Other Questions
6. Deputy Billy Kelleher asked the Minister for Jobs, Enterprise and Innovation if the Industrial Development Agency Ireland will be restricted in its ability to provide grant support for job creation to major companies as a result of a recent decision of the European Commission; and if he will make a statement on the matter. [33561/13]
View answerRegional aid, also known as investment aid, is paid in the form of grants by the industrial development agencies to businesses in order to support new investment and new employment in productive projects in Europe's most disadvantaged regions. Such aid must be in accordance with each country’s regional aid map, as approved by the European Commission, which has responsibility for the regional aid guidelines.
The guidelines for the period 2014 to 2020 are being revised as part of the state aid modernisation reform package. The final iteration of the guidelines was adopted by the College of Commissioners on 19 June 2013. The guidelines will enter into force on 1 July 2014. The Commission initially proposed a complete ban on aid for investments made by large enterprises in the more developed assisted areas, known as C areas. This would have meant that such aid would not be permitted in Ireland. The proposal presented significant challenges for Ireland and the implications could have been very serious in terms of our enterprise agencies being able to attract investment into disadvantaged regions in Ireland.
Following significant engagement by Ireland, at both official and political levels, the final proposal represents considerable progress from the initial Commission proposal in December 2012. The compromise agreed with the Commission will allow member states to provide investment aid to large enterprises for new economic activities and diversification of existing enterprises into new products or new process innovation.
With regard to population coverage, Ireland secured entitlement to maintain regional aid qualification for areas accounting for 50% of the country’s population for the period 2007-13. For 2014-20, that will increase to 51.28%. It was threatened with reduction by half.
It should be noted that the Commission has announced a transition period of six months for the new guidelines. Therefore, the new rules will not take effect until 1 July 2014. All of the country, including those areas not entitled to regional aid, can qualify for other forms of aid such as research, development and innovation aid, SME investment aid, training aid and aid for environmental protection.
It is only fair to acknowledge the huge effort put in by the Minister and the Department in respect of what Commissioner Almunia first proposed, which would have been detrimental to Ireland. We now have the opportunity to focus on a number of issues. The 50-50 split in job announcements, between the old southern and eastern region and the BMW region is not happening. Is that still a commitment of the IDA and the Department or has it been abandoned in the context of the new rules?
Can the Minister specifically define how these changes affect the IDA way of doing business? We have had much controversy and discourse about taxation levels. The change in respect of aid of foreign direct investment has potentially more impact and a more serious impact. Does diversifying activities mean companies involved in new product development and that may be working with SFI can continue to do so? Are we still in a position to support them if they move new product development into job creation?
What does the Minister mean by fresh investments? Does this involve new plants producing the same product or expanding the product line in response to market demand? Will we be allowed to support that? Has the IDA given a formal response to the new proposal on the table?
Our negotiating position was closely co-ordinated with the IDA and Enterprise Ireland as we developed these proposals in order to make sure we protected the capacity of the IDA to promote regional development. The categories for large enterprises include new economic activity, new products and new process innovation. It is a broad range of areas where we can continue to support large companies. We have always had considerable support for small and medium-sized enterprises in those regions, which are at higher rates of 20% and 30%. The rates are unchanged.
With regard to the IDA targets, it is part of the five-year plan of the IDA. This is a difficult target in light of the projects we are winning. We are seeking to diversify the instruments the IDA uses, which is why we have been keen to promote ConnectIreland, which is a new instrument seeking to use connectors. It has a better regional spread. We are also looking to encourage emerging companies that may not have the same----
The Minister is over time.
How do the new regulations affect our competitiveness in attracting foreign direct investment and supporting our own businesses in comparison to other EU countries? How does it affect our capacity to compete with other locations for foreign direct investment, such as Singapore?
Some counties within existing regions do not experience the same level of investment. For example, Meath does not experience the same level of investment as the mid-east region. It suffers greatly with regard to the level of investment in Kildare, Wicklow, Dublin and Louth, even though Louth was formerly in the BMW region. What elements of change in the new regulation will allow those sectors of those regions to have a rebalancing of their opportunity to attract foreign direct investment?
