobstart. Deputies will be aware of the efforts being put into promoting this programme. I have had a series of meetings with IBEC, ICTU, INOU, the Small Firms' Association and ISME in an attempt to ensure a greater uptake of places on this programme. We always knew it would be difficult to reach the stated targets, particularly when we decided to confine the programme to those who had been unemployed for three years. They are clearly not an attractive proposition for employers. Nonetheless, unless we put special measures in place for such people they will never get a chance. It will always be difficult for us to reach the target of 5,000; nevertheless, those who participate will have received an opportunity to re-enter the labour market they would not otherwise have received. For this reason I propose to continue to strongly promote this programme, and I am currently reviewing options open to me which might ensure an improved uptake.
Thank you. I am grateful to the Acting Chairman for accommodating me in regard to the timing of the meeting which was to be held at 4.30 p.m. There will be no Dáil session tomorrow to enable us to go to our rural constituencies and make arrangements for the referendum tomorrow so we wanted to hold the meeting earlier.
I read carefully the Minister's statement and the accompanying documentation. We are faced here by nine men from the Department, for which the Secretary or the two Ministers cannot be blamed. Deputy Bhreathnach's concern for gender equality is sadly lacking here. I am sure there is at least one woman of note in the Department who could be brought to occasions such as this.
There are two women from the Department present.
Are they in drag? Of course, the Minister of State means they are here in secondary positions. Why are they not at the table? I am talking about the nine men facing us. I am not getting annoyed about it but the Minister of State has raised another issue about why they are not at the table. It is extraordinary. It is nothing to do with this Estimate but it tells its own tale.
Fianna Fáil greatly welcomes the fact that it is necessary to provide an extra £40 million in grant allocations to the IDA. The Minister referred to the rapid rate of employment growth but there is also rapid growth of long-term unemployment, which we will address later. Foreign direct investment is the business of IDA Ireland which is to be greatly commended on its work which has resulted in an unusual draw down during this and last year, resulting in the need for extra money in this Supplementary Estimate.
When the IDA makes self laudatory statements about how many jobs it will create, inevitably the number of jobs realised falls dramatically short of the number promised. It is unfair and wrong to dangle illusory promises. However, we all greatly welcome the number of jobs which come on stream and which are, in many cases, filled by highly skilled and technical graduates from our regional colleges and universities. That is very good, particularly when those jobs are sited in research and development. We need to ensure that multinationals setting up here have a research core which can remain if everything else goes. In that way we could, as we managed to do in Galway, keep a research development centre which the multinational could use as its European or world centre. However, I greatly regret that we are given illusory figures not only by this Government but by all Governments.
The electronics firms we are attracting are very welcome. However, they are mostly in the software sector, whereas the hardware sector is more long lasting and not as prone to such swift changes as is the software industry. We should research why we missed out on Siemens and two Korean firms which sought to come here but eventually went to Wales, Scotland or France. We should concentrate on attracting industries in hardware rather than in software, which is inclined to go out of date very quickly.
Forbairt is to receive an extra £10 million in respect of capital grants activity, which is welcome. There is an overlap between the areas of activity of county enterprise boards and Forbairt. There is constant bickering about which one should approach and what conduit of funding is best suited to one's needs. There is a deep-seated vein of animosity between Forbairt and the IDA in many regional offices and an underlying animosity between country enterprise boards and Forbairt in regard to areas of responsibility. A political lead should be given on this and an end put to it because it does not serve the would be applicant; it only serves self seeking people within sections of agencies. We have had enough of that.
The Minister of State at the Department of Enterprise and Employment, Deputy Rabbitte, has ensured practically £300,000 for Tallaght, as was recommended in the Tallaght task force report following events at Packard Electric. What other recommendations of the report have been implemented? Is there a global report on the employment obtained by those involved in Packard Electric?
I am aware of the trade union amalgamations. They appear to be ongoing for some time since the first grants were paid to them. I am shocked with the position the Minister has outlined on savings. While I understand the support measures for small business, the take up should be encouraged by political direction.
There will be a saving of approximately £2 million in the budget for local employment services for 1996. I am unable to understand this. The Minister has said that care must be shown. Those who are unemployed do not applaud the Minster's decision regarding the £2 million allocated for local employment services. The budget was announced as being for the long-term unemployed, yet their numbers have increased, both this year and last year. The previous Government did not do enough for them, but since the Government took office the numbers have increased by 3,500, as indicated in the figures for April and June.
In this context it is not good enough that the Minister has returned money for both the local employment services and Jobstart, where the number is 390 according to the latest reply to a parliamentary question. The Minister for Finance made it a pivotal part of his budget to tackle long-term unemployment, yet for two consecutive years the Department has returned money dedicated for their needs to the Exchequer. The Department is not living up to that part of its mission statement which aimed to work for the disadvantaged and the excluded.
The NESF reported two and a half years ago on the need to promote the LES all over the country. To date there has only been a limited number and we are now told that these are to be reviewed. This does not mean that money should be returned to the Exchequer. There are educational and training programmes and many local employment initiatives to which it could have been put.
There is endless analysis of long-term unemployment and a lack of a sense of urgency on the matter. Democratic Left made reasonable proposals last January and February which emphasised that areas of special need were to be tackled by special funding for long-term unemployment, with special tax measures to be provided. In our document entitled Pathways to Employment, Deputy McCreevy and I produced similar proposals regarding taxation measures. The proposals made by Democratic Left did not find favour with the Cabinet because it was decided to allocate £6 million to long-term unemployment through the LES network. This would have been reasonable if the network was to be extended throughout the country.
The NESF has been treated very shabbily, especially the local employment service and the long-term unemployed. One hears daily of our tiger economy. It is doing well, with buoyancy in growth and revenue. However, it cannot be said to be truly doing well when the Society of Saint Vincent de Paul produces a mission statement making it clear that there are "haves" and "have nots" and that there are those who are in jobs and part of society and those who are not. There is not equal care taken of all members of society.
