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Wednesday, 22 May 2013

Written Answers Nos. 1- 19

Proposed Legislation

Questions (10)

Clare Daly

Question:

10. Deputy Clare Daly asked the Minister for Jobs, Enterprise and Innovation when he intends to bring legislation before Dáil Éireann regarding the abolition of the Employment Appeals Tribunal; the extent of the proposed reforms; and when he expects same to be implemented. [24136/13]

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Written answers

The Government is committed to reform of the State’s Workplace Relations Services. The system that developed over the last sixty years had become unwieldy and complex; it lacked consistency, involved long delays and in some cases proved expensive for users.

In short, the system was no longer fit for purpose and it was for this reason that I have commenced a root-and-branch reform with the objective of establishing a world-class Workplace Relations Service. I propose to establish a two-tier Workplace Relations structure. This will involve two statutorily independent bodies replacing the current five. We will have a new single body of first instance to be called the Workplace Relations Commission (WRC) and a separate appeals body, which will effectively be an expanded Labour Court.

The WRC will replace the Labour Relations Commission, the National Employment Rights Authority, the Equality Tribunal and undertake the first instance functions of the Employment Appeals Tribunal (EAT) and the Labour Court. The Labour Court will take on the appellate functions of the EAT. These four bodies, including the EAT, will then be dis-established following the transfer of their functions to the WRC. The reform programme is not about abolishing any particular body. It’s about creating a two-tier workplace relations dispute resolution system that will be fit for purpose for many generations to come. The process which I have proposed to achieve this necessarily involves the incorporation of the five existing bodies into two.

Significant progress has been made to date and I am happy to report that in the last year a number of priority actions have been successfully delivered within the target timescale. While considerable progress has been achieved to date on an administrative basis, completing the proposed reform requires the enactment of detailed legislation in order to provide the statutory basis for the new structures and processes.

A significant amount of work has been completed on the preparation of the Workplace Relations Bill which will give statutory effect to the Reform proposals. In July 2012, I published a policy document - Legislating for a World Class Workplace Relations Service - which was submitted to the Oireachtas Committee on Jobs, Enterprise and Innovation in order to give the Committee an early opportunity to shape the legislation. I had a constructive dialogue with the Committee on the basis of this document.

Enactment of the Bill will necessitate amendments to 22 primary Acts, 12 specified parts or sections of Acts and 71 statutory instruments. The Scheme of the Workplace Relations Bill has been approved for priority drafting by the Cabinet and was included on the 'A' list for the Government's Summer Legislative Programme 2013. Engagement is on-going with the Attorney General’s Office and I am committed to the enactment of the legislation at an early stage with a view to having the proposed new structures in place from 2014.

I intend to progress the reform programme to the next stage with the same determination that has delivered the achievements to date. I am working towards delivery of the new two-tier Workplace Relations structure so that from next year two statutorily independent bodies will replace the current five.

In the meantime, I intend to continue to progress the reform and bring about further enhancements for users of the services on an administrative basis in the coming months.

Foreign Direct Investment

Questions (11)

John McGuinness

Question:

11. Deputy John McGuinness asked the Minister for Jobs, Enterprise and Innovation if he has indicated to the Department of Finance his views that income tax rates are a significant influence on multinationals in deciding whether to locate here; and if he will make a statement on the matter. [24417/13]

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Written answers

Forfás recently produced a report for Government entitled “Costs of Doing Business in Ireland 2012”. This Report concluded that “While Ireland has already regained some cost competitiveness, further progress is required if Ireland is to return to strong economic and employment growth”.

Total labour costs include wages, taxes on income and employer and employee social security contributions. The Forfás Report concluded that Ireland has “the fourteenth highest total labour costs level in the 28 OECD countries examined”. While Ireland has one of the lowest levels of employers’ social welfare contributions, there is no cap or reduced rate over a specified earnings threshold. Therefore as salaries increase, Ireland’s competitiveness position can be quickly eroded.

