Mary Harney
Ceist:7 Miss Harney asked the Minister for Enterprise and Employment his views on the report of the Task Force on Long-Term Unemployment; and if he will make a statement on the matter. [1569/96]
Ceisteanna—Questions. Oral Answers. - Task Force on Long-Term Unemployment.
I welcome the report of the Task Force on Long-Term Unemployment and in particular the recommendations in relation to the Community Employment Programme and the introduction of a work experience programme and a pilot whole time jobs option.
The Government has accepted the changes recommended for community employment and has agreed to the introduction of a work experience programme and a pilot whole time jobs option as recommended by the task force. I elaborated the details of how I propose to implement these recommendations in my speech on the budget yesterday, and I shall circulate details of the new approach to Deputies shortly.
In addition I will be introducing a job subsidy scheme and special measures for 18 and 19 year olds, the details of which I also mentioned to the House yesterday.
Will the Minister agree that the £80 per week job subsidy scheme consists of putting aside £2,000 for 5,000 people, to be expended between 1 July next and the end of December? Is that the extent of the scheme — £2,000 for 5,000 people who are now on the live register — the total amount for which £1 million — at most — is provided? Will the Minister indicate what steps he proposes to take to ensure that as and from 1 July there is a 5,000 uptake and that we do not have the usual farce by September or October that plans are well advanced to do something on one front or another? Will the Minister also deal with the question of young unemployed people and, in particular, indicate if he is happy with the suggestion that young unemployed people should spend six months on the dole before they are obliged to register and get involved with the training proposals, as suggested by the Minister for Social Welfare?
I cannot understand the Deputy's mathematics. A sum of £80 per week works out at £4,000.
If it is for six months from July to September.
This programme will last beyond December.
A sum of £1 million divided by 5,000 gives £2,000 to each person. That is basic maths.
If the Deputy wishes to look at the basic maths, the full year cost of operating this programme, when it is up and running with 5,000 participants, would be £20 million per annum, on the Deputy's calculations. It would work out at £4,000 per person per annum.
How is there only £1 million?
The purpose of this scheme is to provide opportunities for people who have very little chance of getting a placement. The reality is that those who have been unemployed for three years have a less than 20 per cent chance of obtaining employment during the year. We are determined to give greater preference to persons who are long-term unemployed. This scheme is deliberately designed to give an extra chance to the long-term unemployed to access the employment growth we are now enjoying.
As regards the measure for the 18 and 19 year olds, I welcome the proposal to register after six months. We want to provide a targeted programme for those in danger of drifting into long-term unemployment. Many young people might join the live register simply in transition, between one job and another. We want to bring in a programme which is designed to head off the danger of entry to long-term unemployment. Many of those are people with low or no qualifications. It is appropriate to select the six-month period for the introduction of these programmes. This approach has been used successfully in other countries and has been endorsed by the National Economic and Social Forum in its approach to targeting long-term unemployed young people. This approach will reap considerable benefits in the future.
This reminds me of the times we are told to read the small print in certain documents. The Budget Statement and the press briefings given by the Minister's Department stated that the £80 per week subsidy would take 5,000 people off the live register. A sum of £1 million has been provided for this purpose.
It is £200 for——
Leaving that aside, how many long-term unemployed people will be helped by the subsidy this year?
Money has been provided for the scheme this year on the basis that it will build up. We have not set a rigid target and we will have to build up the scheme and sell it to employers. It is expected to build up slowly at first and I expect 1,500-2,000 to be on it by the end of the year.
The Minister will not achieve that figure with £1 million.
We will continue to build up the scheme and, if necessary, I will look for more resources. It will have to gain the confidence of employers and will be administered by the local employment service which will build up contacts with employers, particularly in long-term unemployment blackspots. The funding is based on an orderly expansion of the scheme and it is expected that there will be 1,500-2,000 on it by the end of the year. The Government is clearly committed to the scheme which it believes will be successful as it is built up over time to the target of 5,000.
This is a very dubious measure given that the budget referred to a figure of 5,000 people but, as the Minister clearly admitted, the necessary funding has not been provided to achieve this target. Does the Minister agree that it would have been better to deal with this problem in a more targeted way by giving tax incentives to employers and employees? Does he think the subsidy of £80 per week could be exploited and give rise to widespread low paid employment?
I assure the Deputy that I will introduce measures to ensure the scheme is not exploited. Obviously this is an important element of it. Employers must fill bona fide vacancies and we will ensure, through FÁS, that they do not make present employees redundant so as to create vacancies and avail of the subsidy. This requirement will be built into the scheme. This scheme is one of several new approaches being adopted by the Government.
It was tried previously.
It is a gimmick.
It is new in the sense that it is targeted exclusively at the long-term unemployed.
It used to be a subsidy for employers.
That subsidy was based on additionality; in other words, an employer had to be expanding his workforce. In practice, that made the scheme ineffective. Studies show that previous schemes did not work because the additionality requirement put a great burden on employers.
Is this not based on additionality?
This scheme does not have an additionality requirement.
It is misleading——
Let us hear the Minister without interruption, please.
