I welcome the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, and his officials to the committee. The Minister is here to discuss the agenda for the June Employment, Social Policy, Health and Consumer Affairs Council. I ask the Minister to begin his briefing on the employment agenda for the Council.
Forthcoming EPSCO Council: Discussion with Minister for Jobs, Enterprise and Innovation
It is a pleasure to be here and to get the views of members on the European agenda. There are two broad dimensions to the agenda. The first is the policy aspect of the second European semester, the review and co-ordination of economic policy in the employment and labour market area. The EU does this on a regular basis, putting forward proposals in respect of what member states should be doing. The second part of the agenda deals with legislative items, most of which in this instance are progress reports on matters that are still in the course of the first reading within the Council's social questions working group. Only one of these legislative proposals, the draft EU regulation on a programme for social change and innovation, will be the subject of adopting a partial general approach, as it is called, at the forthcoming Council.
On the policy area, there is a set of country-specific recommendations on employment and labour market reforms produced at this Council. There will be a move to agree a general approach on these recommendations. These are country-specific, based on 28 detailed reports carried out in all member states and have been designed by the Commission to give operational guidance to member states in implementing economic and labour market reforms that should be put in place over the next 12 months. The adoption of the recommendations will be the concluding phase of the European semester of economic policy coordination, which was launched by the Commission's annual growth survey on 23 November 2011. Following the adoption by the EPSCO Council and the ECOFIN Council, these country-specific recommendations will be endorsed by the European Council on 28 and 29 June and formally adopted by the Council in July. The Council will also endorse the joint opinion of the employment committee and social protection committee, which both feed into EPSCO. They were established under the treaty and provide analysis and insight that feed into this process.
The questions being asked are how we create conditions for high levels of employment, increase participation and retain people in the labour market. How do we fight youth unemployment, early school leaving and how do we improve training, including vocational training and apprenticeships? How do we strengthen and provide more individualised support for jobseekers and promote full-time female participation? Some member states have been urged to ensure their wage setting mechanisms appropriately reflect productivity development and stimulate job creation. Lastly, poverty alleviation and helping vulnerable groups is addressed in several recommendations.
The basis for putting forward these recommendations is the analysis in 28 staff working papers, one for each member state and one for the eurozone as a whole. For the first time the recommendations also accept the findings of the 12 in-depth reviews carried out in the context of the macroeconomic imbalances procedure. Ireland does not have specific recommendations from the Council this year. Instead the recommendation is that the programme countries, which include Greece, Ireland, Portugal and Romania, would receive one recommendation which is to implement the measures agreed under their respective IMF, EU and ECB support programmes.
What force do the recommendations have in getting countries to act? There are a number of ways in which the Commission's work generates activity and action. Peer pressure is one, where member states endorse recommendations at the highest political level and are expected to reflect them in the national decision making processes, including the preparation of the annual budgets, which will start shortly. They track each others progress in a process of peer monitoring. The second pressure comes from the market. The sovereign debt crisis has dramatically increased the scrutiny which EU member states are subject to on the financial markets. There is a strong incentive for governments to pursue policies aimed at reducing debt and deficits while boosting their economies growth potential and capacity to generate jobs. These country-specific recommendations are a focus for the markets.
The issue of possible sanctions in respect of the excessive imbalance procedure creates a greater sense of needing to ensure economic governance to the highest standard across a range of policies. These recommendations, although they do not have specific force, influence the thinking of Government and are a very important input.
The EPSCO Council will also endorse the 2012 employment performance monitor. This will provide the Council with a tool that enables members to see at a glance the main employment challenges for the European Union and its member states. It sets out the main challenges for Ireland under six headings, which include: low male and low skilled employment rates; the risk of structural unemployment due to high unemployment among males; low skills and young people; the very high level of long-term unemployment requiring greater targeting and intensification of active labour market programmes; unemployment traps for families of a certain composition, which creates disincentives for seeking employment; strongly negative employment growth, particularly between the years 2009 to 2010; and potential skills mismatch in the labour force due to high levels of job losses among certain sectors, such as construction. The employment performance monitor also identifies good labour market outcomes for Ireland in the following areas: substantial reduction in the incidence of early school leaving; the high rate of tertiary education attainment; and nominal and real unit labour costs continuing to decline by 12% and 5%, respectively, in the three year period to 2011.
The Commission's employment package is a response to the high level of unemployment in Europe and the policy communication - Towards a Job-Rich Recovery was launched on 18 April 2012. It identifies the EU's highest potential areas and the most effective ways in which member states that are experiencing a difficult social and economic climate, can create more jobs. It provides a medium-term agenda for the EU and member states to support a job-rich recovery and reach Europe's 2020 goals for a smart, sustainable and inclusive job growth. It is accompanied by nine staff working documents. The proposal focuses on the demand side of job creation, setting out ways for member states to encourage hiring by reducing taxes on labour or supporting business start-ups more effectively. It also identifies the areas with the highest potential for jobs in the future, such as the green economy, health services and ICT.
