I thank the Chairman and members of the Joint Committee on Jobs, Enterprise and Innovation for this opportunity to address it on behalf of TASC. I am head of policy at TASC.
My opening remarks are based on the written submission that TASC made to the joint committee in April. I will provide a brief overview of the extent of the unemployment crisis, an outline of the potential sources of employment, and a perspective on the main labour market policy initiatives adopted to date. I will conclude with a number of recommendations aimed at dealing with the specific issue of youth unemployment.
The rate of unemployment continues to rise. In the first quarter of this year, seasonally adjusted unemployment stood at 14.8%, that equates to 309,000 people. More worrying, individuals who have been unemployed for more than 12 months now account for over 60% of those currently looking for work, the highest level since the late 1990s. That means we have 187,254 people who are unemployed for more than 12 months. In the same time period, youth unemployment was 30.1%, which is 8.5 percentage points higher than the EU15 average.
Men represent two thirds of those who are unemployed, reflecting the collapse in the construction and related industries. However, in the past year there has been acceleration in the number of women becoming unemployed, accounting for three quarters of those who have been made unemployed in the past 12 months.
The number in employment, which is the employment rate, also continues to fall, and there are 338,000 fewer people at work than there were four years ago. Clear inequalities in the labour market now exist. In terms of inequalities within generations - which are largely a function of education and skill levels - the attainment of higher levels of education and greater skills means one is less likely to be unemployed. There are inequalities betweengenerations, as young people have been more affected than other age groups by the jobs crisis.
Those previously employed in craft and related areas, as plant and machine operators, constitute over one third of all those on the live register. Certain groups of people are more likely to have lower levels of education and are more at risk of becoming long-term unemployed. Many of those who were previously employed in construction and related industries are likely to fall into this category.
I will now move on to talk about potential sources of employment. The current unemployment crisis is primarily a demand side problem. The greatest barrier to work is the lack of jobs, and according to conservative estimates there are currently 26 jobseekers chasing each vacancy. Demand side solutions advocated by TASC include an investment strategy focused on social and economic infrastructure, such as schools, health centres, broadband, and transport links, designed to generate employment both directly and indirectly. Potential financing sources include the National Pension Reserve Fund, private pension funds and the European Investment Bank. TASC welcomes the efforts currently underway at a European level to increase the capacity of the European Investment Bank to part-finance investment in member states. The action plan for jobs has usefully brought together a wide range of actions under a variety of Departments, aimed at supporting job creation, but the plan does not include any significant new investment, which is necessary to support efforts to accelerate job creation.
The potential of social enterprise as a job generator should be harnessed to much greater effect. A social enterprise is a business which is engaged in trading activity in order to achieve social objectives, such as providing employment, services or creating income for community benefit. Social enterprises have proven to be a successful model of enterprise across a range of sectors including urban regeneration, energy efficiency, waste management, recycling, health and social care. In particular, social enterprise is well placed to provide access to the labour market for the long-term unemployed and those at risk of permanent exclusion from the labour market. However, social enterprise does not receive the same level of State support when compared with the mainstream enterprise sector. A number of practical measures could be put in place to create a more level playing field, examples of which include all Government finance schemes, such as the micro-finance and loan guarantee schemes, making explicit reference to social enterprises in the eligibility criteria; broadening the remit of county and city enterprise board programmes and supports to include social enterprises, as part of the planned re-organisation of local authorities and city and county enterprise boards; and an examination of the potential for social procurement in Ireland, and the inclusion of social public procurement as part of national public procurement policy, within the parameters EU procurement policy. The experience of other countries could be examined in this regard, including the national procurement strategy for local authoritiesin the UK, which includes social procurement provisions and guidelines to public bodies.