The scheme provides that an employer who has a vacancy to fill for whatever reason — for example, someone may have retired — can give preference to the long-term unemployed. It is expected that 49,000 jobs will be created this year as a result of successful Government policies——
It should be remembered that unemployment has also increased.
——and we want more of these to be open to long-term unemployed persons. The scheme is designed to give a preference to these people.
As regards the taxation proposals, the Government has adopted a wide range of measures to deal with the unemployment and employment requirements. One of the central features of our policy is the radical reform of the PRSI system——
Half a percentage point.
——where two-thirds of all employees, 655,000, are on the low rate of PRSI of 8.5 per cent. This is radically different from the position some years ago when all employees were on a rate of 12.2 per cent. This measure is showing results. We are also reforming employees' PRSI — I think the Progressive Democrats supported this proposal in the past — so that the first £80 is not taxed. This is a sensible and progressive reform of the tax code which will ease the tax wedge. The Government is determined to make unemployment a priority and this theme runs right through the budget strategy.
I will not get distracted by a debate on PRSI save to say that to reduce the top rate of PRSI from 12.2 per cent to 12 per cent is no radical reform and the Minister should not cod himself by thinking otherwise.
That is not a fair representation of the changes.
Am I correct in thinking that an £80 per week subsidy is the same as a £4,000 a year or £1,000 a quarter subsidy? If that is the case and 1,500 people avail of the scheme during the last three months of the year then the Minister will have gone through £1.5 million, which is 50 per cent more than the amount provided. This shows conclusively that the 5,000 people referred to in the budget were never seriously envisaged to be the recipients of a subsidy of this order. The reality is that approximately 1,000 people will be covered by the scheme for three months on average. Does the Minister agree that the measure announced in the budget is a far cry from what he now intends to deliver? He is dealing with hundreds of people over a very short period of time in the latter portion of the year.
More cosmetics.
I roundly reject the Deputy's suggestion. This is a novel scheme which will be built up to cover 5,000 people.
When will the figure of 5,000 be achieved?
We will not have built it up to 5,000 people by 1 July.
Will it be achieved by the end of the year?
The Deputy knows that schemes of this nature build up slowly and we will fund the take-up of it. By the end of the year there will be 1,500-2,000 people on the scheme and we will continue to build it up during 1997. The scheme will prove successful in time and it will take 5,000 people off the live register each year. It will give preference to the long-term unemployed in the filling of vacancies which continue to occur in the economy.
As regards his aside on PRSI, the Deputy misses the point. The PRSI reforms have meant that two thirds of the workforce are now on the 8.5 per cent rate of PRSI. If the Deputy does not regard this as a radical change and continues to focus solely on the decrease from 12.2 per cent to 12 per cent he will mislead the public on the intent and achievements of Government strategy.
May I ask the Minister which of the three Government party programmes was the winner in the lead-up to the budget? It is proposed to allocate 5,000 places for work trial schemes. Will the Minister explain what is envisaged?
This proposal fills a gap in that young people in particular find it difficult to access employment opportunities because they do not have any work experience. Employers prefer to recruit people with experience. The purpose of the scheme, recommended by the task force, is to allow employers to try out prospective employees for a trial period of about five weeks. Similar schemes have been introduced in other countries with great success. Some have succeeded in obtaining a longer term placement with the employer concerned. Similar results can be achieved here. This is a new approach to introducing people to the workforce and should prove worthwhile in the long-term.
On the budget, the Deputy asked who won——
I do not want to embarrass the Minister.
The budget was a major success. This is recognised by the financial community and by the parties opposite in that their only response has been to try to find differences between the Government parties.
The Minister should ask some people on the street what they thought of it.
All three Government parties have gained from this excellent budget and are quite happy to be in the winner's enclosure together.
The winner's enclosure is an apt analogy in that, usually, there are three clowns in the winner's enclosure who have lost a lot of money buying horses, one looking more stupid than the other. The trainer and jockey do all the work. That sums up the performance of the Government very well — three clowns standing beside the nag all claiming to be successful.
There are only two here today.
The Deputy is losing the run of himself.
May we have a question, please?
The truth is now emerging about the 5,000 jobs scam. The Minister has finally admitted that he is hoping to build the figure up to 1,500 over time and that in any given year — I was listening carefully — 5,000 people will avail of the scheme. It appears that the envisaged lifetime of the subsidy is in the region of three to four months. This is how the figure of £1 million can be explained. Will the Minister agree that the figure of £1 million cannot subsidise 1,500 people for more than three months and that what he is saying, therefore, does not add up? Will he further agree that far fewer than 5,000 people, probably of the order of 1,200, will be on the scheme at any given time on average?
I can categorically deny that; there will be 5,000 people on this scheme——
At any given time?
When?
There will be 5,000 people on the scheme at any given time. The figure will be built up steadily. The scheme will be administered, through the local employment service, primarily in unemployment black spots, although places will be on offer throughout the country.
When will the figure of 5,000 be reached?
Our target is to achieve that figure early next year. This will take time as one has to gain the confidence of local employers. This can be done through the local employment service. Each year 5,000 people will be placed under the scheme——
One year maximum?
