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Thursday, 12 Jul 2012

Priority Questions

Job Creation

Questions (1)

Peadar Tóibín

Question:

2Deputy Peadar Tóibín asked the Minister for Jobs; Enterprise and Innovation in view of the 14.9% unemployment rate for the month of June, the effect this may have on his plans to create 100,000 additional jobs. [34247/12]

View answer

Oral answers (8 contributions)

The Government is fully committed to its target of achieving a net increase of 100,000 persons at work by 2016 and improving job prospects for those who are out of work. To achieve this target, the Government has put in place two major programmes, the Action Plan for Jobs and Pathways to Work. These programmes are focused on delivery.

This Government is seeking to undertake a huge transformation of our economy to achieve these goals. Huge damage has been done to the fabric of our economy by the property bubble and the flawed policies which underpinned it. Competitiveness was lost, export markets were lost, our banks were crippled and hundreds of thousands of jobs were lost. However, through the Action Plan for Jobs we are bringing about the necessary changes to achieve this transformation. Every Department and more than 35 offices and agencies have contributed practical actions that will be delivered by 2012 to promote employment. At the end of the first quarter of 2012, 96% of the measures due for delivery under the Action Plan for Jobs were implemented on time. I am also commencing consultation on the 2013 Action Plan for Jobs and I welcome all inputs to this process.

As the Deputy is aware, the Action Plan for Jobs contained a significant number of innovations in a number of employment-generating areas. In terms of access to finance, it provided for microfinance and loan guarantee schemes, the development capital fund and the improved seed capital tax relief scheme. Regarding new markets, we have introduced initiatives for first time exporters and focused our diplomatic resources on trade.

To support start-ups and small business, we are reforming supports to small businesses, we have introduced initiatives for community enterprise centres, a clustering programme, the competitive start fund, and we are improving access to public procurement for small and medium sized enterprises. We have also focused on tax incentives and improvements in competitiveness as a means of employment growth.

Employment trends within the agency supported companies are improving in an environment where there has been an export-led economic expansion. A great deal more work has to be done and I am now commencing consultation on the Action Plan for Jobs 2013.

We are at a crisis point on this issue. It is the biggest problem facing the State and it is progressively getting worse under the stewardship of the Minister's Government. The human face of this crisis is that 450,000 people are unemployed in this State. It is estimated that another two citizens are usually linked to the unemployed person. The crash in income experienced by those unemployed and the negative human experience of unemployment is reaching 1.3 million people directly.

The live register figures we saw recently indicate an unemployment rate of 14.9% but, according to the Census of Population, roughly 19% of the population of the State is unemployed. The real figure is between 15% and 19%. Long-term unemployment figures have increased from 40% to 45%. Nearly 200,000 people in this State are unemployed for as long as this Government has been in office. This is a shocking and startling figure. This is despite 70,000 people emigrating in a year, nine people every single hour. I ask the Minister to imagine if this release valve was not there how much worse these figures would be.

He spoke about the jobs plan but this is ignoring the real issue which is the unemployment crisis. The avalanche of spin is all very well but two key ingredients are missing.

A question, please, Deputy.

Money is needed and also proper targets. What targets has the Minister in mind to ensure that the promised 100,000 additional jobs will be achieved? Given the current economic situation, how will those targets be achieved?

The Deputy knows that the Government has set a series of targets of 270 actions to be taken this year to deliver a transformation in our economy. As I said in my reply, many systems are seriously broken. The banking system is not performing to a standard and as a result we have had to introduce numerous measures to support business in getting access to finance. This includes the microfinance initiative, the loan guarantee scheme and the development capital scheme. These are all designed to plug gaps in a system that is not serving business sufficiently. We recognise the need to rebuild our export base and through Enterprise Ireland this is beginning to happen. There was a exceptional 14% growth in exports last year. We have established a first-time exporters division to encourage more exporters.

