This meeting has been convened for the purpose of consideration by this committee of Supplementary Estimates for the public services, Vote 34 — Department of Enterprise, Trade and Employment to facilitate a Supplementary Estimate of the amount required for the year ending 31 December 2009 for the salaries and expenses of the Office of the Minister for Enterprise, Trade and Employment, including services administered by that office for the payment of certain subsidies, grants, and a grant-in-aid and for the payment of certain grants under cash limited schemes. I suggest we consider the Supplementary Estimate until 5.30 p.m. if that is necessary. If we have not concluded then a further meeting will be arranged. At this point I welcome the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Mary Coughlan, and her officials Mr. Dermot Mulligan, assistant secretary general, Mr. Niall Egan, assistant principal, labour force development division, and Mr. William Parnell, principal officer, finance unit. Is Mr. Vincent Landers present?
Vote 34 — Department of Enterprise, Trade and Employment (Supplementary).
Mr. Dermot Mulligan
Mr. Vincent Landers is not available today.
I think some of the officials have been here on a previous occasion. The Tánaiste wishes to make an opening statement. Some people advised that we have opening statements from spokespersons but as a spokesperson myself I consider that interventions and questions rather than long-winded statements are almost as good. I will leave that to members.
Is the Chairman encouraging interventions?
Does that apply to the Chairman?
I would never encourage Deputy Morgan to do anything. Without further interruption from my colleagues I invite the Tánaiste to make her opening statement.
I appreciate the committee affording me the opportunity to present a Supplementary Estimate in respect of my Department's Vote. The purpose of the Supplementary Estimate is to make provision for the temporary employment subsidy scheme through the creation of a new subhead. There will be a technical increase in my Department's Vote of €1,000 to facilitate the creation of this new subhead.
Expenditure on the temporary employment subsidy scheme in 2009 will be approximately €20.5 million and will be substantially financed through a redirection of funding from elsewhere in my Department's Vote. Hence the nominal increase of only one €1,000 in the Vote. The employment subsidy scheme was introduced last August in the context of rising unemployment to assist in the retention of jobs and to help maintain the export potential of companies. The scheme, which is managed by Enterprise Ireland, involves the payment of a subsidy to vulnerable but viable firms engaged in exporting in the manufacturing or internationally-traded services sector.
The first call for applications under the scheme closed in early September and initial payments to successful applicant companies are now due to be paid, in accordance with the terms of the scheme. Through this innovative scheme, jobs will be saved, and vulnerable enterprises will survive the current economic challenges to grow and develop as global markets recover.
The scheme will provide maximum assistance of €9,100 for each supported job over a 15-month period. A key aspect of the scheme is its multiplier effect, which means that qualifying companies must commit to retaining jobs other than those which are being supported under the scheme. The assessment criteria for the scheme were weighted in favour of enterprises which committed to keeping the greatest number of people at work. The efforts of applicant firms to restructure and improve their competitive position, and their ability to fund their operations, were also key assessment criteria under the scheme.
Approximately 470 employers were successful in their applications from the first call. As a result, approximately 7,800 jobs are to receive direct support over a 15-month period. Applicant companies have committed to maintaining an additional 36,000 jobs, meaning that in excess of 43,000 jobs in total are being protected as a result of the scheme.
The first tranche of payments which is now due to companies under the employment subsidy scheme will amount to €2,600 per job supported. The total cost in 2009 will be approximately €20.5 million. Further payments due to the enterprises which were successful under the first call for applications will be paid in 2010 and will amount to approximately €50 million next year. These payments will greatly assist the enterprises in retaining their productive capacity and skills base, and will ensure that jobs are maintained.