Yes. Our target each year will be to take 5,000 people off the long-term unemployment list by this scheme alone. Other measures will also be introduced. For example, the Minister for Social Welfare, Deputy De Rossa, proposes to expand the back to work allowance scheme by making an additional 5,000 places available this year. That scheme, which has proved beneficial, is also targeted at the long-term unemployed under which they are offered assistance in setting up a business of their own.
How many places will be taken up this year?
We expect all 5,000 places to be taken up this year.
At what cost?
The cost involved is significant. Persons who set up their own businesses are allowed to retain 75 per cent of welfare in the first year, 50 per cent in the second and 25 per cent in the third. They also have access to financial support through the First Step programme. Currently, 6,000 people are running their own businesses under the scheme. The Deputy should welcome its expansion.
The Minister and his colleagues have perpetrated a cruel deception on the long-term unemployed who read in the newspapers that 5,000 places would be available on the scheme this year and that there would be a subsidy of £80 per week. He has now admitted that this will cost £20 million, but only £1 million has been made available in the budget.
Each time the Minister appears on television or participates in a radio programme and mentions that the economy is booming and describes it as a tiger economy people write to me and ask: "What is that man talking about? Does he not know it is insensitive to talk about tiger economies at a time of high unemployment?" There are some tigers here who get all that is going, unlike the 284,000 unemployed who do not know what the Minister is talking about.
Listening to the Deputy is enough to make a cat laugh. By any standard, the performance of the Government has been exceptional. Last year 49,000 jobs were created. This represented a growth rate of 4 per cent in the workforce——
There are 284,000 people on the dole.
What about the growth in the number of long-term unemployed?
——and was the first time such a figure had been achieved and was higher than the figure for the period from 1960 to 1989.
The Minister is whistling past the graveyard.
It is ironic that Fianna Fáil is now waking up to the plight of the long-term unemployed. During the eight years it was in office the number of long-term unemployed grew continuously.
The Minister is king of long-term unemployment.
The Government has begun the process of reducing the number of long-term unemployed.
Through schemes such as this.
We intend to reinforce it through a series of new measures announced in the budget. We will reap the benefits through the year.
The Minister is both infantile and pathetic.
The Minister of State, Deputy Rabbitte, is sheltering behind the Minister. He is afraid and aware the Minister is trying to mislead the House.
"Circus" is the right word.
The Minister made the comment that the three Government parties were in the winner's enclosure. They passed the post together, but there is a fight over who won the race. All the Minister has done is confuse the issue further. He mentioned that 1,500 people will be on the scheme by the end of the year. It was announced that 5,000 places would be available——
Questions, please.
With respect, the Minister was allowed to comment without interruption. There are questions I want to ask and I am entitled to ask them.
We are expected to proceed by way of question.
I agree, but the Minister spoke eloquently about matters and I want some clarification. Was research carried out to ascertain how many employers are willing to take on these 5,000 people this year? The public perception is that 5,000 long-term unemployed people will have jobs by the end of the year as a result of the £80 per week subsidy. I welcome the Government's efforts in this regard, especially as my constituency has been badly affected by unemployment. However, the recent surpluses are the result of the policies — to which the Minister cutely referred — pursued by Fianna Fáil during its eight years in Government. Perhaps the Minister might be brave enough to admit that.
Not at all.
That is why there are so many people long-term unemployed.
The Minister has confused matters.
I must hear a question.
The Minister referred to additionality but also stated that he will monitor redundancies to ensure employers do not let go people simply to avail of the subsidy. There is a direct conflict in what the Minister said. Will he clarify Government policy in regard to the success of this measure because we are more confused now than before the Minister replied to the question?
We have carried out research which reveals that subsidies of this nature would have a positive effect and that without them the long-term unemployed would not have employment opportunities. It is necessary to address the matter and this scheme will have a positive impact in that regard.
How many will get jobs?
It will take time to target specific employers. The local employment service and FÁS will be given the task of compiling a list of employers who are willing to participate in the scheme. It would be naive to suggest this will happen overnight and I did not suggest that. We stated that we would gradually build up the number to 5,000. The scheme will offer real employment opportunities to those who currently have very little chance of becoming employed.
In regard to additionality, when a vacancy occurs, through retirement or otherwise, it can be filled under the scheme. Under previous schemes employers could not avail of such subventions because filling vacancies created by retirement was ruled out. Employers had to expand their workforce to participate in them.
There will be no additional jobs under this scheme.
The long-term unemployed will get preference under this scheme. At present their probabilities of obtaining work are about one in ten, but this scheme will offer them an opportunity to get back into the workforce. It explicitly expresses a social reform need and is based on equity grounds.
The Minister said there would be 5,000 jobs in one year at a cost of £80 each per week. He is now saying the number will be 1,000.
We believe that everyone, including the long-term unemployed, should have an opportunity to benefit from the growth in the economy and for that reason we introduced the scheme. During the past eight years of Fianna Fáil Government the number of long-term unemployed steadily increased, but we are beginning to turn that around. Positive, affirmative action for the long-term unemployed underpins this scheme.