In terms of competitiveness with other countries, we have 51% of the country's population in the C regions. Overall, a lower percentage than that in all of Europe is covered by C regions. We have proportionately more C regions than the EU as a whole. We have much more than some very developed markets and much less than some of the emerging markets. I do not have the exact population percentage coverage to hand but I can get it for the Deputy. The issue of regional development is central. With regard to our agencies dealing with export-oriented companies, last year some 43% of new jobs, 9,500, were in Dublin. I do not have the exact figure for Cork. Overall, export-oriented jobs were reasonably spread. There are concentrations around cities. There is a reasonable spread and our challenge in regional development is to build it stronger. It is not just about foreign direct investment, which is important, but the key is indigenous growth. Given the Deputy's background in supporting indigenous companies, he will agree with that. In C regions, we have 30% capacity for small, 20% for medium and 10% for large. That is graded in order to allow the emergence of smaller indigenous companies that have greater difficulty in travelling the path. We must seek to build on regional competitive advantage, which must be part of the strategy as well as encouraging a regional spread of foreign investment.
I am concerned. I accept that we must support and build our indigenous economy but we have traditionally depended on a strong presence of foreign direct investment, which assists the indigenous economy.
Many of our more successful indigenous companies grew from initially servicing foreign direct investment companies in the State. I am somewhat concerned about the vagueness surrounding this issue. We must do more than diversify the instruments. If large-scale projects are no longer to be located in the regions, there must be more urgency in developing an alternative strategy. Will the Minister outline what will be different now? What will IDA Ireland no longer be able to do after July 2014?
Those are the categories, which means that this is not entirely open-ended. To qualify for regional aid, it is necessary to demonstrate that a new investment represents a new economic activity by a company and involves a new process or innovation. Companies must show that they are modernising their production and developing new products or ways of doing things. There must be a step-up in technology or diversification. That is the test. It is a very broad mandate compared to the suggestion there be no aid for large companies. If a company is simply replicating the same technology, that is restricted for companies which already employ 250 staff. There is broad scope. Having discussed matters with IDA Ireland, we are satisfied that the measures cover the typical expansion. There is always an upgrade in research and development and the value chain is always being climbed to bring in new technologies. This is a broad, workable mandate.
7. Deputy Brendan Smith asked the Minister for Jobs, Enterprise and Innovation his plans to amend the Employment Permits Act 2003 to provide recourse for undocumented foreign workers who have little recourse in cases of exploitation; and if he will make a statement on the matter. [33564/13]
View answerI assume the Deputy is referring to foreign nationals defined in the Employment Permits Acts 2003 and 2006 as foreign nationals other than nationals of member states of the EEA and Switzerland. The law is clear on the employment of third country nationals. It is illegal for a third country national to be employed without the State's permission and the offence where a third country national is employed is committed by both the employee and the employer concerned. Illegal employment of third country nationals creates a serious problem for the employees. They do not have a legally binding contract of employment and cannot, therefore, assert their rights under the contract or rely on the wide spectrum of employment rights legislation. Following the High Court judgment concerning Mr. Younis, I committed to amending the legislation to provide a defence for the employee and to give the courts some discretion when faced with similar circumstances. Subject to Government approval, I intend to introduce new safeguards in the legislation to ensure the situation which arose in the Younis case will not recur. The new safeguards will not undermine legal principles and are intended to ensure an employer cannot benefit from the fact that a contract of employment is illegal and, therefore, not legally binding.
Subject to Government approval, another key feature of the new Bill will be the establishment on a statutory footing of an employment permit for third country nationals who have fallen out of the employment permits regime. I recognise that there can be situations where a third country national finds that he or she has fallen out of the employment permits regime through circumstances beyond his or her control or even as a result of an omission in keeping a permit up to date. It will continue to be the case that an employer can be prosecuted for breaches of employment law, including the Employment Permits Acts, and it is the National Employment Rights Authority's policy to pursue such breaches.
The drafting process in respect of the employment permits Bill is almost concluded. I expect a further draft of the Bill this week. Subject to it fully meeting policy objectives, I envisage submitting it to the Government for approval at the earliest opportunity.
Let us recall the Younis case. Mr. Younis was forced to work a 77 hour week with no days off. He was forced to live in cramped, substandard conditions and brought his case to the Labour Court which awarded him €92,000. The employer appealed the award to the High Court which overturned the decision on the basis that as an undocumented migrant worker, Mr. Younis was not allowed to go to the Labour Court. The matter is before the Supreme Court. There are 24,000 people in the economy who are exposed on foot of the High Court judgment.