Any level of unemployment is disappointing but the Deputy needs to consider what is happening in the area of employment creation. The IDA has had its best year in a decade in employment terms, with new jobs created and a lower rate of job loss. Enterprise Ireland has stabilised the numbers in employment after several years of massive job losses. Enterprise Ireland is showing growth in its employment base in the first three months of this year.

People will note the Government is listing the number of its action plans when people would prefer the Government to deal with the jobs problem. While the Government's jobs action plan has some good points, the proportion of the problem and the proportion of the proposed solution are not meeting up, unfortunately. Enterprise Ireland created a net number of six new jobs last year. This is a phenomenal figure considering the problems we face.

The Department forecasted an unemployment rate of 14.3% to the end of the year but it is currently 14.9% and there was a collapse in the growth figures for the first quarter of last year. The Government should set out its job creation targets for the future. If the Government cannot measure it cannot manage. We will arrive at 2016 with no targets achieved. It is time the Government realises the necessity for a Government-led multi-billion euro stimulus for the economy. The funds are available in the National Pensions Reserve Fund and a well-disposed private pensions industry and the European Investment Bank.

The Deputy needs to recognise that enterprise will create employment in the economy. The turnaround in the performance of all the export-oriented companies and IDA and Enterprise Ireland is a significant achievement after a number of years of reversal. The Deputy is correct that there are innovative ways to bring new investment into the economy. The Ministers, Deputies Howlin and Noonan, are working on those initiatives. The recent meeting with the European Investment Bank is very significant. The new approach in Europe is helpful and there has been a new approach from the troika which is a relaxation in the terms on which asset sales can be turned into immediate investments. Those Ministers are putting together a programme for finding innovative ways of stimulating investment which will have a long-term impact. This is the focus of the effort. This is a significant challenge at a time when the State is in a very difficult financial arena. However, there are real signs of progress and we need to build on them.

We will now take Question No. 1 in the name of Deputy Willie O'Dea.

Jobs Initiative

Questions (2)

Willie O'Dea

Question:

1Deputy Willie O’Dea asked the Minister for Jobs; Enterprise and Innovation if he will prepare and publish an evaluation of the jobs initiative for its effect on jobs; and if he will make a statement on the matter. [34010/12]

View answer

Oral answers (6 contributions)

The Government's jobs initiative of May 2011 was aimed at restoring confidence in the economy, providing opportunities for re-skilling those who had lost their jobs and assisting people in getting back to work. Key measures in the jobs initiative included halving the rate of employer's PRSI on earnings up to €356 per week, a reduction in the lower rate of VAT on certain goods and services, targeted capital spending on labour-intensive projects and the introduction of the national internship scheme, JobBridge. Additional education and training places were also provided for those who were seeking to upskill. The jobs initiative was a whole-of-Government initiative and any formal evaluation of its effects would have to be conducted on that basis. However, the impact of the measures in the initiative is being seen across a range of sectors. The quarterly national household survey shows a year-on-year increase of 8,700 in the numbers employed in the accommodation and food service sectors. The Sustainable Energy Authority of Ireland has estimated that the additional €30 million allocated to the better energy programme under the jobs initiative supported the creation and retention of an extra 2,000 jobs for the duration of 2011. Over 8,400 interns have commenced placements under the JobBridge programme since it was launched in July of last year. Feedback from the Department of Social Protection indicates that 1,196 of the 3,131 people who have already completed JobBridge have gone directly into employment with the host organisation or elsewhere. Over 3,500 people recently graduated from the first round of Springboard programmes which were put in place in 2011 and the Minister for Education and Skills, Deputy Ruairí Quinn, recently announced a further roll-out of the Springboard initiative with an additional 6,000 places in 2012.

The Government has built on the jobs initiative this year with the action plan for jobs. The action plan has set a target of supporting 100,000 net new jobs in the economy by 2016.