All Governments have given inadequate attention to this matter. What does one do if one is long-term unemployed? Who represents such a person at the current negotiations on a new national agreement? We need local employment services countrywide and stated numerical objectives for the reduction in long term unemployment because this is the only way reductions will be achieved. We also need to stop being complacent and content with the economic indicators which give comfort to those who have and are sterile for those who have not.
Will the Minister continually return money allocated to his Department to deal with long-term unemployment? There are many long-term unemployed people who could usefully use that money, especially within the education and training services and with counselling and guidance that the long-term unemployed person must have with his or her mentor through the local employment services.
The Department and the Government are doing well in attracting industries. They are also doing well on the indigenous industry front, although much remains to be done. One should be positive where possible. However, I cannot be positive about a Department which has so shamefully neglected a prime part of its mission statement. I was Minister of State at the time it was drawn up and I was emphatic that it should address the needs of the excluded and put high on the agenda the needs of those who are not part of mainstream activity.
Some £800,000 designated for Jobstart is being returned. The Minster for Finance had a target reduction of 5,000, but he admits that this will be difficult to achieve, given that one is dealing with people who are unemployed for over three years. They need careful handling and follow up to ensure that a job once obtained can be maintained. Small as it is in the context of the approximately £40 million the Minister is achieving, it is disgraceful that he is returning £2,880,000 which was designated to make life somewhat better for those who are excluded from mainstream economic activity.
This is the more enterprising wing of the Department. I will talk in a moment about the efforts of the Minister of State, Deputy FitzGerald, to destroy Irish enterprise.
Capital grants allocated by the IDA are the main talking point. The Department has a budget of £700 million. If the money spent on community employment, about £265 million, is deducted from that and the European money that goes directly to FÁS, the money paid out to industry through Údaras na Gaeltachta and the Department of Tourism and Trade is added, £600 million is spent annually on industrial policy. To put it in context, it is equivalent to 50 per cent of income from corporation tax annually. This has to be analysed in terms of value.
The Labour Force Survey shows that in the past four years 32,000 jobs were created in the manufacturing industry. One third of them involved either part-time or casual work which means that, on average, it cost over £60,000 for an industrial job as virtually all that money goes to the manufacturing sector. For example, over the same period in the services sector 130,000 jobs were created. Industrial development strategy which is solely based on grant-aid, which is the case in Ireland, is not successful. We can never compete with the biggest and the best and it would be in Ireland's economic interest if it was to strive for a grants free Europe. When it comes to some of the more labour intensive industries, we have been losing out to companies such as Hyundai and Lucky Gold Star. This is because of our tax policies and regulations that are enforced here as opposed to Great Britain.
What about Intel and HB?
Intel, Apple, Gateway and Microsoft are great success stories. They did not even exist 25 years ago. They grew up in the United States without government aid. Is it not ironic that they prospered in an enterprise culture while they are brought in here using Irish taxpayers' money? It seems that we think the State always knows how to pick winners. We need to reform our anti-work tax system. Recently I said that the way to lose money in Ireland was to come off the dole and take up a low paid job. The Minister of State does not believe in a low paid job. She believes a no pay job is better than a low paid job. I do not agree with that as it is bad for society.
Ireland has decided to transpose the working time directive into Irish law in its most rigid and inflexible fashion. The Government will tell workers what is good for them and it says a worker who wishes to work more than 48 hours will not be allowed to do so. Will the Minister confirm that the cost to industry of transposing the directive into Irish law will be between £80 million and £100 million? If it is taken that the cost in Britain is estimated at £2 billion annually, can I assume that it would cost that much? Were costings on this done by the Department? The manner in which that directive is being dealt with is in direct conflict with a statement in a Forfás report published in May, which was probably the best report I have ever read from a Government agency. It said that given the level of unemployment in Ireland, the trend towards increased protection should be kept under constant review and slowed down where appropriate. Any proposals coming forward from the EU, for example, must be scrutinised in consultation with employers and trade unions, particularly in SMEs to ensure they will have no significant consequences for the competitiveness of Irish enterprises. Why was that advice not taken on board when this legislation was introduced?
Over 100 agencies are involved grant aid and there is huge confusion. Many people go to area partnership, Forbairt, Leader, county enterprise boards and the Department of Social Welfare, which has aid available for the recruitment of long-term unemployed and others. If it is intended to maintain a grant aid approach, there should be strict criteria. I know of one county enterprise board which gave grant aid for the development of a nursing home while the one across the county boundary did not. Huge problems are created for entrepreneurs and others in the private sector when they see different sets of standards.
There are no fixed criteria when it comes to grants. We are always told it is confidential information but it is not good enough that one person gets £60,000 per job created and another gets £40,000. It is decided on a discriminatory basis, is an inefficient use of taxpayers' money and distorts competition.
It is worth comparing the performance of the United States in terms of industrial policy over the past 25 years with that of Europe which is the big unemployment disaster of the world. In the 25 years up to 1995 America created 46.5 million jobs and increased its workforce by 65 per cent. Europe created 8.5 million jobs increasing its workforce by 6 per cent. In the first five years of this decade, Europe lost jobs although the trend has been reversed this year, while America created 17 million. It fosters a culture that encourages enterprise and there are no barriers in the market. People are free to exploit the market and if they succeed, they can prosper.
What about State and local government grants in the United States?
There are virtually no grants.
The Deputy should go to Georgia or California.
The Labour Party cannot listen to a different view.
The working time directive is being transposed into Irish law as it is for health and safety reasons. There is nothing worse for a person's health and safety than losing a job or suffering a loss of earnings. If that is the case, why is the prison service, for example, being excluded? The Comptroller and Auditor-General's report last year showed that one prison officer earned, on average, £800 per week in overtime, while other prison officers earned £300 per week in overtime on average. Overtime is rampant in the prison service. I do not object to this but the system is not run efficiently. If people working in the prison service will be free to work 70 or 80 hours per week why are people in the private security industry being told they cannot? The Minister of State, Deputy Rabbitte, and I are familiar with The Square in Tallaght. This legislation will add £50,000 annually to their security bill alone. Deputy FitzGerald is the only Minister of State at a Department of Enterprise and Employment in the world who thinks that if the cost to industry is increased, more jobs will be generated. I do not know how she can come to that conclusion.