The legislative items on the Council's agenda which fall within my area of remit are the programme for social change and innovation. The Danish Presidency hopes to secure the support of the Council for a partial general approach on the proposed EU regulation establishing the programme for social change and innovation. Ireland supports the Presidency's approach and expects the item to be agreed unanimously. This will pave the way to negotiations with the European Parliament. Ms Marian Harkin, MEP, who is the rapporteur on the regulation on the proposed new European globalisation adjustment fund, is also taking a particular interest in the file. The programme for social change and innovation will provide financial support for the EU objectives in terms of promoting a high level of employment, guaranteeing adequate social protection, combatting social exclusion and poverty, and improving working conditions. The programme also incorporates three existing programmes, which are the PROGRESS programme for employment and social solidarity, EURES, which is European employment services and the European microfinance facility. The reason that it is only a partial general approach is that the programmes have to get funding lines for the period 2014 to 2020. The development of these programmes is at the provisional stage, and will replace the existing programmes in this field.
The Danish Presidency will present progress reports on the outcome of continuing discussion on the following proposals which fall within my remit - the directive on the enforcement of posting of workers; the regulation on the use of the right to collective action, known as Monti 11. My officials have already made a presentation to the committee on these regulations and the directive on electromagnetic fields. The EPSCO Council will be chaired by the Danish Minister for Employment, Ms Mette Frederiksen, and her colleagues the Minister for Social Affairs and Integration, Ms Karen Haekkerup, and the Minister for Gender Equality, Mr. Manu Sareen. The Commission will be represented by Commissioner László Andor.
I thank the Minister for that summary. We have already discussed some of the issues he raises, particulaly the job-rich recovery. Much of that strategy is part of our plans. We have scrutinised some of the directives as well. I will now take questions.
I welcome the Minister and have some general questions for him. In respect of the much talked about EU initiatives to stimulate growth, how does the Minister imagine Ireland benefiting directly from the wider European measures to tackle high unemployment levels? How might Ireland benefit in terms of funding for major projects that might draw in many former construction workers, for example, in the construction of a DART underground and so on? Will such projects be put on the agenda? Are we putting them on the agenda? I think such a project could make some real impact in cities and areas of mass unemployment, and people who were engaged in construction could aspire to getting back to work? How will that growth initiative evolve and develop in practical terms in the timeframe?
Ahead of agreements in this field, it is difficult to be specific. There is an appetite to invest an additional €10 billion in the European Investment Bank. It would appear that will be linked to a broader range of projects. Clearly, Ireland would have a number of projects that are ready to avail of such additional funding, where possible. Until we see the colour of the proposals emerging, it is difficult to be specific. There are lines of existing funds that remain unused and there is belief that some of the money can be released to bolster demand in the present situation. There are much wider issues in terms of the approach to growth that are being canvassed, with no overall agreement emerging.
There are also quite a number of areas under which we have received funding already and I hope we will get enhanced funding as the next round of programmes develop. We are now discussing under the competitiveness section, the competitiveness of enterprises and SMEs, COSME 2014-2020, a programme which provides funding lines for small business. Under ERDF funding, the county enterprise boards get funding under the research heading. We utilise the seventh framework programme, 7FP, to get research funding. We are now developing our microfinance proposal and we will be seeking to get get support by way of a partial guarantee for that from the European Investment Fund. There are a number of concrete funding lines.
The other broad area, as I said, is the process of peer review and looking at what is working in other countries which provides us with the opportunity to identify scope. In the specific areas of employment, unemployment support and youth opportunities, there was a review of eight countries by Commissioner Andor, to see how effectively resources were used and whether they were fully deployed. Ireland came out of that study, showing that all our Structural Funds were committed and that we had the highest absorption rate for those funds. There was no spare money to focus on new initiatives. There has been a redirection of some of the initiatives, particularly in the area of education, prioritising initiatives targeting youth unemployment. The development of the growth agenda is very much a work in progress at European level and different ambitions have been articulated. Until we see these emerge, I do not think it will be possible for the Government to outline a concrete programme. It should be said that under the existing headings, the Government, in particular the Minister for Public Expenditure and Reform, Deputy Howlin, and the Minister for Finance, Deputy Noonan, have been working to develop a package of what might be roughly described as demand-side measures. These are areas where we can take initiatives using our balance sheet. NAMA made a commitment to invest €2 billion in the coming years. The Minister, Deputy Howlin, has established an infrastructural fund, with a capacity of €1 billion to support initiatives. A number of additional initiatives are being developed by the Government with a view to setting an infrastructural agenda to address our growth prospects. That is reflected in my own Department, where we seek to leverage relatively small funds to access finance in areas. These would include microfinance, the temporary loan guarantee, the development fund and the innovation funds which are all based on the principle of leveraging a relatively small Exchequer contribution to make a much bigger fund. We are looking at initiatives to do smarter things that generate activity and investment while engaging in fiscal consolidation.