I apologise for my late arrival in the Chamber. I note the Minister's response but the figures are pretty damning. The recent official statistics which, if anything, understate the case, point to a level of unemployment which is the highest in 20 years. They also indicate that half those people who are now unemployed have been unemployed for a year or more and one third are unemployed for two or more years. In addition, there is plenty of evidence that thousands of young people are hiding out in the education system and the Government has increased the number of people on training schemes - which I welcome but it does tend to massage the unemployment figures. The Minister will be aware of the remarks issued by ISME after the recent CSO figures. ISME described the Government's employment strategy as a shambles. He will be aware of the remarks from ICTU which said it is now time for the Government to start tackling the unemployment problem. He will be aware of the remarks of the Chambers of Commerce Ireland which described the situation as a crisis.

We have had the jobs budget, the jobs initiative, the 273 proposals in the jobs action plan but the figures do not lie. In view of the stark situation and in view of the comments from people across the board from one spectrum of society to another who are all uniformly critical of the Government's performance to date, will the Minister accept that his strategies are not working and it is time to try some new ones?

I certainly do not accept anything of the sort. We have inherited an economy in which under the stewardship of the Deputy's party unemployment rose from 4% to 14%, an increase of 10% in a three-year period. A total of 300,000 jobs were lost under that regime. The economy's underlying structure was severely damaged and there is a lot of work to be done to fix it. Nobody ever indicated that this would be fast or sudden. We have a huge amount of work to do in fixing the banking system, the public finances and access to finance, as well as getting small companies back on track, and the Government has confronted that. For the first time, the public service is holding itself to account in every quarter for the delivery of targeted measures to improve the employment area. That is having an impact.

Private sector employment is now growing in this economy after years of decline. The IDA has had a record year and two years of significant employment. Figures for the year to date indicate that it will replicate last year's record performance. Enterprise Ireland is also turning the corner in terms of the expansion not only of exports but also of employment among the companies. We are making headway, but it will be a slow process. The Government always recognised that.

Everything seems to be turning the corner and going ahead, but the problem is growing. Allied to that, as has been mentioned, approximately 200 people per day are leaving the country. If one takes the statistics for the number of people who were employed in this economy from the time the Minister's party left office in 1997 to when it returned to office last year, a total of 325,000 more people were at work in the Irish economy. However, that is history. If the Minister wishes to have a discussion on history, I will happily engage in it but I am interested in the present and the future.

Can I draw the Minister's attention to a recent statement by the Taoiseach? In that statement he gave a commitment that over the next three years, which is probably the lifetime of this Government given that the average term would bring it to three years from now, he will have put 75,000 people who are now long-term unemployed back to work. Where stands that promise? Does the Minister still stand over that promise?

That is a target in the Pathways to Work programme, which was introduced a number of months ago. It is a target for 2015. It indicates that we have now completely reformed the employment services that were inherited from the previous Government. We now have an employment service that is far more streamlined and is focused on identifying those who are at high risk of entering long-term unemployment and seeking to assist them. A number of programmes have been introduced to support that. They include JobBridge, Springboard, intensive engagement with people who have fallen unemployed, improvements in the Revenue job assist scheme and the promotion of those schemes to get long-term unemployed people back into the workforce. This will be a difficult challenge, but the Government is facing it squarely. Yes, we would love to be doing better in many ways but we recognise that the scale of the disaster inflicted on this economy by a Government of which the Deputy was a member has taken a huge toll. We must fix many of the basic systems that were broken and put them back in working order.

The Government is making a very poor job of it.