How many workers in Packard Electric have acquired full-time jobs since the closure? What are the Minister's comments on a grant free Europe? Would it be in Ireland's interest, given that it does not have the resources to compete with big countries, to favour a grants free Europe? Does the Minister agree that the single biggest attraction for foreign industry in Ireland is the 10 per cent tax on manufacturing industry? Irish subsidiaries of foreign multinationals made pre-tax profits of £4.5 billion last year which means that they would have paid £450 million in tax. If they were paying at the European average, about 30 per cent, clearly it would have paid three times more. Ireland would get many of these corporations without grants. Whether it is grants for film makers, or property developers or financial services, there is always a connection between low tax and economic activity, yet when it comes to workers the connection is not seen.
Does the Minister agree that capital grants to industry are not sufficient if there are unnecessary regulations which hinder industry and if the tax system operates against the interests of employment? A single worker in Dundalk earning £300 per week is £16 worse off than his or her counterpart in Newry. It is 50 per cent more expensive for an employer in the South to give a worker an extra £1 in take home pay. In comparison to Northern Ireland our economy is not competitive. In the first instance we should seek to create a single island economy where barriers do not exist and disincentives no longer exist in the South.
I caught an earful of that Progressive Democrats ideology which is bunkum. We have made strides in creating a manufacturing base, particularly in high-tech industries and the State has played an important role. Comparisons are made with the United States. Some years ago the governor of the state of Arkansas had a clear state driven programme of grants and competed with neighbouring states and European countries, including Ireland, to attract industry. The picture painted by Deputy Harney is inherently false.
We are all anxious that market driven criteria would apply to projects but when there is a major collapse, as happened in the Deputy's and the Minister of State's constituency, it is right that the community should respond.
With regard to the local employment service, it has worked well where it has been established in north Dublin in targeting job placement at local people who may have been overlooked in the past. The NESF indicated that about £36 million per annum was needed; so far about £6 million has been invested and there is an amount which has not been spent.
I support the initiatives with regard to the county enterprise board. Dublin Corporation is to raise a loan of about £5 million to be used in conjunction with the State and local businesses to further develop the city.
The information technology sector is being neglected. It is the only one in which there will be job creation in the future. The loss of six high-tech industries in the past 12 months is a body blow. We have low-tech industries which do not survive in recessionary times. If we do not concentrate on high-tech industries we will not create the jobs needed. The only substantial high-tech industry we have is Intel which makes microprocessors. We have to compete with the north of England, Scotland and Wales for future industrial development. Our industrial policy with regard to information technology must be changed. When one has low-tech industries the industries which provide services to them are also low-tech. The life cycle of such low-tech industries is about 10 years. We must make Ireland more attractive for high-tech industries.
Since this Government took office the Cork area has lost out in terms of the procurement of industry. I am sure the Chairman shares that view.
I do not think so.
I do not know whether it is the fault of the Government or the agencies. There should be an even handed approach to industrial procurement and all regions should be considered. The Cork region has high unemployment and I would like to see it being looked after by the Government. We know that announcements of jobs are usually political and the large numbers of jobs announced do not always materialise. I am annoyed that the Cork region is losing out and I know the Chairman is equally aggrieved.
I am not.
AIB bank recently advertised loans for small businesses at a rate of interest of about 6.5 per cent. The Department of Enterprise and Employment over reacted because the money had not been drawn down. The bank was only trying to help small business. If the banking institutions were more open there would be greater industrial development, especially of small businesses.
Deputy Harney talked about job creation and the economy. She mentioned the lack of a work and enterprise ethos. However, it is such an ethos which has given us our successful economy. She should praise rather than criticise the achievements.
I share her concern about the exclusion of the prison service from the working hours directive.
I want everyone excluded.
I do not want them excluded. The prison officers' average working week is more than 60 hours per person. If people have to work such long hours they cannot be in a position to carry out their duties effectively. I do not agree that we can have jobs at any cost. Workers cannot be exploited as they were in the past. It seems to be a current Progressive Democrats point of ideology that they can. We cannot have jobs or working conditions at any cost. The working hours directive is appropriate. There is flexibility within the 48 hours limit. Job creation will come from a reduction in overtime——
It will not come.
——and that will benefit those who are out of work.
The grant-in-aid under subhead G2 to South County Dublin Council in respect of enterprise centres in Tallaght is welcome. Has the Minister considered a similar type of enterprise centre for Ballyfermot given the Semperit problem and employment difficulties in that area? On Deputy Broughan's point about the local employment services, it is strange there has not been a greater uptake on this and that £2 million has been saved in this area. It is the critical mechanism in dealing with long-term unemployment. It is disappointing that we will save £2 million on this and the Minister might elaborate on it. The service has operated on a pilot basis and professionals have to be trained for it but it is absolutely crucial to dealing with long-term unemployment.
We will go into subhead C2 — IDA Ireland grants to industry.
The job performance in Cork has been very positive, not as Deputy O'Keeffe suggested. I will furnish him with information by letter as I did not have advance notice of this.
Deputy O'Rourke's first point concerned job approval numbers and whether these are realised. That has been a long-running concern for Deputies on all sides of the House. The IDA has moved from judging performance not by job approvals but by first-time jobs.
That is the end result. I refer to the carrots dangled at the beginning.
Not every project goes ahead as planned but by and large the job projections are being realised. Many companies which have expanded have reached their promised targets earlier than anticipated. Looking at job announcements in the last two years, 51 per cent of those announced in 1995 are in place. That is very rapid development because virtually all of those would be five year job plans, so in year one we have 51 per cent of jobs projected. Jobs announced in 1996 have only been here less than six months on average but 28 per cent are there. The Deputy should be reassured that by and large the job announcements are being realised. The important test is to look at net jobs as the real issue that determines success.