I welcome the Minister and thank him for his contribution. The construction sector across the European Union has faced collapse, and more so in Ireland, Spain and Portugal. We have had a boom and now a large percentage of the workers who are no longer engaged in construction have found it difficult to get other employment. To take up Deputy Conaghan's point on investment initiatives, the stimulus or project bonds resonates strongly with people in terms of providing funding for shovel-ready projects. There is no shortage of shovel-ready projects, such as schools and roads in any constituency, and every Deputy and Senator could list the names of projects in his or her constituency. Is there an acceptance or concern that until such time as the overall EU and world fiscal crisis is resolved, unemployment will remain stubbornly high? Is there a fear that while we can introduce initiatives, unemployment will be a problem until we see real growth in economies, and the debt crisis and the burden on countries is solved? We will be putting in place our own plans, and we hope that the jobs action plan will work, but is there a concern at EU ministerial level that the fiscal crisis is so large that all we can do is just to talk about job creation until it is sorted?
Obviously, there is major concern about the continuing crisis. We have seen the downgrade of Ireland's growth prospects, not because of internal policy or problems but essentially because of the downgrade of prospects in the main markets in which we trade. It is clear that a positive external environment is vital for countries like Ireland that must undertake very serious adjustments. To be able to do that successfully, it is vital that we generate growth. There is obviously a very strong debate in Europe as to how to bring about the proper balance between the type of bank resolution we have, structural reforms and how we set about achieving fiscal sustainability. All of these topics are hotly debated in order to achieve a balance between different dimensions of policy and the extent to which the burden should be spread.
Common European bonds or project bonds are issues that are debated and we are all acutely aware of the tensions and the differences of opinion in Europe as to how best to deal with it. Ireland has a very strong view on the need for a bank resolution strategy to ensure a more vigorous growth strategy. We have adopted very significant structural reforms within our programme. When I attended a meeting of the OECD, the extent to which we had achieved structural reforms compared with some of the other countries was acknowledged. There is an increasingly public dimension to the debate, as countries express their different views as to their priorities and how things should develop. There is clearly an onus on the European Union as a community to develop a credible and sustainable growth strategy. That cannot be divorced from fiscal sustainability. One will not have long-term growth if one has an unsustainable fiscal strategy. It is not a question, as some people seem to pitch it, of a debate about austerity or growth, it is about achieving fiscal sustainability within a broader economic package that promotes employment growth and economic growth, which is the long-term cure to fiscal problems. There is a very lively debate and acute concern about youth and general unemployment figures rising to acute levels in many countries. There is an understanding of these challenges at European level.
I wish to question the Minister on the last point, namely, the acute awareness of EU member states on the youth unemployment issue.
The common denominator in all the presentations made to the committee was the urgency of tackling unemployment, particularly youth unemployment, which will come together in our report. I read some of the press releases from the Minister's last meeting in Europe. I welcome the fact that youth unemployment was covered in one of the articles. I still get a sense that the level of urgency that is needed to address the issue of youth unemployment in particular is not trickling down to the reality on the ground. I am very concerned about the consequences for society and the problems that are being created while we wait for a solution to youth unemployment in particular. Ultimately, the people who will pay for the problems down the track will be the administration at that time. I am delighted to learn that member states are acutely aware of the problem and that it is not just talk and buzz words but action that is required to deal with youth unemployment. Can Ireland use its voice to articulate the need to put the foot down harder on the accelerator to deal with youth unemployment? I do not wish to list the consequences of unemployment, we all know them already, but I am genuinely concerned that we are running out of time. Ireland could come up with a strategy and use its voice to put youth unemployment to the fore. It is disappointing that the unused Structural Funds from other member states are not available to Ireland. We are being hit because we used our funds effectively. It is a pity that those funds are no longer available. I urge the Minister to be one of the voices that puts youth unemployment on the agenda and to put his foot on the accelerator a bit more.
The last EPSCO Council had a specific section devoted exclusively to youth employment and had lots of differing perspectives by countries. Countries with relatively low levels of overall unemployment and youth unemployment have a different set of policy options available to them than countries with high levels. There are existing EU funding lines and we are using them to the hilt. Some of the initiatives of the past 12 months are part-funded, such as JobBridge and Springboard. The latter receives €10 million from the national training fund and some additional funding from European funds. We use our funds effectively and divert them into the initiatives that we feel will be most targeted on youth unemployment. Both Springboard and JobBridge have proven to be worthwhile. I know that there have been critics of some of them and there will always be teething problems. My experience, and that of the Minister, Deputy Burton, is that it is a positive programme that a lot of employers have used and it has a good placement rate for employment.
