It may be unusual to have a debate of this nature in the House in advance of a European Council, but I was, however, very happy to accede to the request of Deputy De Rossa that we have such a debate. It is entirely appropriate that the House should have such a special debate on the occasion of what is a unique European Council. It is unique because this European Council will be solely devoted to the issue of employment and to the role of the European Union in tackling what is the primary concern of its citizens, namely, the creation of jobs.
Employment is the primary challenge facing the European Union. The need for firm and sustained action on this front has never been greater. European unemployment affects close to 18 million people. The average unemployment rate among young people in the Union is over 20 per cent. In 1996 more than 5 per cent of the European Union's labour force had been out of work for at least one year.
These statistics of themselves cannot portray the corrosive effect which unemployment has on society and individuals. Unemployment wastes the valuable contribution people can make to society. It leads to poverty and social exclusion with its attendant misery and places social protection systems under financial strain. It is an issue which goes to the heart of the concerns of citizens. The response of the European Union must, therefore, be clear and effective. It must support to the fullest extent possible the efforts of member states to promote employment and minimise unemployment.
It is my hope that this special European Council will send a strong signal that the EU is embarking on a more co-operative and co-ordinated approach to tackling unemployment. The inclusion of a new chapter on employment in the Treaty of Amsterdam provides a legal basis for European-wide action in this area which must be built upon.
The convergence criteria in the Maastricht Treaty for economic and monetary union have in many respects been the catalyst for the pursuit of sound macro-economic policies across all member states of the Union. This co-ordinated approach to economic policy has delivered low inflation and macro-economic stability to the European Union, thereby creating the conditions essential for employment growth. Member states should now resolve to harness the potential for a co-ordinated approach to employment policy.
The European Council will consider the adoption of EU-wide employment guidelines and the establishment of annual surveillance of member states' employment action plans as the method to facilitate closer co-ordination of employment policy. Ireland supports this approach. It is sufficiently flexible to allow for different approaches by member states according to their particular circumstances while facilitating better co-ordination in employment policy.
The European Commission has prepared draft employment guidelines which have been considered both by the ECOFIN and the Social Affairs Council. The Tánaiste and Minister for Enterprise, Trade and Employment will deal with the Commission guidelines in more detail in her address. I welcome the fact that the draft guidelines commit member states to focus their efforts under four key pillars of employment policy, namely, improving the employability of the unemployed; developing entrepreneurship; encouraging adaptability in businesses and in their employees; and strengthening equal opportunities for employment between men and women.
To improve the employability of the unemployed we need, in particular, to tackle early school leaving and to improve the targeting of training schemes so as to ensure that the unemployed have an opportunity to acquire the skills that the market place demands. The recent announcement by the Government of a £250 million information technology investment fund which will be used to develop technology education at all levels is a practical example of improving employability in the modern economy.
Entrepreneurship is the lifeblood of employment creation in a market economy. Therefore we must do all we can to make it easier to establish and develop a business, particularly through easing the administrative burden on small businesses. Action to reduce non-wage labour costs is also required under this heading.
We can encourage adaptability by taking advantage of the opportunities for new types of jobs which modern society offers. This requires considering developments such as flexible working hours and part-time working in consultation with the social partners. Equality of opportunity must also be fostered with the aim of increasing the employment participation of women.
The guidelines also set out specific objectives in a number of areas, notably, interventions to help the young unemployed and the long-term unemployed, increasing the level of training for the unemployed, fostering social partnership and tackling the unemployment gender gap.
There are differing views among member states as to how specific the objectives in the guidelines should be. This issue will no doubt be the subject of discussion at the special Council. Ireland is generally positively disposed to the suggested approach. I believe that conclusions which merely restate a general concern about European unemployment will not send a sufficiently strong message from the summit.
The Council will also have before it a funding package to assist job creation involving funds from both the EU budget and the European Investment Bank. Ireland welcomes this package which is particularly designed to stimulate employment creation in the small and medium sized enterprise sector, SME. No one is suggesting that this special European Council will, of itself, be a panacea for Europe's employment ills. In accordance with the consensus among member states, employment policy will remain primarily a domestic competence. The hope is, however, that the Council will see agreement on a structure to co-ordinate better member states' employment policies and on policy guidelines which will have sufficient flexibility to allow them to be tailored to individual member states' needs.
Ireland will approach this special Council in a positive and constructive frame of mind. We have achieved much on the employment front over the last decade but we continue to suffer from an unacceptably high level of unemployment. I believe that Ireland's employment policy experience can be of assistance to our European partners. I am, therefore, circulating to my colleagues on the European Council, in advance of the special Council, a short paper setting out the Irish perspective on the issue. I have arranged for copies of this paper to be placed in the Library of the House.