Deputy O'Rourke also raised concerns about the tendency of software industries to become redundant quickly. The opposite is the case. Most problems we have had were where hardware became redundant and the market bypassed a plant with a fixed way of doing things. Manufacturing software in itself is a developmental process and responds to changes. Its longevity has been very good and it has proved to be an effective area of development with strong growth. In net terms we have seen approximately 5,000 additional jobs in software in the past five years. This industry is innovative by nature. Even if the market changes and it has to adapt, it has proven very effective in adapting. Software has been and continues to be a very good area for development. Software skills continue to be developed very quickly by our higher education institutions.
The Deputy expressed concern at the loss of significant projects, mentioning Korean companies, Siemens and others. In those cases there is no indication that Ireland was in some way unsuited or not competitive. In every case different circumstances govern the selection by companies of location. Very often companies want a large market on their doorstep and that was true of some of the Korean projects. They were very market-led and a large consumer market on the doorstep was very attractive to them. In some cases a particular component they were sourcing was being produced in a certain location which gave that location a significant advantage. In every case the circumstances are different and it is a very competitive environment. That is where I take issue with Deputy Harney when she says grants are not of importance. They are very significant in the location of industry. One has to be competitive in this area and others, such as the availability of skilled people, to attract companies. It is a package that involves people, grants, tax regimes and infrastructure.
I take issue with her view on industrial strategy when she takes £600 million and divides that by a certain number of net jobs to say: "That is too costly per job". That is neither a credible nor a fair way to evaluate grant aid. In the Department we evaluate grant aid on the basis of the grant per job sustained over a seven year period. The Department looks at what was paid and sustained. Against that, one can see that the IDA and Forbairt have consistently cut the level of grant aid per job sustained. It has come down from £20,000 five or six years ago to £12,000 now. That has been achieved by being more frugal and competitive in the grant area. To suggest we could move to an area that would be grant free would not be real. That is not to say we should not move towards a situation in Europe where the level of grants are more coherent in overall strategy. The Deputy will be pleased to hear this was an issue at the recent industrial council at Ireland's initiative, where we attempted to get decisions on having greater order brought to grant aid approaches in different regions. We are concerned that very prosperous regions of the EU pay out substantial grants for industry location which would be beyond the capacity of peripheral regions to match in trying to encourage regional development. Some progress has been made but there is no overall consensus on these issues in Europe and there would have to be unanimity for grant reduction across the board. That is not on, but we succeeded in making the EU State grant aid controls more effective to pursue clear cases of breaches of State aid rules. That will, in time, bring some results. We have addressed the main areas in relation to IDA Ireland. The attraction of foreign development continues to require an effective IDA operation in marketing, identifying opportunities and companies, selling Ireland and developing the linkages that provide both knock-on jobs in Ireland in IDA companies and make Ireland more attractive to overseas companies. As Ireland develops a strong infrastructure, more companies will choose to locate here. That means that in time the grant levels required to win projects will decrease. I am pleased with the way IDA Ireland uses resources. Its budget this year is £137 million. As the Deputy indicated, corporation tax from FDI would be three or four times that. This is a good balance sheet.
IDA Ireland deals with multinational companies. Is the Minister worried about the effect of the working time directive on all companies, particularly multinationals? I have received correspondence which indicates these companies are worried about its application. I am looking at this situation from the workers' point of view, not the employers' point of view. I have a file full of correspondence from individual workers who say they need the overtime to pay their mortgages and fund their children's education. The right to work seems to be a basic civil right. A worker would suffer more stress if his income was cut by £40 a week than he would by working overtime. When I signed the directive, I signed the individual voluntary opt-out clause.
I am fully satisfied that the introduction of the working time directive will not affect foreign companies here. The Department has had close consultation with foreign and domestic industrialists about this directive to ensure that the maximum flexibilities are available. One flexibility which is not being introduced is the voluntary opt-out clause. However, when we identified the way in which net time was defined and the flexibilities of average periods over lengthy periods, it was found that industry, particularly foreign industry, was not affected in a large number of cases. Most modern approaches to hour rules do not involve consistent long working times. There is no difficulty in this area.
The companies which have raised reservations about this are blue chip companies, such as Cement Roadstone Holdings, some multinational companies and indigenous companies. What is the Government's objection to a company deciding with its workers to opt out of the 48 hour rule?
There have been a number of problems with that. The Minister of State at the Department of Enterprise and Employment, Deputy Eithne Fitzgerald, would be able to give the Deputy more information. It would be a dramatic change from our collective approach to industrial relations and it would put pressure on individual workers to agree to working times. The idea that individuals would have to make arrangements is contrary to the approach we have taken. We have adopted the flexibilities in the directive to ensure we accommodate the needs of industry.
All other EU countries, except the UK, have introduced the directive without the opt-out clause. The UK challenged it on the basis that it was not a health and safety measure. However, the European Court said it was validly introduced as a health and safety measure under the Act. The directive will apply throughout Britain.
We have ensured that certain categories of workers, such as transport workers, fishermen, family workers, people who manage their own time, etc., have been given an opt-out. This was seen as conforming to the needs of industry. The Bill, as introduced in the Dáil, was carefully assessed and it meets the needs of industry. There are only a small number of cases where people work long hours after meal times, waiting times, etc., are taken into account. This directive was introduced to put certain restrictions on excessively long working hours. There has been a 53 hour maximum limit in our legislation since 1936. The cases the Deputies mentioned have been in breach of that legislation. When people carefully examine this legislation, rather than listening to polemic about it, they will realise that we have accommodated the needs of industry. It is flexible legislation which people will be able to implement in the workplace.
Last Saturday a worker and member of a registered trade union visited me and showed me his current wage slip. He calculated how much he will lose when this legislation is implemented. This is not polemic but hard fact. He asked me if I would accept the legislation which would mean he would lose £20 or £30 per week. He fought with his trade union on this issue and I put his case to ICTU when I met its representatives.
The Minister is not painting the correct picture. I am not talking about competitiveness but about an individual's right to work. When I was in Brussels negotiating this directive, the then Minister for Enterprise and Employment, Deputy Quinn, and officials in the Department were adamant that I should concentrate on the individual voluntary opt-out clause. I strongly believe in people's civil rights. What do I say to that worker whose income will be reduced? This legislation will not create more jobs but it will reduce this man's income by £30 a week. I do not have the right to say that to anybody. I have strong feelings about this Bill and I want to stay true to what I did three years ago.