The sense of urgency is shared but different countries have varying levels. Some countries can talk about youth guarantees of a comprehensive nature while others talk about target levels. Ireland has undertaken a radical reform of the area by establishing the employment service. The OECD has been a long time critic of Ireland for its separation of employment support services and the social protection dimension. We are bringing them together and it is an important element of reform. My colleague, Deputy Joan Burton, set very ambitious targets in her Pathways to Work document for impacting on long-term unemployment and its youth dimension. Ireland is getting its house in order and is implementing the necessary reform. There is a real sense of urgency among employment Ministers to deliver effectively. There is also the wider European external debate on the framework but that is a larger debate than the one among employment Ministers.
With regard to the Action Plan for Jobs 2013, we are starting to look at the proposals and we hope to commence a consultation period. It would be timely for us to see the committee's work and hear its ideas on the subject as the Government is trying to frame what it needs to do next year.
I agree with the comments made on JobBridge and Springboard and how the new Pathways to Work document compliments labour activation measures. My concern is about the roll-out of the new one-stop-shop within the Pathways to Work document. By the time it comes into effect around the country people will have been left behind. The initiatives are reaching people but do not go far enough but sufficient resources would make it go further. The Action Plan for Jobs 2012 and Pathways to Work initiatives compliment each other but they will not reach everyone with the resources available. We do not live in an ideal world but we should take a step closer to reaching everyone.
I should like to pick up on some of the points made by the Minister and Deputy Lyons. The reason unemployment figures are quite startling is that, according to statistics published last week, the long-term unemployment rate increased by 2% and there was a 10% increase in the number of women unemployed. I do not have all of the figures here. The point was made that existing schemes will not reach all of those unemployed. The imposition of the troika and the austerity measures will further impact on the numbers. We now have the situation whereby staff working for Bus Éireann and Dublin Bus will have their wages cut by 20% because the Government cut subventions. Therefore, the Labour Party will introduce subvention cuts to our public transport companies that will have an impact on wages and how much they can spend. Their inability to spend money will lead to job losses further down the line. We need a greater debate in Europe but the powers are not moving fast enough and not as fast as our implementation of austerity measures in the Irish economy.
The Minister said that Ireland cannot make a recommendation because we are part of the troika agreement along with Greece and Portugal. Have we submitted a proposal to the troika identifying projects that would have a positive impact on our economy? Has the Government identified a project and asked for money from Europe or wherever to get it moving within three, six or eight months? That is the type of news that we need to hear. People here are desperate due to the reality of their situation.
I shall answer the Deputy's last point first. There are actions in the troika agreement that fall into the labour market area. The agreement deals with labour market policy, not banking policy. Some of those actions are clearly being implemented. I have just mentioned the Minister for Social Protection, Deputy Burton, and the creation of the employment service. It is a significant reform and is backed by the troika because it brings payment and activation together in one unit, thus providing a more individual service. It intervenes at points in a person's experience and tries to head off the drift into long-term unemployment. The measure is supported.
With regard to my area, reforms in the wage setting mechanisms have been introduced and the members and I will discuss them on Committee Stage shortly. The reforms were significantly flagged. As members will know, last year the Irish Government negotiated the introduction of the jobs initiative within the existing framework and resulted in initiatives like the reversal of the minimum wage and cuts in PRSI and VAT. Those employment focused initiatives were introduced with the approval of the troika and the Government negotiated them within the existing framework. A lot of things have happened in the labour market area that have the support of the troika and there are timelines to implement its different dimensions.
The Deputy was right to comment on the recent employment figures. We have undertaken a difficult transformation of the economy. The construction sector simply got far too big and was unsustainable and we have seen the impact of the collapse of the property market. The challenge for us is to transform the economy again to one that is based on enterprises that can export and we have made considerable progress. One of the strengths of the Irish economy that has taken us out of the danger zone and seen our bond spreads fall is that we now have a balance of payments surplus. We are seeing a healthy export growth even in difficult markets and are hitting all of our targets. We do need a better external environment to assist us in this difficult transformation. I accept that no-one wants austerity but we also recognise that it is unsustainable to have spending at 45% higher than our revenue base. We cannot base sustainable growth on that so we must develop twin tracks, the Action Plan for Jobs and the Pathways for Work, along with a necessary fiscal consolidation. That is our challenge. Much of the Action Plan for Jobs is looking at where the new markets are externally, how to use public procurement in a smarter way to help businesses get their reference sales to build export markets, and how to get companies to look at export markets who only looked at the domestic market. Much transformational work remains to be done with Enterprise Ireland to bring about the necessary changes.