The initial promise to publish the new legislation to remove the loophole was made last year. None of us wants the situation to continue. One year later we are still at the drafting stage. I acknowledge that the NERA has stepped up its work in the area considerably. It is working very closely with the Migrant Rights Centre of Ireland on some of the worst cases. While the NERA can bring prosecutions, there is little it can do to provide recourse and compensation for those whose employment and human rights are being trampled on because of this legal lacuna. Can some timeline be provided for the legislation? Obviously, we will not have it by the end of the session. Will we have it early in the next session to allow us to address the issue once and for all?
As I indicated, I expect to have a draft of the Bill soon. We are in the final stages of the process and it appears that we will have it imminently. I hope we will have it before the end of the session. We will certainly make it available for the very start of the new session.
Mr. Justice Hogan reversed a Labour Court award having found that the contract of employment was illegal as Mr. Younis did not have an employment permit. The judge noted that the Employment Permits Act made it an offence for certain employees to work without a permit. The Acts do not provide for any defence for an employee which suggested to the court that it could not take into account mitigating circumstances and had no discretion to consider the contract of employment as other than illegal. The result, arguably, was that the employer benefited from the illegal contract. There are procedures for pursuing employers who seek to abuse the system. Clearly, there is a lacuna in that there has not been a defence for the employee. That is what we are seeking to correct in the legislation. The Bill will be before the House as soon as I can bring it forward. The Deputy will know about the frustrations of the legislative process, but we are at the end in this case.
The reaction of the Houses to this issue appears hypocritical sometimes when contrasted with the reaction of Members to the undocumented Irish working in the USA. We focus on the rights of Irish people but do not necessarily afford the same rights to migrants working here. It is a massive problem for those who are forced to work in the grey areas, many of whom are exploited because unscrupulous employers know they have significant legal leverage. We have seen this, in particular, in the case of au pairs working in the State.
While the Minister is attending Cabinet meetings, he might tell the Minister for Justice and Equality that migrant rights organisations, which do a tremendous work with individuals are having their funds cut and closing, while European funds channelled through his Department and the Department of the Environment, Community and Local Government remain unspent. It is important that advocacy groups have the resources needed to represent this section of society. When will the Minister ratify International Labour Organisation Convention 189 on domestic workers? Will he provide a precise timetable for the resolution of these outlying issues?
The Migrant Rights Centre of Ireland, with which I had severe disagreements when I was sitting where the Minister is now sitting, has built a bond of trust with undocumented workers and tends to be their first port of call rather than the law. The centre does a superb job but has funding difficulties which affect its capacity to continue to do this work. The Minister is beginning to sit down to prepare for 2014 and might look at that issue. As Deputy Peadar Tóibín said, there is unspent money available. It is not as if someone else would have to face a cut. The Department of Justice and Equality has an unspent fund which would allow the Migrant Rights Centre of Ireland and local organisations to do this work. If it is not done, we will not be able to expose those rogue employers who are exploiting people.
Deputy Calleary will have to take up the issue of unspent funds with the Minister for Justice and Equality. As the Deputy stated, there is a close relationship with the migrant rights organisations who have been instrumental in trying to make this system work. What we have recognised is that there are legal defects. We are seeking to correct those in the two types of cases that I outlined in the reply and we hope that will be a better legislative framework.
I held a ministerial conference at the ILO on the domestic workers convention and under the Irish Presidency we passed provision in the Council of Ministers to initiate the sanctioning by EU members of the domestic workers convention. We have initiated the change, not only for Ireland but right throughout the EU.
Question No. 8 is in the name of Deputy McGuinness.
It is already answered.
I beg the Deputy's pardon.
Question No. 8 is more or less already answered.
It is a repeat of an earlier question.
It relates to entrepreneurship and gender issues.
Then we will move on to Question No. 9.