As I have indicated, the cost of the employment subsidy scheme for 2009 will be met through the transfer of moneys from other areas in my Department's Vote. This is a reflection of the improved flexibility we have introduced in our response to addressing the problem of unemployment and in getting better efficiencies and value from the funding available. In addition to the employment subsidy scheme, other measures have been introduced this year to support those who are unemployed. For example, FÁS has doubled its capacity to cater for referrals from the Department of Social and Family Affairs under the national employment action plan. FÁS has increased the annual referral capacity to 147,000 persons in 2009. FÁS has almost doubled the number of training and work experience opportunities it can provide, to over 130,000 this year. Within these places, it will deliver approximately 92,000 short-course training opportunities to the unemployed. This is a quadrupling of the number of similar courses which were provided last year. Between my Department and the Department of Education and Science we are providing 2,500 opportunities in the higher education system to the unemployed. Individuals on these places will have their fees paid by the State and they will retain their social welfare entitlements. Another significant initiative taken this year is the introduction of the work placement programme, which provides unemployed participants with work experience for up to nine months while they retain their social welfare entitlements.
In addition to these training, education and work experience opportunities, my Department has, this year, introduced the enterprise stabilisation fund, which is aimed at assisting companies through the difficult economic challenges they face. At least €50 million will be spent on the stabilisation fund this year. The fund provides direct financial support to viable companies with robust business models by buying preference shares in internationally-trading enterprises. These enterprises are investing in cost reductions or other measures to gain sales in overseas markets.
I wish to inform the committee that I am proceeding with a second call for applications under the employment subsidy scheme shortly, with broader eligibility criteria. The second call will be open to many companies which were not eligible to apply under the first call. However, applicants will have to be able to prove that they are viable, have a realistic restructuring plan and have strong prospects for economic growth in the medium term. The assessment criteria for the scheme will continue to be weighted in favour of those enterprises that commit to keeping the greatest number of people at work. It will be under the auspices of Enterprise Ireland.
I ask the committee to approve the Supplementary Estimate to make provision for the employment subsidy scheme for 2009. I am happy to take any questions that may arise from the committee.
In regard to the redirection of funding will the Tánaiste outline from where the €21.5 million to pay for the temporary employment is coming? When will the criteria for the second call be published? Can the Tánaiste give some information on it. Given that we have received the Revised Estimate for 2009, is that for discussion today or is it a separate item?
That is included in Vote 34 — Enterprise, Trade and Employment — the temporary employment subsidy scheme and cash limited schemes. Is that the issue to which the Deputy is referring?
That is a further Revised Estimate and is separate from this Estimate.
It is not for discussion today.
The Deputy has raised two or three issues.
Shall I respond?
I will take questions from Deputy Morgan as well.
I look forward to seeing the amended criteria published in order that we can evaluate it. I welcome the fact that it is in the process of being amended because clearly it was not broad enough to catch the numbers and was very restrictive. Particularly at this time, it is much easier to retain a job than to create another one. These are happy days so far as it goes but I am disappointed that a more substantial sum is not made available to deal with the huge number of vulnerable but viable businesses that need this help at this time. It would have been money well invested to make it a substantially bigger fund and at least €600 million per year would be a more realistic figure to capture the need.
I welcome the scheme and am happy to support the provision of the moneys. The employment subsidy scheme is a good idea and employers are keen to have assistance provided at a time when they are trying to protect jobs. It is very difficult for an employer to lay off people and it is only done as a last resort. In some of the cases, people will be delighted to have taken up jobs. As the Minister stated it is all about protecting jobs and trying to create other opportunities.
The Minister stated that in the second call the eligibility criteria will be broader. Will she explain the reasons for the change in criteria? The number of training and work experience opportunities are to be doubled. Are we placing people in a good position to take up opportunities that may arise in the near future? Have we conducted a study to establish that meaningful training and real opportunities are being provided or are such places a means of keeping people off the live register?
I welcome this Supplementary Estimate. To quote the Tánaiste and Minister for Enterprise, Trade and Employment, this is about jobs, jobs, jobs. I welcome any measures that are being taken. We must make every effort. During the past six to 12 months we have all seen the changed pitch, particularly for small and medium enterprises in our constituencies, which are suffering and are under pressure not just from Revenue but from all other agencies as well.