I am sorry I missed the earlier part of the meeting as I had to attend another meeting. I was very impressed last week at the meeting in Croke Park organised by the American ambassador and by what the Minister said. One of the figures that caught my attention was that there are 5 million people unemployed in Europe but there are 4.5 million job vacancies. Therefore, Springboard plays an important role in placing graduates whose degrees are in the wrong area. Their qualifications could be in the area of construction, architecture or quantity surveying. Is Springboard working as well as it should, or is there anything more which can be done in that area? I am not sure if Springboard is under the Minister's remit or that of the Minister for Education and Skills. It appears there are huge opportunities.
An article that caught my attention yesterday in The Economist concerned a young Italian who wanted to set up a business in the US and discovered he would have to wait a long time to get a work visa to do so, even though he was investing quite an amount of money. He went to Chile instead and got his visa, through its system, in two weeks. An entrepreneurial visa has been introduced here for those coming here to establish jobs in Ireland. Is that visa closer to the Chile visa which can be obtained in two weeks or similar to Rhode Island which takes a couple of years? If we are to encourage people to come and invest in job creation in Ireland we need to be able to do things like that.
In the past I was opposed to the sale of passports, which happened a long time ago, but I am very much in favour of the visa redemption for those who are establishing businesses here.
Springboard comes within the remit of the Minister for Education and Skills, Deputy Ruairí Quinn. A challenge for the committee and the Council is that five Ministers criss-cross the Council agenda. While Springboard is working, that is not to say it cannot be improved. One of the best examples was the case of the ICT area where the Minister succeeded in working with industry and the higher education institutes to get a proposed doubling of the output of technologists in the ICT area. There is a combination of Springboard which is just conversion and an expansion of the throughput on core courses. The ICT case is a good example of where it works. I would hope that having achieved something in ICT, we would look at the next skill bottlenecks and develop similar ambitious programmes. It is working. As the report points out, the dislocation has been largely among males who do not have technical skills while the job opportunities are in different areas. Therefore, there is a big task of conversion.
On the issue of setting up a business in Ireland, we have set out in the action plan for jobs the ambition that Ireland would be the best place in which to start up a business. That has involved visa reform, for which I do not have the figures, but it is prompt where there is a good business proposal. That has been reformed by the Minister for Justice and Equality, Deputy Shatter. IDA Ireland and Enterprise Ireland are working together as a joint team in promoting Ireland as a start-up location. We will hit the targets this year for the number of high potential start-ups; 15 overseas entrepreneurs are choosing Ireland under the high potential start-ups. This is the top end of the start-up tree. There is also Connect Ireland which was developed by a businessman in Kilkenny, Terry Clune, founder of Taxback.com. He has turned his model for tax refunds around and is using it as a model to get the Irish diaspora or anyone else who knows of small companies looking to establish in Europe to choose Ireland. A high number of companies, 200,000, establish for the first time from the US into Europe. A few of those small companies would choose Ireland as a location. This is an attempt to seek to garner some of those.
We are creating the environment for start-ups. The venture capital environment is good. The seed capital fund makes it easy to start up and we are developing a capital fund for growth. Therefore, we have a number of good funds. We have some of the best ecosystems for creativity, particularly around the social networks area such as the presence of big multinationals and small innovative companies, for example, in gaming which are proving very successful. We are a significant magnet for new start-ups. We have a good corporate regime and a good business environment. This is an area where we can promote Ireland as one of the best places for ambitious companies to start up, as well as the traditional IDA Ireland role of attracting established companies to locate in Ireland. I do not say it is perfect and if members come across any glitches we would like to hear about them. The initiatives we have put in place on visa reform, venture capital, seed capital and Connect Ireland are creating the environment to attract companies to start up here.
I welcome the Minister to the joint committee. Senator Quinn said that 5 million people are unemployed in Europe and there are 4.5 million job vacancies and bearing in mind the ESRI study which suggests that 41% of the unemployed are better off remaining on the dole, that equates to 200,000 people in Ireland who see no value in taking up a job. Has the Government a plan to tackle that issue? There is evidence of that in the catering and retail sectors and if one takes a walk on Grafton Street one will see plenty of job offers in shop windows but they cannot get staff. What can be done about that? I have suggested for more than 12 months that we use the social welfare budget more wisely. If a person is on the dole for a long time, is it not better to give half the money to an employer to take him or her on? In that way half the money would be saved. I have given the figures for such a scheme previously. If we were to introduce such a scheme and create 100,000 jobs we would save €1.1 billion per year on the social welfare bill alone. We should seriously consider this matter. Employers need all the help they can get to take on staff but something has to be done about the people who do not see any value in taking on work.
On a separate issue, when the redundancy schemes were introduced in the public sector we did not look too far down the road as to how they would pan out. What is happening is that people who took early retirement have found other work or other jobs either in the public or private sector. I do not begrudge them the work but they are depriving somebody else of a job. Are there any plans to tackle those two issues?