If the Minister and IDA Ireland and the CBI and its equivalent Minister are trying to attract foreign companies, does the fact that we do not have an opt-out clause and Britain does not put us at a disadvantage? I am not convinced by the argument that the directive has been introduced without the opt-out clause everywhere in Europe. Germany and France have heavily regulated labour markets. Britain and Ireland were loosely regulated markets and that is why we have done relatively better in terms of American investment into both countries. The fact that every other country in Europe is doing something does not convince me of its merits. There are 20 million people unemployed in Europe and American companies do not understand this.
There are also other issues about who will police this and whether they will work 48 hours per week.
I have answered that.
I do not wish to be smart but the Minister should take this in hand because he is an enterprising Minister and I agree with 90 per cent of what he has done.
I do not have a concern on that front. I have spoken to many US companies and I am satisfied they have no difficulty with the implementation of the directive. There will be ample opportunity to debate this further.
What about the worker? What will I say to the worker I will meet next Saturday?
We have gone through the cases and the Minister of State, Deputy Fitzgerald, can go through it further in the Dáil. We have looked at numerous examples and we have seen that this will not disrupt industry. There might be a small number of cases where people will face a reduction in earnings because of the long hours they have been working. Some of them work in excess of what has been legal since 1936.
It has not been implemented.
Perhaps, but that is the situation. A fair balance has been struck between the rights of employers and employees in this legislation and that will be seen to be the case.
With regard to the IDA subhead, the committee is just dealing with the overrun. However, has the Minister any intention of changing the current policy of not releasing money for advance factories and depending on developers to provide them? In some areas it is practically impossible to get anybody to develop such factories yet we were told by the IDA that if a factory space was available a food project could be secured. Is there any chance of changing the policy? If it is not changed there is no hope for areas such as Cavan and Monaghan where there are no private developers.
We have revised our approach to property development and it confirms that there is no merit in the IDA building advance factories that will remain vacant. That was a feature of industrial policy in the past. The best way to use property as part of a development portfolio is in co-operation with private sector investment. That has been the policy over a number of years and it is proving effective.
I do not anticipate a reversal to the old policy of building advance factories and considering it an effective form of industrial development. This does not mean we do not recognise the need for a well planned approach to regional development and securing advance factories where it is a coherent part of a plan to develop industry. Advance factory building still occurs with the co-operation of the IDA in appropriate locations so it is a complementary part of the tools it uses to attract industry. The new approach is more focused and strategic and includes a clear regional focus. I have had discussions with Deputies from Cavan and Monaghan and the strategic approach of the IDA includes planned actions in those counties.
I am not in favour of the IDA building advance factories. However, in this instance, we had a meeting with the IDA and Forbairt. They stated that if there was factory space available they could provide a project in the food sector. In cases such as those there must be recognition of the need.
I will get the details from the Deputy and examine the case. I am not aware of the project. By and large, the current policy has been operating satisfactorily and we do not intend to change it. However, we are always flexible in looking at particular needs.
I agree there is a problem in the Border region and I make no apology for again referring to County Monaghan. Border funds are supposed to be available but it is impossible to get them together to do something. When one approaches one group it might be willing to do something but when one approaches another it will claim that a different body, such as Forbairt or the IDA, has responsibility. We are in a difficult situation. Our location means we do not have the ability to attract blue chip industries. We are told the food industry is prepared to locate projects there and give employment but we cannot get a package together to put a factory structure in place. It has now gone beyond a joke. Without the indigenous industries in those counties there would be little or no job creation.
I understand the sentiments of both Deputies. We had a full discussion about the problems in Monaghan when the Deputies led a delegation to discuss them with me and my officials. We took careful note of what was raised during those discussions and we will revert to the Deputies after a period to review progress. I am not sufficiently briefed to respond in detail today but we are conscious of the needs the Deputies have brought to our attention and we will review them on a regular basis and keep in touch with the Deputies. The concerns they express are very genuine.
We will move to subheads D.2 to G.2, inclusive.
These refer to Forbairt and the county enterprise boards. Deputy O'Rourke raised the issue of animosity between the CEBs and Forbairt. We are determined to root out any such animosity.
And between the IDA and Forbairt.
Perhaps, although I am not aware of problems in that regard. Forbairt is represented on the county enterprise boards so there are cross connections. We are determined that this will be an effective partnership. The county enterprise boards are developing a first stop shop approach where, effectively, the county enterprise board will be the first port of call for clear information about the support available.
Deputy Harney raised the issue of inconsistency in approach by different county enterprise boards. It is probably a necessary consequence of devolved power that different boards will take different approaches. However, there is a broad operating agreement whereby, for example, the maximum grant is £5,000 per job. In interpreting particular sectors and whether, for example, nursing homes can be assisted, different boards will take different views. It is up to them to evaluate issues such as the potential for displacement and so forth which are in the common agreement, but beyond that there is an element of devolved power and that was seen as the merit of the county enterprise board structure. It was intended to have a flexible approach and to build on the perceived strengths of a locality. It was anticipated that such considerations would alter the approach that might be taken to development in a particular county if it was perceived that certain sectors were strengths that could be exploited. It cannot be neat and still retain the devolved element.
The overall agreement ensures that public money will not be wasted in that criteria being put in place to cover important elements such as displacement and dead weight. I believe value for money will be assured. It is too early to judge but, by and large, the cost per job at approximately £3,000 is low. Sufficient time has not passed to enable us to pass judgment on the survival rate of the companies being supported. However, the evaluation process is being put in place and it will enable us to assess the added value of this approach.
Some Deputies, including Deputy O'Rourke, have been critical of the county enterprise boards structure but it has only been in existence for three years. There is a need to evaluate and assess development rather than introduce structural change before doing so.
I have been critical of the proliferation and overlapping of agencies, not singling out the county enterprise boards in particular.
Structures are in place to try to deal with the relationship between CEBs and Leader and a strategy team has been put in place in each county.