9. Deputy Aengus Ó Snodaigh asked the Minister for Jobs, Enterprise and Innovation if consideration has been given to focusing additional supports in his Department on indigenous business through additional supports to Enterprise Ireland and the county enterprise boards. [33497/13]
View answerThe Deputy will recall that the capital budget for enterprise supports was broadly protected for 2013 to ensure continued support for Irish business and the implementation of the Action Plan for Jobs programme. This plan is about using available resources in smarter ways and achieving new forms of collaboration across Government to promote enterprise and jobs.
Many of the innovative ideas developed under the Action Plan for Jobs have been aimed at developing new opportunities for indigenous business. These include: improving enterprise competitiveness and access to finance through measures such as the seed and venture capital, development capital, credit guarantee and microfinance schemes; the creation of a micro and small business focused centre of excellence within Enterprise Ireland and the establishment of local enterprise offices within local government, heralding the start of a new radical reform of the system of supports for micro and small businesses and the creation of a culture of excellence for micro-enterprises and start-ups; establishing the potential exporters division in Enterprise Ireland as a new way of engaging with Irish companies that are not yet exporting; a recently launched manufacturing strategy which has the potential to support the creation of 20,000 jobs by 2016 - this will be achieved by focusing on sectors with potential, adapting and responding to changing global supply chains, developing and adapting new technologies and developing indigenous potential for start-up and scaling; a new national step change initiative available to all Enterprise Ireland client companies that will systematically support manufacturing companies; new start-up and capability funds to be run by Enterprise Ireland specifically targeting supports for new manufacturing start-ups and to support capital investment; and roll out of the three new technology centres in the areas of pharmaceutical production, data analytics and connected health. Twelve to 15 companies will be supported by each new centre and this number will increase over time.
These policies are having a positive impact and are supporting enterprises and job creation. There has been a return to stability in the labour market since the middle of 2012 in spite of international and domestic difficulties. The Deputy will be aware that there was an annual increase in private sector employment of 20,000 people in the year to March 2013 and about 18,000 of this was in indigenous business.
My Department continuously monitors the needs of Irish businesses to ensure that policy and programmes reflect their needs. We are currently assessing how policy supporting entrepreneurship can be improved with the help of the group of entrepreneurs under Mr. Sean O'Sullivan. We are also reviewing our capacity to improve-----
The Minister has run over his time.
The Minister, Deputy Bruton, will be working on the Action Plan for Jobs which will review all of the actions.
No doubt there has been a reliance on foreign direct investment by the Government for job creation. We welcome foreign direct investment and all that can be done to ensure foreign direct investment is brought to the State should be done. It is worth noting that the multiplier effect from foreign direct investment creates 0.7 new jobs for each job that is directly created and these are also to be welcome.
In this area, Ireland should focus on its competitive advantages vis-à-vis attracting foreign direct investment. It should focus on the issues of skills, languages, infrastructure, culture, efficiencies and productivity. We should not be putting all our eggs in one basket in terms of Ireland's attractiveness on tax avoidance. I believe strongly that such focus creates a bubble effect whereby when those loopholes are closed internationally, it will have a negative effect on Ireland's foreign direct investment.
Indigenous business is in large part the poor relation in this State. It creates, in comparison, 1.4 new jobs for every direct job created. In general, indigenous businesses contribute properly in taxation to the State.
Over the past five years, and the past two years of Deputy Bruton's stewardship, the county enterprise boards which are directly responsible for indigenous small business development have been directionless. They still do not know what is happening. They are in the nowhere zone. Typically, they provide a better regional distribution of job creation. When will these issues be resolved?
On the same issue, when will we see the legislation? This is the most talked about show in town. We were promised legislation would be published this year. We are coming to the end of a session and we still have not seen it. There are local elections next year.
Second, the Minister might let us know what conversations he has had with the Minister for the Environment, Community and Local Government, Deputy Hogan, on the underspend in Leader. Leader is one of the greatest sources of funding, particularly for indigenous businesses in rural areas. Many Leader companies cannot get access to Leader funding to support business because of more messing around by Deputy Hogan in his Department. Has Deputy Perry, as Minister of State with responsibility for small business, raised the issue of the slowness in Leader funding with Deputy Hogan?