I welcome the Tánaiste and Minister for Enterprise, Trade and Employment. I would be interested to know the broader eligibility criteria for the second call for the temporary employment subsidy scheme. Why has it been changed? If the change will be of benefit, that is good. I would like to know what the broader parameters are. I also welcome the availability of 2,500 opportunities in the higher education system for the unemployed. They will not be going through the traditional CAO admissions system. Will the Minister supply information on how it will work? It is tremendously important that we have upskilling of people who are unemployed so that when the longed for green shoots appear, we have a very educated and well-informed workforce. I would like to know how the criteria for access to higher education will work.
I welcome the change in the second announcement. Does the Minister have a view on whether FÁS is in a position to facilitate the increasing number of people looking to attend FÁS courses? Obviously there has been a significant increase in the number of people seeking courses. Is FÁS in a position to respond to them in a speedy manner?
We focused on the employment subsidy scheme during the course of a committee debate on exporting in the manufacturing and internationally-traded services sector. We thought it was very restrictive. One can work out the employment subsidy if one divides the number of jobs, 7,800, by the number of employers, 470, that is between 16 and 17 jobs on average. Will the Minister provide the figure for the lowest and the highest number of jobs. We debated this previously when Mr. Parnell and Mr. Egan appeared as witnesses.
We have a significant number of people with jobs that are not in internationally-traded services areas. Those four or five jobs are very important in small and medium-sized enterprises that are the backbone of our economy. These employers are on the anvil of despair as they try to secure their base. To reiterate what Deputy Power said, the last thing that people in family-run businesses want to do is give an employee his or her P45.
We had a robust debate on displacement and we do not wish this money to be used for jobs that would be saved in any event, but for those who would need a leg-up to be in a position to save jobs. During the weekend I read with interest what may be carefully crafted or deliberate leaks. I want to see young people taking up employment, going on to education or participating in training and upskilling, rather than going onto social welfare. I have argued the case, perhaps over-vehemently, for the retention of community employment schemes. I know that nobody listens. Could this money be put into community employment schemes? Could we even bring down the age criteria and get people working and making a contribution? It is a case of Peter and Paul, taking money from social welfare to put into community employment schemes. The word came back that I do not know my maths.
FÁS has increased the annual referral capacity to 147,000 persons in 2009. FÁS has almost doubled the number of training and work experience opportunities it can provide to over 130,000 this year. Where are we going to get them if we do not have employment? An important question is whether we have the capacity to provide training and upskilling courses.
The enterprise stabilisation fund has €50 million. How many companies have availed of the stabilisation fund? Will the full €50 million be spent this year? What types of companies have availed of funding for preference shares? Do the Minister and her officials find this is a good scheme? What has it achieved and can it be expanded if it works? Is it a way of saving companies that might otherwise not be in a position to secure the financial support to help them continue?
We have €50 million in the stabilisation fund to spend this year. Deputies may be aware of companies in their own constituency that received this money. It was a very robust exercise. It is a change of policy in Enterprise Ireland.
What does the Tánaiste mean by "robust exercise"?
It was robust in that the Department was working with the companies to ensure their development plan had support from the banking sector. There was a tripartite approach between the relevant person from Enterprise Ireland, who looked after the manufacturer, the applicant and his or her support people, and also the banks. It meant that one tied the banks into the stabilisation of the company, which was a major issue for many of the companies. That exercise was excellent and has worked very well. A number of the companies in the manufacturing and internationally-traded services sector availed of the funding. I do not have the numbers but I will have them sent to the secretariat. The feedback from companies is excellent. The people in Enterprise Ireland are of the view that this is an excellent support mechanism for companies. This is complemented in a different way from the employment subsidy scheme. For some they use it to bank on the basis that, pro bono, they were having a certain amount of income made available to them. Deputy Power and I met a company involved in the scheme which is delighted with it. On that basis it was going ahead and expanding, which was great. It could embed its situation and move ahead into a further support mechanism from Enterprise Ireland. Overall, the feedback has been superb.