I would now like to speak about the labour market activation and the National Employment and Entitlements Service. While the unemployment crisis cannot be solved in the absence of measures that increase the demand for labour, there is a need for a range of supply-side labour market activation measures that are essential for keeping people close to the labour market, while also ensuring a skills match between the labour force and future jobs. The pathways to work scheme sets out to achieve much-needed reform in labour market activation measures across five strands. These relate to engagement with people who are unemployed; the targeting of activation places; incentivising the take-up of employment; incentivising employers to take on unemployed people; and the reform of institutions delivering the services. The schemedraws on international best practice, where increased levels of engagement with unemployed people is a central plank of active labour market policy. However, such an approach requires substantial and sustained investment, as well as institutional reform. Ireland's expenditure on active labour market measures is low compared to countries with highly developed employment services. These countries also have much lower levels of unemployment than Ireland. We have a lot of catching up to do in developing employment services that meet the diversity of needs of employers, jobseekers and the wider economy.
While many of the planned reforms should lead to improvements over time, the policy measures identified in pathways to work are unlikely to be sufficient to meet the sheer scale of the challenges facing us, in particular the challenge of addressing structural unemployment, where there is a complete mismatch between the skills of those looking for work and the skills required for the jobs that are available. Effective labour market activation measures must provide a full range of training and education options to reflect the diversity of needs among unemployed people; have close and productive links between education and employment services; develop good relationships with employers and act as a conduit between unemployed people and potential employers; fully utilise the capacity of local development companies in rural areas and urban based partnerships to provide outreach services to deprived communities where unemployment is more likely to be concentrated; improve the level of data gathering, analysis and evaluation to build the evidence base for high quality and effective labour market programmes, as a recent evaluation of the labour market activation fund found that there was no record of what happened to half of the 10,000 people who completed a training course; avoid perverse consequences, such as displacement in respect of internships and similar work placement initiatives, which can be achieved by having clear criteria as to what constitutes a work placement or internship and by engaging constructively with employers; and ensure that other areas of public policy do not undermine labour market activation measures, such as cuts to community child care schemes and increased fees for education and training courses that act as barriers to the progression paths on which people are encouraged to proceed. We also need to ensure employment service staff have the skills and capacities required to deliver a person-centred approach to service provision. For some staff, this will involve a transition from processing payments to acting as a caseworker for unemployed people and having up-to-date knowledge of the range of options open to each individual.
I would like to conclude by outlining TASC's recommendations on youth unemployment. Youth unemployment currently stands at 30.1%. Youth unemployment, and in particular long-term youth unemployment, has the potential to develop into structural unemployment, which I defined earlier. Young people that are neither in employment nor in education are of particular concern and they typically include young people who left school early to enter the labour force during the boom. This group is particularly vulnerable and requires significant support through labour market activation measures. Without such measures they are at risk of permanent detachment from the labour market.
TASC's recommendations on addressing youth unemployment include the following: the provision and expansion of high-quality education and training courses that meet the needs of young people who are unemployed as part of a clear progression path towards employment; ensuring that trainee and internship programmes include learning objectives and targets; work experience should be co-ordinated with local employers, including identification of struggling but viable businesses which would benefit from interns or trainees; sectoral policies aimed at promoting job creation in youth-friendly sectors such as tourism, catering, ICT and sports; and a feasibility study should be carried out to assess the potential of a youth job guarantee whereby local authorities or local development organisations would act as employers of last resort for young people unable to access appropriate education, training or employment. A number of countries in the EU have implemented youth job guarantees, so there is plenty of evidence available to examine how these have worked elsewhere. Other TASC recommendations include an assessment of the specific supports required by young people considering starting their up their own businesses. Such a programme could be piloted by local development bodies and urban partnerships in conjunction with the county and city enterprise boards. A young entrepreneur package could include reducing the waiting time for the back to work enterprise allowance, entrepreneurial training and measures to address issues relating to credit-worthiness through the provision of micro-finance.
Investment in jobs and in the labour force is crucial to Ireland's economic and social recovery. Thank you for your time and consideration.