I support my colleagues here. There was a discussion earlier about entrepreneurship on priority questions and the Minister, Deputy Bruton, launched the global entrepreneurship monitor, GEM, report a few days ago. Was he disappointed that there was such negative feedback and that among prospective entrepreneurs, particularly the young and women, fear of failure, lack of ambition and funding are still fundamental issues with which they must contend? Would it be fair to say that the Government's approach to local development - I speak from the other side of the fence as somebody who has been involved for many years - needs to be much more proactive at local level and we need to get away from the austerity mindset, which seems to be predicated, perhaps with the ESRI report yesterday, on something that might continue for the rest of a lost decade? Deputy Bruton will be aware, for example, that the Northside community and business centre of which I am a long-standing director recently launched a programme to encourage and support young women entrepreneurs. Is the Minister certain that the existing rules, in particular, in the Department of Social Protection, do enough to facilitate women who have the idea of starting a business?
First, on the points made by Deputies Broughan and Calleary on the issue of women in business, the aim of Deputy Joan Burton's Department is very much to encourage people back into work. The announcement this week of the fund to provide up to €10,000 to an employer of the long-term unemployed is one example of this. As I stated initially, the purpose of this Government is business. The actions of the Minister, Deputy Bruton, and all of the Departments are focused on jobs and getting people back to work. It is about confidence and credit. Obviously, the latter is a big issue in any business.
From the point of view of the Action Plan for Jobs, the legislation is ready for stamping. It is being signed-off on. It is imminent. Regardless of that, the county and city enterprise boards are effective. The boards I have met are working on the ground with business and their allocation of funding is being spent on the creation of jobs in the domestic economy.
On indigenous economy and foreign direct investment, while there were exports of over €16 billion from Enterprise Ireland supported companies, the highest ever level of exports, the agency expects the corresponding figure this year will be €17 billion. If one looks at the added value of jobs, it is about commercialising good ideas into jobs.
Let us be under no illusion. It is quite difficult to create jobs. There is nothing more difficult than to establish and manage a business.
The Minister of State has run over his time.
I reiterate the commitment of the support agencies, who are doing the best they possibly can. We attended the launch of the pilot local enterprise office in south County Dublin and the county manager was also in attendance. This scheme will be quite revolutionary when it is rolled out from next September and it will mark a new beginning for local enterprise. The point about Leader partnership companies has been raised-----
The Minister of State must conclude.
I thank the Cathaoirleach for his indulgence.
Deputy Phil Hogan is the Minister.
He is dealing with that.
May I ask a supplementary question?
A final question.
We are in favour of supporting indigenous companies that are exporters. However, I caution against talk of high levels of exports in the context of jobs. There has been a decoupling of the connection between job levels and export levels in recent years. The two are not correlated as they were a number of years ago. Indigenous business is better for job creation, for taxation and for long-term sustainability. I suggest there should be a rebalancing in the Government's policies to ensure that indigenous business, the poor relation in business terms, is given the attention it deserves.
The 2013 budget contained an effective plan for the domestic economy and I am confident the action plan for 2014 will reflect the policy of entrepreneurship and the policy to encourage women in business.
We are becoming more competitive. It is not just the 12.5% rate of corporation tax that attracts foreign direct investment. Companies come here because they get highly motivated, highly intelligent people who are capable of doing the job.
I refer to the recent announcements by the Taoiseach and the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, with regard to job creation and foreign direct investment. For every large company there are many small companies. The Government is focusing on the 200,000 companies in the domestic economy employing up to 700,000 people. The Minister is focusing on creating confidence and credit and encouraging positivity among employers. It is important to give support to employers. I meet company representatives and I know that many employers are very positive. They are confident about the future of Ireland and the jobs that can be created.
10. Deputy Thomas P. Broughan asked the Minister for Jobs, Enterprise and Innovation the current supports provided by his Department to Irish residents under 25 years of age to start their own businesses; if he will be introducing further support for this category of entrepreneurs; and if he has any further plans to assist and encourage women entrepreneurs. [33414/13]
View answerEncouraging and promoting an enterprise culture in those under 25 years is an important area of activity for the county enterprise boards and the local enterprise offices. These offices seek to influence student attitudes in favour of enterprise at both primary and secondary level through the annual student enterprise awards and local or inter-county initiatives such as Exploring Enterprise, in which more than 20,000 students participate annually.