Why did we change the employment subsidy scheme? We did so mainly because the criteria set down were restrictive. The committee debated this and I heard it from other people. The removal of the export requirement was the main change that took place, it is no longer restricted to manufacturing or internationally traded services. We are adjusting the scoring scheme to keep as many people as possible in work. Fáilte Ireland is also now involved in the assessment criteria.
The problem I will face when this scheme is ready, hopefully next week, is that it will be oversubscribed. There is a specific amount of money but we must see where we will be. It has been set down for ten employees to start with. On the basis of what I hear and the interest in the scheme, it will be oversubscribed. It would, however, be worse if no one was interested. There will be €135 million spent on the employment subsidy scheme, which is a huge investment.
Deadweight is an issue of concern. We do not want to keep someone for the sake of it when it will reduce the productivity of a company. That was a key concern in the criteria changes. The fish processing industry organisation that Deputy Morgan used to represent will be keen to apply for this. It is always good to fire the first shot across the bow.
I do not declare all my interests here because it would take too long.
I would not characterise the Deputy as a deadweight.
We had savings in the context of the contract prices made available to FÁS. There has been an underspend in FÁS under the training and integration support that could be related to the capacity and quality assurance of courses.
There has been less interest in blended learning and online learning than expected, even though the issue was raised by many people. The numbers were not there, although we trained over 100,000 people this year. There was also concern about the length of courses and quality control and we have carried out a review of course provision.
We are trying to do two things — to deal with a huge number of people to ensure they do not become disconnected from the labour force and to provide courses that will be pertinent to the economy of the future. Many well-educated people have a particular skill and we must convert some of those skills into other areas. Deputy White asked about conversion courses for people who had a skill to retrain in green technologies. Those courses provided in the institutes of technology were paid for by my Department to allow those who were in receipt of jobseeker's allowance to participate in them. By the sounds of it, they were happy with that. They had to be six months unemployed and they seem to be going well.
The flexibility of the institute of technology system has been of benefit in allowing that to happen. It had the capacity and was able to turn it round quickly. The feedback I got was positive. There are 15,000 places at third level and 1,000 at fourth level, where some of the universities are involved. People in receipt of jobseeker's allowance or jobseeker's benefit who are unemployed for six months were eligible and my Department paid their fees. The two Departments worked together to get the best outcome for people.
On the length of the courses, it is important that we interact with the labour market and education. The capacity of FÁS to do it all is limited, being cognisant of the quality assurances that are needed. At the same time we must get good value for money for the taxpayer because this is a huge spend. Getting people involved in the workplace is very important. Unfortunately I cannot share with the committee, although we have evaluated the best way to deliver courses and who has the best ability to provide them. It is cross-departmental, between my Department, the Department of Education and Science and the Department of Social and Family Affairs.
It is also important to emphasise that 150,000 people left the live register to go into work. Although there are huge numbers out of work, 150,000 people moved into work. It is important to remember that.
Can the Tánaiste outline which sectors they found work in?
It is hard to believe there are even skill shortages in certain sectors. The medical device sector has been doing very well, as has anything in ICT and lean manufacturing. Those are the areas where new jobs are being taken up.
The difficulties in the downturn have been in construction, retail and old manufacturing industries. For some of those people education levels will be very basic, at VEC levels, while others will be able to convert a particular skill set into a new skill set. That will be a challenge because, although the majority of people who are unemployed have the capacity to pick skills up, there are still some of the older age bracket in construction, for example, who will find it hard to move on.
We are looking for a mechanism through the graduate placement programme that changes from today. The criteria set down will hopefully free up a greater capacity for graduates and non-graduates to participate with sign-off by the public sector as well as the private sector that allows that to happen.
Productivity is a huge issue. There is a need for lean manufacturing and there are great opportunities within the green technology sector. There are continued opportunities within the medical device sector, research and development in the pharmaceutical sector and the overall manufacturing sector. Unfortunately, some uncompetitive manufacturing businesses will continue to find it difficult, with the majority of those who have lost their jobs in the lower to middle skills bracket within construction, retail and certain types of manufacturing.