The Minister of State at the Department of the Taoiseach, Deputy Gay Mitchell, recently announced that a study is being carried out in respect of local initiatives, funding, groupings and the county enterprise boards. What is the nature of that study?
The mid-term review will include an evaluation. The county enterprise boards are being evaluated as part of an ongoing monitoring process to discover whether they are having an effective impact.
Does that relate to all areas of funding?
I understand that a specific consultancy will be evaluating the performance of CEBs.
Perhaps the Minister's officials have further information in that regard.
There may be another evaluation to consider Leader and CEBs in a single context. There is a single monitoring committee which evaluates CEBs but I understand that individual studies are being carried out on individual approaches. The Comptroller and Auditor General has already carried out an evaluation of Leader.
Yes, and the Minister of State at the Department of the Taoiseach, Deputy Mitchell, was shown up by it.
An OECD study on local development was published in July.
What is the nature of that study?
It was not a detailed evaluation of the sort referred to by the Deputy. It merely provided a bird's eye study of local development partnerships and Leader, as it had been developed in Ireland. It was a very positive study.
Last week in the Dáil the Minister of State at the Department of the Taoiseach, Deputy Mitchell, stated that a study was being undertaken which would consider the issue of overlapping and proliferation.
I will communicate the relevant information in that regard to the Deputy when it becomes available.
I am interested in discovering the nature of that study because I would like to have an input to it.
To my knowledge, there is a specific study relating to CEBs and the consultants carrying it out have been put in place. However, I will try to discover the nature of the study to which the Deputy referred.
Deputy O'Keeffe raised the issue of research and development and the lack of sufficient development of technology in industry. Perhaps the Minister of State, Deputy Rabbitte, will deal with that matter.
There is need for political encouragement for multinationals to have quality research and development systems which would remain in the event of their leaving the country.
That is one of the features Kieran McGowan, chief executive officer of the IDA, recently commented upon when he reviewed the performance of the electronics sector.
That is correct.
Some newspaper headlines seized on the fact that a small part of that segment is at risk, which it always has been. Mr. McGowan made the point that the proportion at risk is significantly lower than in the past because add-on functions have been developed. We are seeing a deepening of industries and many recent expansions led to the development of software activities and research centres by certain companies. Many companies have indigenous core research staff in the FDI.
The situation has changed dramatically from the time when international companies only carried out research in the country of origin. Research is now being carried out in Ireland to a greater extent, for the reasons outlined by the Minister. In addition, schemes such as the Measure 1 programme, which allows access to £100 million support, are also open to international companies. This funding is significantly drawn down by those companies. The most dramatic example of this involves the closure of Digital, where the R&D facility proved an anchor to keep the company in Ireland. In one form or another, this led to the creation of more jobs at a number of locations than originally envisaged in respect of the Galway plant.
I wish to refer briefly to questions raised in connection with the Tallaght task force. The moneys allocated to implement the recommendations totalled £2.4 million, £1.376 million of which was provided by the State.
Is that catered for under the Supplementary Estimate? It seems that only £300,000 has been allocated in that regard.
That is the specific amount required for the particular enterprise centre. Other moneys have been channelled through FÁS. The Deputy will recall that a good deal of this involved up-skilling the workforce and providing specialist courses.
Did that come from the Estimate relating to the Tallaght Regional College or from FÁS?
It was sourced from a number of centres. For example, the Department of Education funded the programmes given at the regional technical college.
That is what I said.
Some 220 workers presented at the regional technical college open day and specialist courses, which are funded by the Department of Education, have been held at the college. The consultants interviewed each worker in terms of their profile, expectations, suitability, etc. Between that and the counselling programmes provided, most workers found it useful.
Was that paid for by FÁS?
In the most part. When they presented their report six weeks ago, the consultants' best estimate was that 300 people had found employment. I do not know whether that was full-time or part-time employment. The majority of those 300 people came from the first cohort of 400 that were made redundant. There are no data available as to whether the situation has improved.
The provision of two enterprise centres was a core recommendation. Unfortunately, when it came to signing the contract for the centre identified at Tallaght village, the vendors decided, for reasons yet to be established, that they did not want to sell. There was an arrangement to operate that centre as a joint venture with a private sector business which has switched its focus to the alternative centre, for which specific moneys in the Supplementary Estimate have been released. This centre will be functioning in the early part of 1997. Discussions are ongoing with solicitors and other professionals representing the vendors of the Tallaght village site as to whether a deal can be concluded. The position is uncertain at this stage, for various complex reasons. We do not know why the matter was advanced to the stage of contract, which was then not signed.
It is appropriate that I thank the members of the task force for the imagination and commitment they demonstrated in producing a report with tangible recommendations. This was appreciated by the workers. FÁS and the Regional Technical College combined have done a great deal to restore confidence and employability and enhanced the options open to those who are not yet employed.
The Minister said 200 people turned up for the open day at the regional technical college. Has he any idea of the numbers participating in any of the courses?
I think it is in the order of 150. Some of them have already been presented with certificates of proficiency in different courses tailor made to their requirements. Through the regional technical college, FÁS and the voluntary organisations like Get Tallaght Working everyone who sought training has been provided with it. In the immediate wake of the closure a number of people did not make themselves available for one reason or another. Some of them are now re-emerging and the regional technical college has promised to accommodate them as best it can.
There are a large number of funds available; INTERREG, IFI, peace and reconciliation, Leader, CEBs, Co-operation North, etc. A person can go on many projects which do not meet employer needs. There needs to be better co-ordination between the organisations involved. We will not have long-term success and sustainable employment unless we co-ordinate our efforts. I would also mention that there is very little money available for capital investment.
The Deputy's point spans a wider area of responsibility than my Department. It is an area which has proved frustrating to him but I cannot offer a solution. With my Department I will review what can be done to assist in this matter.
We will take subheads K4 to Z.
Eighty per cent of the money allocated for Jobstart will not be spent. At the time of the budget the spin doctors told us this would be the jobs budget and this scheme would be of great benefit to the long-term unemployed. We know from Dáil responses that 390 people have participated in Jobstart. How much did the promotional campaign cost?