Some of those issues are not necessarily for today.
I agree with the Senator that employer incentives are important but there is a Revenue job assist scheme. That scheme offers double tax relief on the wage of a person who is out of work more than a year. If a person is employed at, say, €20,000, the employer will get a tax allowance of €40,000 on that employee for three years. If one is a sole trader who pays a 40% tax rate, that equates to an additional €20,000 over three years in a direct incentive. The take-up of the scheme is low and even though last year 140,000 people left the live register to take up work, only a few hundred availed of that scheme. We have a problem in communicating to employers the schemes that are available. Similarly, an 18-month PRSI holiday is available and the take-up is again not reflective. One of our challenges is to communicate to employers that there are good incentives to bring the long-term unemployed into the workforce. One of the jobs action plan commitments is to make that easier in order that eligible long-term unemployed persons will have a simplified search in their hand and when they go to a prospective employer, the employer can see straight away that the person is eligible for these reliefs, which are of significant benefit. Working with members and chambers of commerce, we need to get the message out more effectively to employers that generous schemes are available that can assist.
The ESRI report has been an issue of controversy in the media and I am not in a position to comment but there are different views as to whether there is an incentive in place. My understanding is that more than 70% of people on the dole are on the basic payment of just €188 a week with no rent supplement, additional payments for children or spouses and so on. Taking up a job even on the minimum wage means a wage of approximately €360 a week versus €188 per week on the dole and that, therefore, clearly gives a significant incentive to take up the work. This is not primarily an issue of incentive. We experienced low rates of unemployment when the economy was strong. We have problems and that is why the Minister for Social Protection's approach to intervene and to expect people to participate in programmes that could result in them reskilling or being given assistance to get back into the labour market is correct. This involves a form of contract in order that if people do not co-operate, there will be penalties within the system, which has worked in other countries. It is a best practice model where the State seeks to assist people who have been dislocated, predominantly from the construction and retail sectors, to reskill by participating in programmes such as JobBridge or Springboard. We are trying to turn the welfare model into a development model because traditionally in Ireland one only received a payment provided one was idle. The position was that one had to be idle to qualify for this, that and the other. The Minister is trying to shift from that and it is the right way to go.
Early retirement is a broad issue that concerns all Departments but, in the case of my Department, four people were rehired having taken retirement. None was employed. They served on advisory boards for which some received a stipend while others did the work on a entirely voluntary basis. I do not say that is the case in all Departments but when I examined what happened in my Department, the people came back to lend their experience to advisory groups and so on and to support the audit function on a board for a low stipend. It is not always as it seems. I do not have the detail on what is happening in the health and education fields but a great deal of effort is put into ensuring people are not rehired but there are cases where it happens because there are no easily available alternatives.
I thank the Minister for his presentation. Within Europe, how are we on a level playing field in the context of competitiveness and wage levels when last year the NEC factory relocated from Ireland to Poland? An RTE documentary showed management bringing the workforce to Poland to see the new factory on a greenfield site there. Other companies relocated from all over Europe to Poland because the monthly wage is €600. During the Celtic tiger era, a Minister stood outside the gates of NEC in Ballivor in my constituency to say it was a sign of the times that companies were relocating to cheaper countries. The Minister is trying to reverse the process and to bring these companies back to Ireland because manufacturing jobs must be created. He must contend with the Asian workforce, which provides cheap labour. He has a tough job but I wonder whether European officials are aware of how uneven the playing pitch is and that workers here start on a higher wage rate compared with other countries. The documentary broadcast by RTE last year highlighted that hundreds of acres had been set aside for the construction of new factories. We have a tough job and I wonder whether Europe understands the problem we face.
It does. By and large, Europe has commended Ireland for the progress it has made. Last week, the world competitiveness rankings showed that Ireland has improved four places to return to the top 20. We are in the top eight in the EU. Those are broad indicators and competitiveness comprises a package. It is not only about wage costs; it is about many other measures such as skills, innovation, the ease of regulation and the business environment and tax code we have created. Ireland is recognised as being in the course of making a great deal of progress in these areas. For example, unit wage costs have improved by 20% since the recession began relative to the rest of the eurozone. That is reflected in an improved flow of inward investment and our ability to win back export markets to rebuild our market share. During the boom our share relentlessly declined for six years. If wage rates are compared with those of other European countries, we will still be at the high end of the comparison in different areas and the challenge for us is to match that with higher productivity and to be smarter and better at doing our business. Wage expectations have also adjusted. The public sector has experienced wage cuts while, in the private sector, people are being recruited on lower rates and there is a much more competitive environment compared with the peak of the Celtic tiger. That is reflected in us winning back some of our competitive edge. It is a necessary, though painful and difficult, transformation to get back to where we need to be.