Ireland’s tax wedge has grown significantly in recent years as the previous Government imposed 80% of the tax adjustment on income taxes. The wedge is higher for higher income earners – a financial disincentive for highly skilled internationally mobile workers. The tax wedge is important from a competitiveness perspective. Ireland’s 48% personal tax rate is in the top one-third in terms of highest personal tax rates of the 33 OECD countries, however, only 2 of the 33 OECD countries have lower entry levels to the higher personal tax rate than Ireland. The marginal rate of income tax, at 52% for employees and 55% for the self-employed, is higher than in most of our competitor countries, particularly in the UK. It also kicks in at a much lower level of income - in fact, at €32,800 for a single person, the threshold is below the average income. Tax rates of over 50% on average incomes damage inward investment and entrepreneurship, and make too many people question whether they would be better off not working at all. That is why I have publically argued that we must also as soon as possible begin to reduce the income tax burden, starting with hard-pressed families on average incomes who have endured so much over recent years, and put a little badly-needed extra cash in their pockets.

The Forfás Report recommended “no further increases in the labour tax wedge” and identified the need “to flag when it will be feasible to reduce marginal labour rates below 50 per cent”.

I have brought this Report to the attention of cabinet colleagues. As Jobs Minister, I must be alert to the impact this can have on our ability to create employment. This issue is raised with me when I visit the board rooms of major potential investors.

The CEO of IDA Ireland has also stressed that in the fierce competition for international investment, Ireland must be wary of losing its attractiveness as a location to employ highly skilled labour. As an open economy, highly reliant on FDI, Ireland must be sensitive to the impact of personal tax rates and structures on labour costs.

The very heavy reliance on personal tax adjustments in the 2009 Supplementary Budget, Budget 2010 and Budget 2011, in particular the introduction of the Universal Social Charge, has resulted in Ireland having higher marginal personal tax rates relative to other jurisdictions.

To summarise, Ireland’s competitiveness position in terms of personal tax rates is a combination of the actual rate and the entry level relative to other jurisdictions.

Job Creation

Questions (12)

Denis Naughten

Question:

12. Deputy Denis Naughten asked the Minister for Jobs, Enterprise and Innovation the steps which are being taken to support job creation in the Athlone area following the announcement of significant job losses by Alkermes Ltd; and if he will make a statement on the matter. [24299/13]

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Written answers

In light of reductions in manufacturing demand for certain pharmaceutical products that have become generic or are nearing the end of their commercial life, Alkermes made the decision recently to review resources at their Athlone facility. This review has led the company to conclude that they need to reduce the number of staff in Athlone by between 100 and 130 staff, from their present workforce of 420, to take place over a two-year period, as these older product lines are phased out.

The company anticipate that a reduction in staff numbers will be achieved through a combination of natural attrition, voluntary redundancy and compulsory redundancy. Favourable redundancy terms and outplacement services will be provided to affected employees and discussed as part of the consultation process.

I am advised that the Athlone facility will continue to play a strategic part in Alkermes’ future business, and significant investment is planned for the site over the next number of years which will allow Alkermes to focus primarily on the manufacture of newer, advanced pharmaceutical product lines. World-class development and manufacturing activities at the plant will remain robust and it will continue producing global pharmaceutical products.

At present there are eighteen IDA Ireland supported companies in Westmeath employing 2,444 people, and 7 IDA supported companies in Roscommon employing 896 (end 2012). There was a net increase of 222 jobs in IDA supported companies in Westmeath in 2012 and a net increase of 53 jobs in IDA supported companies in Roscommon last year. Significant foreign companies which have established themselves in the Athlone area in relatively recent years include The NPD Group, American Medical Systems, PPD Inc, Kinetic Concepts Inc, Teleflex Medical, GTRI and AXA Assistance. Many of these companies have announced ambitious plans to expand their employment levels over the next few years.

IDA Ireland is working closely with educational institutions in the Region, in developing the skill sets necessary to attract high value added employment to the area. IDA is also working with FAS/SOLAS to provide guidance in developing the skill sets needed by those already in the workforce who are interested in upskilling.