That is a matter for FÁS.
That is not good enough.
In Dáil questions we would not answer for FÁS but there is no secret about this. The figure covering the two schemes Workplace and Jobstart is £162,000.
There has been a series of large newspaper advertisements with regard to Jobstart and Workplace. The figure the Minister has given is not a true figure.
Does that figure include the radio advertisements?
All the radio and newspaper advertisements.
It includes the radio advertisements. I explicitly sought information on this.
That is a very good advertising agency if one can get all that advertising for that price.
I counted 44 half-page newspaper advertisements. It is marvellous if the Minister can get all that activity for that price.
It is definitely £162,000. I reviewed it before I came here. There are encouraging signs that it is building even since the parliamentary reply to which the Deputy refers. The Jobstart figure is now 425 and we are recruiting at a faster rate and we will continue to promote the schemes. It is important that we make a strong effort in a buoyant economy, to encourage people to provide opportunities for the long-term unemployed. This scheme is aimed at those who are three years or more unemployed. It has been difficult to get employers to take an interest but a great deal of promotional work has been done. I have also met the various agencies and FÁS and we have developed a pro-active approach by FÁS staff who refer people they believe suitable to particular employers.
The local employment services would be better suited to this work because they have precise information on people. Would it not be better to use them rather than the amorphous Jobstart scheme? This is why the Department will hand back £2 million.
We took specific initiatives when it was seen the scheme was not working quickly enough. In conjunction with FÁS I have targeted employers using placement officers who go out to their local employers and promote this scheme. These officers have at their disposal very accurate lists of suitably qualified people.
Is it that employers are not interested?
All of these schemes take time to develop. Deputy Harney and Deputy O'Rourke will remember the job training scheme which was introduced by their Government. This proved very slow to start. We are now rationing that.
The job training scheme?
Yes, and interest has rapidly developed in it. There is a delay in getting through to people because most businesses which are recruiting are relatively small with limited management time to devote to finding out information and there has to be a more pro-active approach.
There would not be if the local employment services were better utilised.
Some of our successes have been through the local employment service.
Exactly.
I took the opportunity to meet those involved to promote the scheme and they are using it. The figures from the local employment services have not been more encouraging than those from mainstream FÁS.
Do politicians qualify for the £80 per week subsidy?
No. The local employment service concept is not an instantaneous answer or a numbers game where one shuffles people on and off the register. That concept has contributed to some of the cynicism about the schemes. This has had to be carefully planned with local people. It has involved much consultation and work in targeting particular needs. That is so outside the inner city, Ballymun or north side where there has been an amount of experience to date. They have been able to get up and running much faster than those in areas in which a new local management team had to put it together, agree a plan, an approach, identify priorities, recruit a co-ordinator and train mediation and counselling staff because it is a different type of activity that requires proper training. There has been a delay but that is a necessary consequence of adopting a bottom-up approach which will be underpinned by local structures and which will be of lasting benefit because of its strong links in the community.
The Northside Contact Point developed over time and is now firing on all cylinders. It had a slow build up, but is now delivering results. I believe this will be the case with the others. They are now up and running and effective, but they will not draw down a full year's budget because they were not up and running early this year. There will be moneys which will not be spent.
As I said last year and the year before, thrift is an admirable virtue. However, returning money dedicated to long-term unemployment to the maw of the Exchequer is misplaced thrift. The Minister is involved in the talks on the new programme, if there is to be one. A segment of that programme must comprise a detailed plan with objectives and aims for lowering the number of long-term unemployed. If that does not happen, the programme is not worth a penny candle. Why have an arrangement which only suits those with jobs and does not do anything for the unemployed?
I assure the Deputy the reason we brought in outside people, including the INOU and ICTU——
Endless analysis.
——is that there would be a clear input. The programme which emerges will reflect their concerns. We are making progress on long-term unemployment. Last year's Labour Force Survey showed a 25,000 reduction in the number of long-term unemployed. The current live register is the lowest since about 1991 and shows a reduction of 8,000 on last year. On the basis of the labour force, the figure is down 28,000 compared to April 1994. Significant progress is being made in this area.
Local employment schemes and Jobstart are part of a broad range of schemes which include community employment. I am pleased to report that 36 per cent of those coming off CE are finding employment. It is proving to be a valuable programme which is impacting on unemployment.
I never had any doubt about it — we coined it.
We are achieving an impact on long-term unemployment.
The numbers are up by 3,500.
I agree with a great deal of what Deputy O'Rourke said, but she is wrong about the figures.
I am sorry to tell the Minister of State that I am not wrong in relation to the live register.
They are a bit out of date. This is an interesting discussion, but we must not forget we are talking about bias towards the long-term unemployed. It is interesting that the take up has been slow. It is interesting that the Minister in reply to the first parliamentary question he was asked about this predicted that it would be so. There are probably a number of reasons for that slow take-up. One is that in the present labour market in terms of how the labour force is growing and the quality and calibre of young people being turned out by the schools system——
They are getting the jobs.
——many employers do not have to opt for someone who is long-term unemployed. Deputy Harney may say she does not believe in labour market interventions.
I do.
If we did not have labour market interventions, we could not see how the market was functioning and these people would be permanently on the unemployment register. It must be sold very hard.
There should be other measures.
The Deputy is right about the local employment schemes being an ideal vehicle to help sell that. I hope turf wars are not taking place between the various agencies in a situation where there are in excess of 100,000 vacancies in the economy and where the participation rate among the long-term unemployed is paltry.
Will the Minister of State extend long-term unemployment services?
The local employment service is a good idea——
Why return money allocated to it?
——and it is being evaluated. It is important to do the ground work when building something from the bottom up so that it will work. In my area — Deputy Harney will validate this — enormous work was done before it was up and running. Since then, it has established relationships with local employers and contacts with the unemployed. It has matched the skills available to the jobs which become vacant. That does not happen overnight.
I agree that it is tedious, costly and time consuming. I always said that having spent time in the Department. I welcome the realistic comments of the Minister of State. Surely it is worth the extra political push to use that money?
