Dáil Éireann Debate, Wednesday - 3 February 2010
93 Deputy Kathleen Lynch asked the Minister for Finance if he will make a statement on the recent declines in labour market participation, its likely effect on the macro economy and on tax revenues for 2010 and beyond; his views on the fact that this development depresses the live register figures; and if he will make a statement on the matter. [5310/10]
View answerThe latest data on labour force participation relate to the third quarter of last year when, according to the quarterly national household survey, 62.5% of the total population over the age of 15 was in the labour force. As labour force participation peaked in the third quarter of 2007 at just over 64.5%, it has declined by 2.1 percentage points over the last two years. There was a fall in the participation rates for all male age groups during this period. Participation rates among females over the age of 25 showed minimal falls for two age groups and increases for the other four groups. The biggest fall in the labour force participation rate was in the 15 to 24 age group, among both males and females. Although full data for 2009 are not available, it seems that the fall in labour force participation for this age group reflects an increased participation in education by younger people and therefore should be welcomed. The increase in participation in education, which is associated with the fall in labour force participation rates, will contribute to enhancing the skill level of our labour force and the productive capacity of the economy over the medium and longer terms. The fall in the average labour force participation rate is an outcome of the reduction in employment opportunities that is associated with the economic downturn. While receipts from income tax were weak last year, reflecting the poor economic and jobs climate, it is difficult to estimate the impact the drop in participation, particularly among younger people, would have had on tax receipts. In the absence of detailed information on those involved, it is not possible to estimate with any certainty the impact on the live register of the fall in labour force participation rates.
Is the Minister aware that approximately 440,000 people, one third of whom are men, are unemployed? It is a national disaster. The figure I have given does not take account of emigration, which has resumed at a strong level among people who had previously migrated to this country and at a high level among young Irish graduates. People in the latter group are going anywhere in the world they can, in order to try to secure employment. Does the Minister have any plans in this regard? Can Fianna Fáil offer any hope that a job creation strategy will be introduced? We know that Fianna Fáil is spending a lot of time on bankers and developers, but it seems to have no interest in the unemployed. The Green Party does not seem to be making an input into solving the problems of the unemployed. Does the Minister have any kind of strategy for getting people back into work? Is he aware that tax flows are strongest in countries with high labour participation rates, such as the Nordic countries, because more people are contributing and that economies tend to be most stable in such countries?
Of course the Government has a policy to bring people back to employment and to improve the economy. It requires improving our competitiveness, getting our financial house in order and restoring our banking sector to stability and to the capacity to provide credit to the economy. The Labour Party has consistently chosen to oppose the various measures adopted to advance such policies, which are essential if we are to see a return to employment-creating conditions. I accept there are no easy solutions to this serious problem and of course I am aware of the position reflected in the January live register returns. However, it should be borne in mind that the figures are as predicted at budget time and do not constitute a deterioration on what was anticipated. In every economic crisis, there is a prolongation of unemployment even when the end of the crisis is in sight and regrettably, that is the position in Ireland as well.
Does the Minister——
While I will return to Deputy Burton, I call Deputy Morgan.
In light of the figures published this morning by the Central Statistics Office on unemployment, does the Minister accept that the real number of unemployed people probably is close to or in excess of 500,000? For example, one should consider those who were forced into being sole traders, particularly in the construction sector, in order that their then employers would not be obliged to pay PRSI and who therefore are not entitled to jobseeker's benefit or assistance. Second, one should consider those unemployed people who were entitled to jobseeker's benefit for 12 months because they possessed the requisite stamps. Thereafter, another income coming into the affected household would disqualify that person from an entitlement to jobseeker's assistance. Therefore such people may not be registered as many people do not feel obliged to register when not in receipt of a payment from the State. Does the Minister appreciate the huge number of people involved, which I estimate to be in excess of 500,000 rather than the published figure of 436,000? This is the scale of the crisis facing us.
While I accept Deputy Morgan's good faith in putting this question, I do not accept its premise. I consider the quarterly labour force survey to be a far more reliable indicator of the extent of unemployment than are the CSO data relating to the live register. It provides a more accurate picture because not everyone who is on the live register is unemployed. Nevertheless, the position is serious and regardless of how one analyses the statistics, it reminds one of the essential need to put our economic house in order. The position in respect of competitiveness in Ireland, as it developed during the latter part of this decade, is highly serious. It is clear that we had priced ourselves out of world markets and had developed unrealistic expectations about how we could manage ourselves as citizens, workers, employers, householders or self-employed producers. There are clear signs in the economy that this has been recognised, that such realities are accepted and that we are taking the necessary measures to put us back on the road to recovery.
I accept that as a mea culpa from Fianna Fáil for economic policy from the year 2000 onwards, when almost all the cost rises in the Irish economy were led by increases in Government charges as an alternative to reforming the tax system in a fair and balanced way. As for competitiveness, does the Minister agree there is indeed a sheltered private sector? For example, I have yet to hear of families who have been obliged to take their children to a GP, including many low-income public servants, and who have found that the GP prices have decreased. It still costs €50 to €60 over almost all the country.
The Deputy is extending the scope of the question.
The Minister has answered regarding competitiveness, which is important.
Not before the question.
However, most of the lack of competition occurs in areas that were controlled or organised by Fianna Fáil in government from the year 2000.
An tAire, a brief reply.
Again, I agree with some, albeit not all, of what the Deputy said. However, I accept that the introduction of competitiveness in the sheltered private sector is of crucial importance. One reason I placed on a standard rate the reliefs available for medical expenses in the penultimate budget was because I considered it to be an important disincentive towards medical inflation. One must take such individual decisions in individual areas to ensure that competitiveness and transparent pricing are to the fore.