IDA has invested in the physical infrastructure required to attract FDI to County Westmeath. This included investing €3.5m in a quality flagship Business Park in Athlone, which is now an integral part of the agency’s international marketing programme. That park has planning permission for different sized units and has all necessary infrastructure, including ducting for broadband.

The Action Plan for Jobs 2013 recognises that the indigenous micro-enterprise and small business sector is central to economic recovery, job creation and the future prosperity of the Irish economy. In pursuit of this, Enterprise Ireland are very active in support of Indigenous Irish companies in the area. In 2012, 1,119 people were employed on a full time basis in 59 Enterprise Ireland client companies in Co. Roscommon and 2,352 people were employed on a full time basis in 97 Enterprise Ireland client companies in Co. Westmeath. That agency continues to operate arrange of initiatives to assist their client companies in the region.

The County Enterprise boards in both Roscommon and Westmeath assist the development of Micro-Enterprises with a wide range of supports and have been very active in both counties with a wide range of initiatives to assist their clients.

I am confident that the on-going efforts of the development agencies will continue to enhance job creation in the Athlone area.

Pharmaceutical Sector

Questions (13)

Niall Collins

Question:

13. Deputy Niall Collins asked the Minister for Jobs, Enterprise and Innovation his views on the impact of patent expiration on employment in the pharmaceutical sector; the way the industry can be supported to maintain employment levels; and if he will make a statement on the matter. [24424/13]

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Written answers

The last 18 months have seen a reduction in employment levels in some Pharmaceutical companies in Ireland due to the expiry of patent protections, combined with increased competition from other overseas sites. IDA is aware of these factors and has been working for many years to diversify the pharmaceutical base here in Ireland. Patents on blockbuster drugs have expired in the previous decade and, in spite of this, there has been continued growth in the sector.

In growing the pharmaceutical sector, IDA’s strategy has been to win leading company investment and to diversify the breadth of operations over multiproduct sites, including associated services and development of new compounds. Ireland has been enormously successful in attracting eight of the top ten global pharmaceutical companies and the world’s number one biotechnology company to manufacture from Ireland. In addition, Ireland has a large number of companies outside of the top ten who manufacture and successfully export from Ireland.

The Irish Pharmaceutical Industry is an enormously important and highly valued sector. While the industry has been faced with some difficult years due to patent expiration and competitiveness challenges, we are starting to see an increase in R&D productivity with the advent of more targeted biotech therapies and personalised medicines. 2012 saw the highest number of new drugs, 39, approved by the United States Food and Drug Administration in 16 years, and the predictions are that industry has turned a corner. Ireland is in position to be the location of choice for development and manufacture of a number of next generation drugs. The sector has been performing well in Ireland, with €1.1bn of fresh investment announced in 2012 from five major companies, which will result in 1,200 jobs.

Unfortunately, while some older manufacturing facilities around Ireland have been downsized or closed because of industry consolidation driven by the loss of patent protection on key drugs in recent years, others have been acquired or expanded, in particular, in the area of biopharmaceuticals. Notable examples include the acquisition of two Pfizer manufacturing facilities by the biotech companies Amgen and Biomarin and the €44M and €330M expansions of biotech facilities by Genzyme in Waterford and Eli Lilly in Kinsale, respectively. Biopharmaceuticals represent the next wave of opportunity in the industry and IDA has successfully attracted and developed globally leading programmes from Allergan, Amgen, Centocor, Eli Lilly, Genzyme, Merck, Biomarin and Pfizer, as examples. Ireland now has a globally leading biopharmaceutical cluster in the next generation of Pharmaceutical products.

Government agencies are continuing to invest in research and training to help the academic system support industry. IDA Ireland, through its overseas network, remains committed to maintaining and growing relationships with key decision makers in the pharmaceutical industry and IDA Ireland can offer assistance to companies to support new investment and enhancement of technical capability.

The overall export performance of the sector, therefore, is multifactorial and whilst there are challenges with regard to patent expiration, IDA Ireland has assured me that it will continue to support continuous improvement and transformation in its existing client base while seeking to win new FDI opportunities in the pharmaceutical sector.