There are three areas dealing with young entrepreneurs. Young entrepreneurs interested in starting a business can contact their local enterprise offices to discuss options available. This is the first stop for enterprise, offering both grant support and soft support such as mentoring and training. The second support source is Enterprise Ireland, which provides a general suite of supports for start-up companies. These include the competitive feasibility fund and the competitive start-up funds, seed and venture capital, development capital funds, high-potential start-up funds, and the HALO business angel partnership, which is mandated to match business angels with appropriate projects.
The Government also established a microfinance loan fund in 2012 to improve access to credit for entrepreneurs and to facilitate the growth and expansion of viable businesses. This is particularly relevant to young entrepreneurs who do not have a track record or credit history, previous business experience, or other assets to act as security, which other financial institutions typically seek.
Enterprise Ireland has a number of initiatives to support young third-level researchers to establish businesses. These include the Enterprise Ireland commercialisation fund, innovation vouchers, applied research enhancement centres, incubation units in third-level colleges and community enterprise centres. The issue of youth entrepreneurship features large in the submissions received under the recent public consultation on the proposed entrepreneurship policy statement, which is currently in preparation by a group chaired by Sean O'Sullivan.
When will that report be available? It will be a major national statement on entrepreneurship. Is it expected this year?
I refer to the GDM report. Some of the comments about supports for young entrepreneurs and women entrepreneurs were somewhat disappointing. Even allowing for the impact of the great recession, I wonder if more could be done. Youth unemployment is a common problem in most European Union countries. I refer to an interesting article in Süddeutscher Zeitung which states that what happened to Ireland was the result of a failure of the political class. I suppose this relates to a failure of Fianna Fáil and Fine Gael down through the decades in that we could have had a much more community-controlled economy, as Deputy Tóibín said, and a more entrepreneurial economy based on our own strengths. Instead of which, the article notes the massive emigration figure of 300,000, which compares to 5 million Germans leaving Deutschland-----
The Deputy is over time now.
-----which would be regarded as a national catastrophe. Because of the failure of overall macroeconomic policy, are we not losing perhaps some of our most innovative, dynamic and business-orientated young people to Australia, Canada, the United States and Britain?
The Deputy must conclude.
Is this not a great tragedy? They will be entrepreneurs in a different culture. It is critical to get the macro policy right and follow it up. I know the Minister and the Minister of State are sincerely determined to try to keep the numbers at work at the current 1.845 million. They need to keep doing that.
The Deputy is now one minute over his time.
The Acting Chairman is used to my being slightly over time in different forums, although I have not been in a forum with him for a long time. The Minister knows where I am coming from.
I thank the Acting Chairman for allowing me to speak. Like Deputy Broughan, I wish to compliment the Minister and his team on some of the great schemes that are available to help entrepreneurs. However, I think we could do with a bespoke scheme for young entrepreneurs because of the types of project and the age of the applicants. They might be at a disadvantage compared with older applicants. I ask the Minister to look at this again. A scheme designed specifically for young entrepreneurs would help to address the haemorrhage of talent from these shores.
The decline in entrepreneurship is disappointing but it is concentrated in certain sectors such as construction, which used to be a major entrepreneurial sector. As I mentioned in reply to Deputy Calleary, a bespoke scheme for women entrepreneurs was launched last year. It was very successful and was oversubscribed. We are continuing to build on that.
On the question of whether our most dynamic young people are leaving the country, it is recognised that Ireland has a really good start-up culture and that we have good availability of seed capital and many strong clusters in technology, medical devices and so on. In many areas we have really good environments for business start-ups and we are actively seeking, through the likes of Connect Ireland and other programmes, to get people to recognise Ireland as a good place for start-ups.
In reply to Deputy Hannigan, youth entrepreneurship will be at the heart of this review of entrepreneurship. Start-up support is located in higher education institutes in order to target young people who are undertaking research. There may be merit in having dedicated competitive start funds targeted at young people, as was the case for women entrepreneurs last year.
On the wider issue, the Deputy asked whether this is a failure. The Irish economy can be very successful and has been. There is no doubt but that it took a wrong turn in the 2000s and got wedded to a property bubble that was unsustainable, but basic enterprise, innovation and the capacity to export have been sound. The challenge for us in politics is to rebuild the capacity to build strong enterprises based on innovation and the ability to export. That is really what we are seeking to create.