There is a recognition in Europe that Ireland is getting to grips with its problems. Ireland is regarded in the US, China and Asia generally as a doughty warrior getting to grips with its problems and making the necessary adjustments. The people, by and large, support that adjustment. That is a very significant factor in why we are seeing such a high flow of foreign investment. IDA Ireland had its best year in a decade in 2011 because people recognise that Ireland is now a very competitive environment in which to do business.
I welcome the Minister. I agree that the message is not out there in regard to the existence of incentive schemes for employers such as the Revenue's job assist scheme and the PRSI holiday. Will the Department consider running a television advertisement campaign as the most effective and direct way of setting out the incentives that are available? Local action initiatives are needed in order to bring prospective employers and the unemployed together. Many employers, particularly owners of small and medium-sized enterprises and restaurants, are telling me that jobseekers have stopped inquiring about jobs and dropping in CVs. The message is out there that there is no work available. Local action initiatives would facilitate the bringing together at local level of employers and unemployed people at a designated meeting point, perhaps once a month, with training sessions being run simultaneously to assist people in their efforts to secure employment. I am aware that this might come under the remit of the Department of Social Protection, but does the Minister have any funding to support such an initiative? The cost would be minimal but it could be of great value to the potential participants. We must ensure that unemployed people get out of their homes and meet with others, including local employers. It is only when people become proactive that opportunity will knock. The recent ESRI report was so controversial because it seemed to suggest that people would be better off remaining out of work.
Ireland's assumption of the European Union Presidency next year affords us an opportunity to give leadership on these issues. I have already proposed to the Minister of State at the Department of Foreign Affairs and Trade, Deputy Creighton, that the Government should host a high-level youth employment event during its term in office. There are countries in Europe, such as Denmark and Norway, which are not experiencing the same levels of youth unemployment as are we and some of our fellow member states. There are solutions available within Europe and we must bring them to bear in our examination of how to move forward on this issue. I hope the Minister will indicate that he is open to such co-operation.
Some of the Senator's questions are not necessarily relevant to the forthcoming Council meeting and are more fitting to the second part of our agenda today. Before handing over to the Minister, I take this opportunity to comment on the ESRI report to which the Senator referred. It is a shame the ESRI did not consult the committee on this report. We have had several useful discussions on this issue with the Minister and her officials in the past year in the course of which we clearly identified that, in the majority of cases, it is certainly worthwhile for people to take up work. In the case of the very small percentage for whom the benefit of doing so is questionable, the Department is aware of the issue and is working to address it. The report seems to be based somewhat on opinion, rather than purely on facts. When we went through the figures it was clear that, in more than 90% of cases, people are better off working. Those data are on record and can be checked. It is a pity a particular message has gone out from this report because the information might not necessarily be true. We will discuss the report in detail at another meeting but it is important to note, for now, that the percentages cited in the report do no stack up and that the issues it addresses are being dealt with by the Department of Social Protection with a view to closing the gap between welfare and work and ensuring those who have the prospect of employment will take it up.
In regard to incentive schemes for employers, my instinctive reaction is that they do not lend themselves to television advertisement campaigns, which are often characterised by being high cost and poorly targeted. Instead, we propose to spread the word about the incentives through the networks that interface with business and new start-ups, including the chambers of commerce, county enterprise boards, Enterprise Ireland and the Companies Registration Office. That is a far more targeted approach and it is the one we intend to favour, at least initially. We have committed to an initiative in this regard under the action plan for jobs and proposals in that regard are reasonably well advanced. We are determined to get the message out more clearly.
I am supportive of the concept of local action initiatives, which generally take the form of partnerships across a range of institutions at local level. As part of our strategy of support for small business and start-ups, we are locating enterprise support within local authorities. We see the latter as a very significant player in helping to bring together such initiatives. The plan is to assess successful initiatives with a view to mainstreaming them subsequently on a broader basis. There is no large pocket of funding in my Department for this purpose, but the local partnership companies, local employment services and local enterprise offices all have a role to play in such initiatives. The Local Heroes programme in Drogheda, in which Senator Feargal Quinn was very involved, was an excellent example of this type of initiative. There was no new funding line - instead, it was about the existing players coming together, voluntary and statutory sectors working in co-operation, in order to put together initiatives that seemed to work. We must seek to garner good practice with a view to setting exemplars and spreading the message. Pobal is also involved in this type of activity.
In regard to events planned during Ireland's European Presidency, an informal meeting of the Employment, Social Policy, Health and Consumer Affairs Council, EPSCO, is being organised and we are considering the appropriate agenda. There will also be a meeting in Dublin of the European Commission's treaty-based employment committee, EMCO, which feeds into the employment framework. In addition, the European Foundation, a European body based in Ireland, intends to hold a conference during our Presidency. I do not know the precise agenda for any of these meetings, but any one of them might provide an opportunity for a debate on youth unemployment. It is an issue that has been discussed at a previous EPSCO meeting.