Question No. 14 answered with Question No. 6.

International Workplace Safety Standards

Questions (15)

Brendan Smith

Question:

15. Deputy Brendan Smith asked the Minister for Jobs, Enterprise and Innovation the discussions he has had with his EU counterparts regarding the safety standards upheld in production facilities operated by companies exporting to the EU, in view of the Dhaka factory disaster; and if he will make a statement on the matter. [23177/13]

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Written answers

The collapse of the factory building in Dhaka is an appalling tragedy. I am shocked that over a thousand workers have lost their lives. The disaster has affected many, many more people by the loss of spouses, relatives and indeed family bread winners. I want to extend my sympathies to all that have lost loved ones and that have been hurt by the catastrophe.

At a meeting on May 8th of the Trade Policy Committee, that is currently chaired by officials from my Department, the EU Commission reported that it is exploring several avenues to demonstrate its deep concern and interest in helping the Bangladeshi authorities improve labour conditions as well as tackling the causes that brought about this tragic event. This includes co-operating with the ILO on a roadmap for safer working conditions in Bangladesh as well as looking at what opportunities there might be to use EU assistance, including Aid for Trade, to address the problems that exist.

The Commission is committed to analysing Bangladesh’s commitment to core international conventions and to working with international monitoring bodies in this context. Bangladesh receives preferential access for its exports to the EU under the General Scheme of Preferences. The EU will actively monitor the country’s commitments under this trade support scheme and will report at a later date to the Trade Policy Committee to provide an update on its activities and progress in advancing working conditions in the country. This will also include outreach to EU companies that buy from Bangladesh, to promote and help the development of higher standards of corporate social responsibility.

Question No. 16 answered with Question No. 6.

Foreign Direct Investment

Questions (17)

Caoimhghín Ó Caoláin

Question:

17. Deputy Caoimhghín Ó Caoláin asked the Minister for Jobs, Enterprise and Innovation the profit-to-employee ratio for multinational corporations here and across the EU. [24454/13]

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Written answers

Gross operating surplus is the balance available to an enterprise which allows it to provide a return to shareholders, to pay taxes and to finance all or part of its investment. Gross operating surplus as a percentage of turnover is a measure of the profitability for an enterprise.

The Central Statistics Office published in November 2012 a report “Business in Ireland 2010”, in which 12.9% of turnover was reported as the gross operating surplus for enterprises across all sectors in the economy, higher than the EU average of 9.2%. The figure for gross operating surplus was reduced significantly to 7.7% when foreign owned multinationals were removed from data analysis.

Turnover per person is a simple measurement of labour productivity, in 2010 the CSO reported that for all enterprises in Ireland turnover per person was almost €261,000 however this figure also falls significantly to €155,000 when foreign multinationals are excluded.

It was estimated by the CSO from the Structural Business Surveys that over 3100 or 1.9% of the 161,200 enterprises in the selected sectors of the business economy in Ireland were foreign–owned in 2010. Despite the small number of foreign owned enterprises, they were very significant in terms of employment, turnover and Gross Value Add. They employed almost 257,000 or 22.3% of the 1,151,000 person in the selected sectors. They also generated almost €164 billion or 54% of the €296.5billion in total turnover and over €44 billion or 55.6% of the €79.2 billion in total Gross Value Add.

Industrial Development

Questions (18)

Joe McHugh

Question:

18. Deputy Joe McHugh asked the Minister for Jobs, Enterprise and Innovation if he will give an update on his Department's engagements with the Industrial Development Agency and Enterprise Ireland in respect of economic development of the north-west; and if he will make a statement on the matter. [24139/13]

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Written answers

IDA Ireland and Enterprise Ireland support 349 client companies which employ 10,834 people in full and in part time employment in the North West counties of Donegal, Sligo and Leitrim.