Enterprise Support Services

Questions (3)

Catherine Murphy

Question:

3Deputy Catherine Murphy asked the Minister for Jobs; Enterprise and Innovation if, in the operation of the microenterprise loan fund scheme, consideration will be given to encouraging viable enterprise in areas of the country currently affected by high levels of unemployment as a priority, or will decisions on grants be based on a demand led approach to viable applications; and if he will make a statement on the matter. [34250/12]

View answer

Oral answers (5 contributions)

The microenterprise loan fund will facilitate the growth and expansion of all viable microenterprises from all industry sectors across the country that have been refused access to credit from the banks. It is a key element in our Action Plan for Jobs. The fund has a significant entrepreneurship focus to encourage all would-be entrepreneurs across the country who may be unemployed but who have the potential to generate employment for themselves and others. It will not have geographical quotas but will be of particular help to persons who are unemployed who would have much greater difficulty accessing conventional sources of bank lending. It will be promoted through a range of networks across the country, including local bodies that support business start-up for people with fewer resources, and in areas of high unemployment. It will not be confined to businesses with export potential and will be more within the reach of unemployed persons who target business opportunities within their own local communities. It will form an important complementary element and add value to schemes of support, such as the back to work allowance. Support will be in the form of loans, rather than grants.

Loans will be made available to start-up, newly established or growing microenterprises with viable business propositions that do not meet the conventional risk criteria applied by banks. The potential viability of the business proposal will be the dominant factor in all credit decisions. It will ultimately be for enterprises to apply for the loans so it will be demand-led in that sense. It is envisaged that mentoring will be an important element in the success of the fund. Delivery of business supports including business planning and mentoring to facilitate successful credit applications will be facilitated through the national network of existing bodies and agencies. The county and city enterprise boards are often the first port of call for business support and advice, and they will be actively involved in the promotion of the microfinance fund across the country.

The Minister answered the question of whether the fund will be targeted. Clearly, it will be down to the banks. They could delay people very significantly, because people must be turned down by the banks before they can apply to the microenterprise loan fund. However, other issues come into play as well if this is going to work. One of them is the provision of incubator units, particularly if something will be manufactured in the enterprise as opposed to something done on the Internet or whatever. I can give the Minister an example. I met somebody recently who is in the hobby sector and is seeking to get onto the back to work allowance scheme. He was going to try to manufacture in a small shed in his back garden, so we went through the detail of what that involved. He did not qualify for a grant because he would have to get planning permission, and he could not get planning permission on that site because it is in a housing estate. All these issues come into play. If he did have planning permission, he was faced with commercial rates and development contributions with the application for planning permission. In the absence of a suite of measures such as a proactive approach to the provision of incubator units this fund might not be capable of being leveraged by people who have viable ideas.

The scheme is currently being finalised and will be laid before the Houses of the Oireachtas. The Deputy refers to a unique case. There is a code of practice in the scheme whereby a decision must be made within two weeks or 15 days - I will have to check the exact timeframe. The core principle of the microenterprise loan fund is that even in good economic circumstances the risk criteria might not be met by a certain coterie of people, such as the person to whom the Deputy referred. They might be credit-worthy but they do not fit within the banking criteria. The fund is designed for people in that position. Given that the local bodies will then feed into that process, one hopes there will be a fit solution for such people so they will not have to incur massive administrative costs to be able to access the fund so they can start their businesses.

I was using that person as an example. I believe incubator units are required, so perhaps the Minister will consider that. Has the Minister set a time to conduct an evaluation once the scheme is up and running? It will be important to keep an eye on what the banks are doing in the context of this scheme.

It will be within two years.

Sick Pay Scheme

Questions (4)

Willie O'Dea

Question:

4Deputy Willie O’Dea asked the Minister for Jobs; Enterprise and Innovation his liaisons with the Department of Social Protection on possible changes to the system of sick pay and employers PRSI; if he considers that any such changes would impact on competitiveness and employment; and if he will make a statement on the matter. [34246/12]

View answer

Oral answers (5 contributions)

Any proposals for changes in the sick pay scheme or to employer PRSI are budgetary matters which will be considered in due course by the Government. Any such consideration will include a thorough examination of the proposals, having regard to the overall impact of the measures proposed. The Minister for Social Protection initiated a consultation process earlier this year on the feasibility and implications of introducing a scheme of statutory sick pay. Forfás and representatives from my Department attended the consultative seminar held by the Department of Social Protection, along with a number of business representative organisations. I understand that the Minister for Social Protection recently published a report on that consultation seminar.