The Deputy understands the position in regard to accounting. This is 26 November and we have just been talking about the advertising push, relaunches and proactive discussions with FÁS and others. There is no point kidding ourselves that we will hasten employment between now and Christmas. In terms of having put in place an infrastructure and a vehicle which will push up participation among the long-term unemployed, this is one of the more innovative measures.
On the question of the local employment schemes, £5 million was made available in the budget. I am delighted CE schemes are now producing jobs, which was not the case in the past. The NESF report was specific in identifying the cohort of people who are long-term unemployed. It gave a figure of 100,000 and the ratio of mediators to the unemployed. A model was given in relation to contact points which obviously need to be adapted to various parts of the city and country. The initial proposal was that a lump sum of £30 million would be given. Where was the hold-up? Was it in recruiting and training people or in acquiring premises? What is the prognosis for the coming year? Are we making progress?
It was said the take-up rate was slower than expected. Was the delay caused by putting in place the structures as distinct from the cohort of people we were targeting?
The budget made provision for a certain pace of build-up and operation of the scheme which will be fully operational in all 14 areas by the end of the year and will deal with the workload expected. The delay in establishment has been for the reasons suggested, especially in areas like the north side and inner city where there were no established community groups. There was considerable delay in identifying and agreeing a plan which would be best tailored to these areas. The plan then had to be signed off and the local structures involved implemented. Elements such as the recruitment of a co-ordinator and of staff for training people involved delay. The greatest delay was in putting an agreed plan in place. It took longer than expected and none of the LESs operated for a full year. By the end of the year all 14 area schemes will be properly established and running business. The impact on priority cohorts will be reviewed and a data collection service has been set up so that the throughput, the type of people being helped and the outcome in terms of placement, going on a CE scheme, going into training or other chosen outcomes can be seen. We are also proceeding to identify four further areas early in the new year and expand into these new areas. We have chosen to focus on unemployment blackspots where the scheme is most urgently needed to ensure it is planned and built in a coherent way. It could not possibly be established in every area as it would be chaotic. What we are doing is slow and difficult but is being done in a way which will see long-term results because of the care taken in putting it together.
It is very disappointing that there are small businesses involved in the operational programme funding and INTERREG, both of which came into place about two years ago, and now this scheme is set up. It takes a long time for these schemes to get moving when funding becomes available. Nothing was done with INTERREG for a year until the second scheme came in. Since these schemes were established, FÁS has set up the Jobstart scheme, local employment service and the unemployment initiative. FÁS should be asked why there is not a better take up on those schemes since there is a real need for them, especially the local employment service. Bodies operating those schemes should be taken to task because money allocated to them in a specific year is not being used.
INTERREG is an EU initiative which does not have Exchequer involvement. It is operated under joint working groups and is answerable to the EU and Court of Auditors. It extends to 1999. Ten projects have been approved to date, mainly community enterprise centres and a variety of feasibility studies. Some have been rejected and others transferred to other measures or operational programmes. A significant number of projects, about 21, are at various stages of examination and moneys are not released until matured liabilities arise. I note the Deputy's frustration with the rate of progress but significant work is being done and it seems that negotiations often prove more complicated and protracted than bargained for. Funds will be allocated and will not be lost as a result of the slowness in approving the various projects. All we can do is indicate the Deputy's frustration which he has expressed on previous occasions about that slowness.
Money is predominantly taken up in the small business sector but, because of the slow take-up rate, the cost to the programme this year will not be as high as anticipated. The full value of the funds will be available.
I have dealt with the Jobstart issue already.
Mayo is a major tourist destination and many people may get seasonal work of 12 to 13 weeks per year. When they then want to go on a FÁS scheme, they cannot because they have not been unemployed for 12 months. It is a major problem to people in the region. I ask the Minister to examine the situation. People want to take part in FÁS schemes but cannot because they had three, four or five weeks' work and hence do not qualify. I ask for that to be dealt with.
Disabled people sometimes get personal assistants on a FÁS scheme. While schemes normally last for three years, these people are on the scheme for one year. It takes a year for disabled people to get used to these people.
I ask the Minister to examine these two areas, especially the 12 month requirement for eligibility for FÁS schemes. People should qualify if they are on the live register.
The difficulty with FÁS schemes is that they must be prioritised. There are 40,000 places costing roughly £260 million which must be prioritised to the long-term unemployed. Much of the discussion has been about the need to create a preference for the long-term unemployed. All places are being filled on the basis of that criteria. To extend it to people who are short term unemployed would, in effect, take away the built in prioritisation. That would defeat the aim of a priority scheme for long-term unemployed people. The scheme is constantly reviewed but, as of now, it is fully stretched coping with eligible people.
The CE scheme is structured between one year and three year programmes but there is no rule which states those acting as personal assistants to disabled people must be part of the one year programme. Certain people are eligible for the three year programme and, if they are selected to go on a CE scheme to provide personal assistance, they can remain for three years. Perhaps what is happening is that in some cases people are being recruited as personal assistants who do not meet the criteria for a three year placement. The difficulty is that the CE scheme is primarily a labour market measure which has been introduced to allow long-term unemployed people access to work and allow them move from that into employment. The reason certain categories, especially older workers who have been out of work longer, have been given a longer period is the belief that they need a longer period on the CE scheme before they will be ready to enter the workforce. That is the reason for the three year as against the one year placement. It is driven by the needs of the clients coming into the scheme and is structured in that way. The Deputy is saying that some of the purposes to which it is put, such as providing personal assistants to disabled people, do not match our needs to tailor it as an effective labour market measure. Our priority has to be the development of effective labour market measures. We are also keen to develop good social values. We cannot alter the turns of the labour market measure to particular types of project, especially since we only introduced those new terms earlier this year to try to bring greater focus into the scheme.
I thank the Minister, the Minister of State, Deputy Rabbitte and officials of their Department. I also thank the Members of the committee who made it easy for me to chair this meeting in the absence of our valuable Chairman, Deputy Bell. There are a number of topics on today's agenda which we will return to next week. Agreed? Agreed.
The Select Committee adjourned at 5.20 p.m.