Does the Tánaiste have a breakdown of the retail sector figures, excluding food? What sectors are most affected? Is it clothing, hardware or book sales? Does the Tánaiste have a breakdown of the sectors?
I have read it. The first people to be hit were in the area of discretionary spending. There was a contraction in the construction industry, which affected people working in the retail sector in areas such as DIY shops and builders' supplies.
The coffee and doughnut people were the first to be hit in terms of discretionary spending.
Yes. Discretionary spend on sandwiches and breakfast rolls was affected. I happened to meet the head of Cuisine de France who told me the company had suffered a 40% drop in direct retail sales.
There are implications also for public transport as fewer people now use the bus given there is a smaller cohort who use public transport in the city. Discretionary spend is affected. However, we are getting better value for money, which has been a consideration of the committee in the context of groceries and other retail areas, particularly clothing. The CPI shows a reduction in costs in those areas. We reiterate the call that every euro spent in one's local area has a direct effect on keeping the person on the other side of the counter in a job. That has to be said.
Has the Tánaiste considered apprenticeship training opportunities? I raised that issue on a number of occasions. Jobs are available in London, for example, for apprentices in phase 7 but they cannot complete their training in this country. I know apprentice electricians, plumbers and others who could avail of opportunities abroad but they need a certificate to state they are fully qualified. I accept it is a little unfair to raise the issue as it does not relate directly to the matter in hand. The Tánaiste could respond to me on another occasion. I appreciate that she might not have the information to hand.
If there are opportunities for persons to get work, they should be assisted to get their certificates. Is there any way we can tackle the issue? I accept the Tánaiste said we should contact the local FÁS office, which we do, to see whether anything can be sorted out for individuals. Is there any way we can alleviate the difficulties experienced by apprentices? We can work around the issue for those who are at phase 4 or 5. In fairness to the Tánaiste she has reversed the position so that apprentices can do the theory rather than the practical and then perhaps in six months' time the situation will have improved.
However, apprentices at phase 7 are almost finished and they need a certificate to get work. All that remains of the course is approximately five months and most of the practical experience has been gained. It is only a case of fine-tuning. I am not aware of the course content, but no doubt, as with all of us who have gone to college, the purpose of the final year is to build on what has gone before. Is there any way we can tackle the issue? It does not appear to be going away. I still receive letters about it. I am sure that is the case with the Tánaiste and my colleagues as well. I accept the matter does not relate directly to the Estimate and perhaps it is a little unfair to raise it. I apologise if that is the case. We will continue to write to the Tánaiste on the matter.
The Chairman is correct. We did two things. First, we had a rotation scheme within FÁS apprenticeships. Through the flexibility of the institutes of technology we were also in a position to get people to do their next stage of training.
Two or three issues arise. Like parents and others, I am anxious that the young people concerned would be allowed to get their qualifications. Even though it will be difficult for some recently qualified apprentices to get jobs, they are qualifications that can be converted into something else. Unfortunately, many employers are not in a financial position to take on apprentices. For that matter, they might no longer be in business. We have worked with a number of people in the United Kingdom and Germany in the 1980s to position apprentices. The participation of apprentices in those countries would be signed off as part of their FÁS training. That work is under way. I wish to ensure that when young people are sent abroad they would get their qualification through FÁS. A number of people have done that.
I was in Canada recently where there is a considerable opportunity, especially in Alberta, for people with certain skills. There is a great interest in young people from this country. For some reason people in Westmeath are over in that part of the world. I met a few people from Westmeath who encouraged those young people to go over there.
There is an historical connection. People went to the mines in the 1950s and 1960s.
There is a large Westmeath population over there.
Unfortunately, Deputy English represents many of those now.
I hope they will have votes.
They will have.
It is a very cold place at this time of the year. The Premier and I had a discussion about Canada's immigration policy, which is difficult. We agreed that we might follow through by means of the ambassador to facilitate the emigration of young people to such places as Edmonton. That might be beneficial. It is not that we are exporting our talent. Those people want to qualify and get different types of experience and that is ongoing in the context of what is happening.