Proposals for a statutory sick pay scheme would affect competitiveness and employment. The evidence of this impact will need to be weighed against the potential for savings in terms of reduced absence due to sickness. I will therefore carefully scrutinise any proposals which develop from this consultation phase and their impact on jobs and competitiveness and contribute fully to the budgetary process within the Government.

I take it from the Minister's reply that his officials attended a presentation on an information campaign organised by the Minister for Social Protection. However, I am inundated with correspondence from small employers who are hanging on by their fingertips and who are extremely worried about proposals emanating from the Department of Social Protection, whose Minister is saying there is a compelling case to increase employer's PRSI and load more of the sick pay bill onto the backs of employers. This is affecting their planning and business and it is creating an air of uncertainty. Does the Minister agree that, with the current levels of unemployment and emigration, the last kinds of solutions we need are proposals to add to the cost of employing somebody, in view of the fact that the average cost of employing somebody in Ireland is still approximately 20% higher than the average among the 27 EU member states. Does the Minister not agree that increased costs are the last solutions we need and that it would be better if this discussion were not ongoing?

Every proposal needs to be examined carefully. Evidence suggests that small employers manage absence through illness extremely well and that the highest rate of sick leave is in the public sector. We need to look across the board at this issue. The Minister for Social Protection is undoubtedly correct that there has been considerable growth in long-term dependence on welfare owing to sickness. We need to examine the causes. This is the background to this debate. There is no doubt the Deputy's concern, namely, that there will be a disproportionate impact on small business, needs to be examined. The truth is that most small businesses do not have sick pay schemes of the sort operated by larger employers in the public service. There are serious issues to be examined, including the impact on the cost of employment. There is serious concern about the extent of dependence on long-term sickness welfare schemes, and we need to examine ways in which to reduce this.

I agree with the Minister's last point but the answer is surely not to solve the problem by loading more costs on the backs of employers, which will inevitably create more unemployment and put more pressure on the social insurance fund. The Minister said in reply to question No. 2 that one of the centrepieces of the Government's employment strategy is the halving, in certain instances, of employer's PRSI. If this is the centrepiece of its policy for creating jobs, does any proposal to increase PRSI, for whatever reason, not fly in the face of it?

The Deputy is seeking to have me comment on a number of issues that will be discussed in the context of the budget. The matter will be dealt with by the Government by weighing up the evidence in due course. There is no doubt we ought to be extremely careful about anything that adds to the cost of employment. We must ask whether any proposed measure will be effective in reducing absences and dependence on welfare. There are serious issues to be addressed. As I stated in my reply, I will be contributing very much in this regard and examining carefully and evaluating the potential impact on small business and employment. Any decision will have to be taken in a balanced way, bearing in mind all the issues that arise.

Credit Availability

Questions (5)

Peadar Tóibín

Question:

5Deputy Peadar Tóibín asked the Minister for Jobs; Enterprise and Innovation the steps taken by him to address the issues of credit within the small and medium enterprise sector. [34248/12]

View answer

Oral answers (13 contributions)

I am bringing in a series of targeted initiatives to make it easier for micro-enterprises and small and medium enterprises to access credit. The micro-enterprise loan fund scheme, which is expected to be operational from early autumn, will facilitate up to €40 million in additional lending to micro-enterprises over the next five years. The Government is in the process of introducing the temporary partial loan guarantee scheme for micro-enterprises and small and medium enterprises which, because of a lack of collateral or the sector in which they operate, face difficulties in accessing traditional bank credit.

These initiatives coupled with the recently launched second call under the innovation fund and the development capital scheme will strongly contribute to addressing the credit needs of business and facilitate business modernisation and expansion, in addition to the creation and maintenance of jobs.

Furthermore, the Minister recently met the CEOs of the two pillar banks to impress upon them the importance of keeping their lending practices in tune with the changing needs of Irish companies. Enterprise Ireland is working closely with the banks to develop credit propositions for exporters and technology companies that are suited to different stages of growth - start-ups, early stage and mature companies - and to adopt cash flow lending as opposed to the asset-backed approach that has been the norm in recent years.