IDA Ireland prioritises the promotion of Letterkenny and Sligo and also promotes other locations in the region as part of its marketing efforts and in response to specific client requirements. In line with the transformation agenda outlined in its strategy document “Horizon 2020”, IDA works with corporate and local management in existing client companies to help them engage in transformation programmes in order to improve competitiveness and efficiencies, enhance their use of technology, up-skill employees, engage in RD&I and develop their business processes so as to ensure the maintenance of the existing jobs provided by these companies in Ireland. This strategy was particularly successful in 2012, with three notable FDI announcements being made in the region:

- In February 2012 Abbot in Sligo announced an €85m investment which will result in the creation of 175 jobs;

- In October 2012 KeyedIn Solutions announced its plans to establish a software development centre in Letterkenny with the creation of 20 highly skilled jobs over three years; and

- Also, in October, GSK reversed its decision to close the Stiefel plant in Sligo and announced an investment of €10m in the plant.

With regard to the indigenous sector, Enterprise Ireland is actively focused on the creation of new jobs by providing a range of supports for entrepreneurs setting up new High Potential Start-Up Companies, the retention and creation of new jobs in existing companies, and in enhancing the innovation capability of Ireland at a national and regional level through support of research in companies and third level institutions.

The New Frontiers Programme, the Agency’s largest entrepreneur programme, is a national programme funded and co-ordinated by Enterprise Ireland and delivered locally by 13 Institutes of Technology. In the North West the programme is delivered in conjunction with IT Sligo and Letterkenny IT. Phase I of the 2013 programme, which commenced on March 23, 2013 with 35 participants, will finish at the end of May. Phase II will commence at the end of June. During the following six month period of intensive full time engagement, programme participants will be supported with a salary stipend of €15,000. By the end of December 2013 it is anticipated that a significant number of new high export and employment potential businesses will have been established.

Local Enterprise Offices Establishment

Questions (19)

Pádraig MacLochlainn

Question:

19. Deputy Pádraig Mac Lochlainn asked the Minister for Jobs, Enterprise and Innovation if he will outline the timetable for establishment of the LEOs; and the way he intends to ensure equality of service and outcomes across all areas. [24446/13]

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Written answers

Significant progress to implement the Government Decision on the reform has been made. A new Micro and Small Business Division has been established in Enterprise Ireland and via a Centre of Excellence will be responsible for developing an improved environment for small and micro business and utilise Enterprise Ireland’s (EI) experience and specialised sectoral approaches to business innovation and development. It will lead, develop and manage the enhancement of a support service, delivered through the LEOs, that generates innovative, small and micro-enterprises capable of increasing, employment, exports and value added to the Irish economy.

On Monday last, along with my colleagues the Minister for Environment, Community and Local Government Phil Hogan and the Minister for Small Business John Perry, I published the Framework Service Level Agreement (SLA) and launched the Branding/Logo for the LEOs. The Framework SLA is an important step in the overall project since it sets out clearly budgets and project evaluation methods as well as a series of demanding metrics and targets for the delivery of services by the LEOs, including the numbers of jobs and businesses to be supported. An Enterprise Development Plan for each LEO will be devised annually by the LA/LEO, agreed by EI and appended to the SLA to take account of local circumstances. My Department will be furnished annually with copies of each signed SLA and the respective Enterprise Development Plans. The plan will address agreed metrics and include targets which will be established for each LEO. A key element of this new structure will be the consistent application of policy across all LEOs from the evaluation of applications to the spending of budgets allocated.

There has also been a significant level of engagement at local level between County Managers and CEOs of the CEBs to discuss administrative plans for locations and accommodation. Our priorities over the coming months will be finalising arrangements for the transfer of CEB staff and amalgamating with the Business Support Units of the Local Authorities as well as the migration of IT and financial systems to ensure a smooth transition for both staff and clients. Protocols between Government bodies (e.g. Revenue, NEES, SOLAS, Credit Review Office, Microfinance Ireland, Companies Registration Office) to provide information and access/dedicated points of contact for referral of LEO clients are in the development process.

Legislation to dissolve the CEBs and transfer their functions to Enterprise Ireland is being drafted by the Office of the Parliamentary Counsel and I anticipate it will be published shortly.

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