A number of years ago we did not have enough apprentices and we had to ramp up the number of apprentices. Now we have too many, some of whom are stuck between stages 6 and 7 who have not completed their training. That is the position. The skill strategy on which the Minister of State, Deputy Haughey, is working, is aimed at complementing the situation while we have a glut of people who need to get through the system to complete their apprenticeships. We will not be taking in as many apprentices because there will not be jobs for them and that would not be fair. What we are considering is a new apprenticeship model.
It is expensive to run the current apprenticeship model, although it is a very good one, which has worked well. The new director general and I had a further conversation on how that model could perhaps be refocused and changed. We train apprentices very well. Other European countries do different types of training models. We are trying to ascertain which approach would best complement the needs of this country.
The Chairman can rest assured that like him, I am receiving letters. I appreciate that it is a trying time for many. Apprenticeships and CERT in its day, which is now Fáilte Ireland, did provide a mechanism by which people got at least their two feet on the ground with a qualification and they were able to build on that. We are anxious to move things on. The Chairman can rest assured that we are trying to work towards facilitating the completion of that training programme.
I do not want to get into great detail as we discussed the matter at a previous committee and during Question Time in the Dáil. The Tánaiste keeps referring to the Vote of her Department and the fact that she is switching money around within the Department. I presume there is communication with the budget of the Department of Social and Family Affairs.
Yes.
Can the Department avail of some of the budget of the Department of Social and Family Affairs for some of the job subsidy schemes? Is there any movement in that regard?
There is.
There should be a greater crossover to try to get people back to work.
I indicated that the criteria had been changed for the work placement programme. That is a direct transfer between my Department and the Department of Social and Family Affairs. People keep their entitlements and we facilitate them. That work is ongoing. It is difficult to understand in some ways why we are spending so much in the Department of Social and Family Affairs and not sustaining employment. This is where the ESS came out of in the first place, to sustain people in employment, as opposed to them moving onto social welfare. The work placement scheme is part of that programme. I am working with the Minister for Social and Family Affairs in that regard. Three line Ministers are working on the issue with the Minister for Finance, namely, the Minister for Enterprise, Trade and Employment, the Minister for Education and Science and the Minister for Social and Family Affairs. We meet on a regular basis to try to streamline the spend and get value for money at the other end.
Is there a cap on the number? I know it is being reviewed and changes will be made but is there a prediction on the number that it is hoped to help with the two schemes?
The bottom line for the employment subsidy scheme, ESS, is the amount of money I have. Once it comes in, that is it. It will not be demand-led.
Is it demand-led?
No. The total spend is €135 million. It is not a big issue to change the work placement scheme if it can be made to work better because it is cost neutral. It is hoped that it will work much better this time. People in receipt of jobseeker's benefit and jobseeker's allowance are eligible, which was not the case previously, and one is eligible after being unemployed for three months. The public and private sectors are involved and there is no criteria on the number of people employed. The Minister for Social and Family Affairs made changes to allow the participation of many charities and voluntary groups which could not participate previously. They can participate and volunteerism will not count against one when considering one's entitlement to social benefit. It is hoped this will address many of the issues. We are also working with IBEC to link into its GradLink.
I am glad that the eligibility requirements have changed to a person being unemployed for three months. Many people had difficulties as they could not prove they were unemployed for a consecutive period of six months because, for example, they went to the United States to find a job and returned. Common sense needs to be applied. If people were unemployed for six months, even though they were not available for work here because they were trying another idea, it should not go against them.
It has been reduced to three months.
I accept that but even for a period of three months unemployment common sense should be applied. Deputies should not be spending time on the phone or writing letters on behalf of people who have not been employed for six or three months because they disappeared for two weeks to try to get a job somewhere else.
All obstacles should be removed to get people into work and onto schemes.
We are all practising politicians and we should use the website and encourage people going to clinics to be facilitated through the scheme. We need to get the message out.
I thank the Tánaiste and her officials, Mr. Mulligan, Mr. Parnell and Mr. Egan, for attending today's meeting of the select committee.