My Department is working closely with the Department of Finance and the Credit Review Office to evaluate evidence on credit availability and ensure the amount of credit flowing to the SME sector is maximised to facilitate sustainable job creation and retention.

My colleague, the Minister of State responsible for small business, Deputy Perry, continues to meet business owners on a regular basis to hear at first hand their views and experiences and to examine further the actions that might be taken to improve access to credit for SMEs.

Credit comprises one of the four pillars of a properly functioning enterprise sector, in addition to keeping costs down, ensuring there is not over-regulation and that regulation is fair, and ensuring demand. Demand is extremely important. Credit in this State is dysfunctional, for a number of reasons. The primary reason is that the troika dictates that the banks must have accelerated deleveraging from the market, which means they will reduce their exposure over the longer and shorter term to small businesses. The Government has produced a number of schemes that should help small businesses. We applaud them but there is a major difference between the proportion of the problem and the proportion of the response.

A problem we highlighted an Committee Stage when dealing with legislation in this area concerned many of the schemes of the Government. The interest rate charged to businesses reduces their ability to service loans or to make a profit on loans.

Could the Deputy frame a question, please?

The major issue for me is that the European Central Bank reduced its rate to 0.75% this week, yet the lowest rate we could find for businesses was 6%. The previous Government put €64 billion into the banks and is a major shareholder therein. The Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, said he met the banks. Has he asked them to reduce the rate of interest they offer to small businesses?

There is ongoing dialogue between the Government and the banks through the Economic Management Council to ensure there is a flow of credit to entrepreneurs and businesspeople. One can say objectively that, in lending practice, the rate offered to businesses is always above the normal interest rate.

I wish to make two key points. The Irish Small and Medium Enterprises Association, ISME, claims that almost 50% of its members still have difficulty getting credit. When the European Central Bank, ECB, started reducing rates for domestic mortgages, there were interesting pictures of an emboldened Taoiseach claiming that the Government had put it up to the banks to get them to reduce the burden on mortgage holders. Has the Minister asked the banks to reduce the rate they charge to small businesses?

The Deputy referred to ISME's report, but there is also a Mazars report. The Credit Review Office, CRO, is our benchmark, but should not be viewed as a permanent fixture. According to a figure in the Mazars report, a demand survey showed that only 36% of SMEs sought credit in the April-September period. As the domestic economy recovers and SMEs seek to increase working capital, the demand for lending will increase and two factors will point to CRO assistance being required. The ultimate aim is to drive credit through the system

The Minister of State is not answering my question.

The relatively poor capital and liquidity conditions of some SMEs following three years of a flat-lining domestic economy is one of the factors. Some of the SMEs that bank with the Irish Bank Resolution Corporation, IBRC, will seek new credit and will need to be moved to new banks. If those banks are unwilling or unable to provide that credit when the upturn arrives, it will be another factor. If the Deputy will bear with me, I am looking for the figures.

Has the Minister asked the banks to reduce their interest rates?

The economic management council, EMC, engages with the banks to ensure that they deliver. The Deputy must acknowledge that they have delivered on their 2011 lending targets. I am struggling to find the figures on the percentages in terms of credit. They were to hand.

Another credit question will be taken shortly.

The report compiled by the accounting firm Mazars showed that 67% of completed credit applications were approved by the banks, representing an increase of 2% on the previous year's report, with the rate of refusals falling by a corresponding amount of approximately 28%. Despite the downturn, the report indicates that some companies are still in a position to protect their finances from potential problems.

It is important that we give ISME, the small business community and its other representative organisations their due regard, but it is also important that we be objective in our interpretation of the figures. If one drills into the figures, one will realise that some of the results in the survey to which the Deputy referred were based on media perceptions of credit. It is important that we assess the qualitative criteria.

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