This paper sets out the successful Irish experience with regard to economic management and employment creation over the last decade. This has been exemplified by the increase of approximately a quarter of a million people in employment, average economic growth of approximately 5 per cent and a reduction of more than 5 percentage points in the rate of unemployment, all achieved against a background of firm fiscal discipline and low inflation.
The main employment gains have been achieved on foot of the consolidation of consistently sound economic fundamentals during the current economic boom, which began in 1993/4. There is no doubt that we are succeeding in creating jobs, and that we are even beginning to make inroads into long-term unemployment.
This performance has been underpinned by the social partnership agreements put in place over the last decade. These agreements are based on a fundamental shared commitment by all social partners and Government to the pursuit of sound macro-economic policies.
Orthodox macro-economic policies are not, however, sufficient on their own especially in the light of the unemployment challenge facing Ireland due to our demographic and labour market trends. We have introduced many innovative measures designed to contain unemployment. I have referred in the paper to be circulated to some of the more notable of these, especially the community employment scheme and the back to work allowance scheme. These two schemes have a current take-up of more than 60,000.
The paper also sets out the major continuing employment challenge facing the country. There has been much recent international coverage of the economic progress which Ireland has made.
We welcome the plaudits but we must also assert that, notwithstanding our recent strides, there is a considerable way to go. Unemployment, especially long-term unemployment, remains unacceptably high. The progress we have made must be built upon and put on a long-term sustainable footing.
The persistence of high long-term unemployment, particularly in concentrated pockets of social deprivation, is a major manifestation of Ireland's relative underdevelopment vis-a-vis its more advanced EU partners. The economic and social costs of high long-term unemployment in Ireland are set to remain a significant burden on the economy. The re-integration of the long-term unemployed into the labour market will remain a priority concern of economic policy.
In addition, Ireland's island location, low population density, dispersed pattern of settlement and small domestic market emphasise our high degree of dependence on both internal and external transportation and communication networks. Poor infrastructural quality in Ireland imposes high competitiveness penalties, reflecting the economy's uniquely heavy dependence on international trade. Considerable further investment will continue to be required in order to attain standards of physical infrastructure comparable to those of advanced EU economies. This Government has also recognised the need to invest heavily in our higher education system over the next few years to have the skills needed by the marketplace.
In some places we have labour shortages and in others there is high unemployment. Since this Government took office we have been encouraging a more even spread of new jobs throughout the country although more must yet be done in that regard.
With regard to the international environment, enlargement of the European Union will benefit the centre comparatively more than peripheral economies such as Ireland. Our lack of historic trading links with the countries of central and eastern Europe will leave us at a comparative disadvantage vis-a -vis our continental partners in the European Union.
These continuing special needs regarding employment creation in Ireland must be clearly recognised. Important negotiations are under way at European level on issues such as taxation, regional state aids and the next round of structural and cohesion funding. The outcome of the negotiations will have the most profound implications for employment creation in Ireland over the medium to long term.
Ireland is a successful example of the cohesion policy which has been so correctly adopted by the European Union. I have no doubt that both the European Commission and other member states will wish to ensure that the cohesion policy is successful on a sustainable basis. The Commission's recognition that there must be no abrupt withdrawal of Objective 1 status from those countries which have exceeded the 75 per cent GDP per capita ratio is a positive indicator in this regard. I am confident a similar constructive attitude prevails in the European Commission with regard to the issues of corporation tax and the regional state aids regime. I therefore look forward to a mutually satisfactory conclusion to the negotiations on these issues and one which will be consistent with the EU's overriding objective of maximising employment in all parts of the Union.
Deputies will be aware that I have expressed concern regarding the employment effect throughout Europe of the decision to abolish duty free facilities from 1999. The Treaty of Amsterdam states that the objective of a high level of employment shall be taken into consideration in the formulation and implementation of community policies and activities. It is accepted that duty free facilities will eventually be phased out. What is at issue is the timing and the impact of implementation. At a time when the European Union considers it important to present a citizen friendly image of the community to its people, it is difficult to see how the total and immediate abolition of duty free can be presented in a positive light. I intend to use the opportunity offered by the employment summit to raise the issue.
No doubt there will be those who will view the outcome of the special European Council as an insufficient response to Europe's employment problem. It is true that no dramatically resourced EU initiative will be launched at the summit, nor should such be expected. Preparations for economic and monetary union dictate tight fiscal regimes.
Nonetheless, if the Council can agree on the employment guidelines, the follow up surveillance procedure and the financial package, solid progress will have been made. A foundation will have been laid to facilitate better co-operation and co-ordination of national employment policies which should, over time, yield significant benefits for employment in the EU as a whole.