To clarify, I have in mind a major conference that would be attended by the public. Does the Minister see a role for his Department, perhaps in conjunction with the Department for Foreign Affairs and Trade, in leading something like that?
What generally happens at informal European meetings is that Ministers - the decision makers - will consider which policies are working and which are not in regard to a particular issue. Before the meeting takes place, Ministers will hear from representatives of the social platform, including trade unions. That is how the system works, rather than having a large, learned conference with papers and submissions. However, a number of agencies are planning to host those types of conferences in the State during Ireland's Presidency. I will try to get the Senator a list of what is proposed. The Council meeting will potentially involve five Ministers and not all of the issues for discussion, including the narrow issue of youth unemployment, are specifically within my remit.
In regard to youth unemployment, we must refer to the European Union context if we are to seek to tackle the problem effectively. The European Commission's Youth Opportunities initiative in December last year sought to assist young people in improving their employability. Under that initiative, member states were encouraged to utilise the €30 billion available in the European Social Fund. How are we connecting with that kind of thinking in the EU?
In regard to youth employment activation measures, will the Minister completely reimagine the profile of labour activation measures, obviously to include basic aspects like work, training and education but also to include broader aspects which would engage the entire young person, for example, fitness, well-being, swimming and rock climbing? Something more imaginative than what is the general menu is needed to engage contemporary young people in a rounded way. Will the Minister consider calling for proposals for a reimagined activation measure?
The community employment schemes are working. We need to ensure they are supported in a wholehearted way by all Ministers and that funding is made available. They are the employment anchor for so many urban and rural communities. We meddle with those at our peril. I refer to the old saying, if it is not broken, do not start to fix it. If the word goes out that this Government is completely committed to this anchor employment presence in urban communities, it would really revive community spirit and send out a message of hope rather than the various messages we are getting that they may not be funded, they may be undermined, they may be disabled or whatever. We need to send out a clear message about community employment schemes which have been a resounding success, reject the ESRI view of them and look at the work of young academics in UCD who have done a much more creative assessment of the importance of community employment schemes.
Deputy Conaghan raised quite a broad agenda. In regard to how Ireland is engaging with the EU, if the Deputy looks through the headings in the paper, Towards a Job-Rich Recovery, which was produced by Commissioner Andor, he will see that we are pretty active in all these areas. It talks about subsidies for employers who hire people who are out of work, about supporting start-ups and about what might be done. As I outlined earlier, we have strong programmes in both of those areas. It also looked at the potential of different sectors and at how we support people who are out of work.
I refer to the establishment of SOLAS which is rethinking its whole model and is questioning the existing FÁS provision which I suppose got somewhat set at the time of the strong construction sector. It is trying to reset that compass around the new clusters of skills it will need. That is characterising the career training cluster framework which is being developed so the skill support being offered is more relevant.
I know there has been debate about budget strain on the community employment schemes but it is still a very significant programme in the overall scale. It is probably one of the largest activation headings throughout the whole menu of labour activation measures. It is an effective system but I suppose the pressure on it currently with the high level of unemployment is to make it more relevant to activation and the progression of people. I understand the Minister for Social Protection, Deputy Burton, has brought in changes to try to make it more of a core piece of the activation agenda as well as being very socially useful within communities. She is trying to balance that. It is a measure which is important in getting people to progress back into employment. One is trying to do two things with the community employment schemes and in the current crisis getting the more active labour market dimension is the highest priority.
We are open to new ideas but obviously within a constrained resource background. Just as we are looking at how we can make our action plan for jobs more effective, the Minister for Social Protection is looking at how we can improve our pathways to work. If Deputy Conaghan is developing thinking on a new engagement, we would be keen to look at it to see if there are ways in which programmes could embrace it while recognising that we are working with diminishing budgets rather than expanding ones. It is a question of finding something else which would be better than what is in the existing menu of activities.
SOLAS is a really exciting development. I should not talk about another Department but FÁS generally was seen to have been built around certain apprenticeships. There is now a new demand on it. The ability of that new organisation to meet that new challenge will be crucial to our overall success.
This discussion was useful in covering the Minister's agenda and what is coming up at the next meeting. We deal with many of the issues in the context of directives and in our own discussions. It was good to have the chance to go through them with the Minister. We have dipped into issues which cross over, including youth unemployment on which we are working. We covered the activation measures, Pathways to Work, the youth guarantee and many of those areas. A balance is needed between the fiscal adjustments and getting our fiscal affairs in order in regard to job creation and youth unemployment. Having this discussion prior to the meeting was useful.
The youth guarantee has come up a lot in our discussion on youth unemployment and long-term unemployment. Is it something to which we are giving greater consideration? What is the view on it among the Minister's colleagues at these meetings? We are implementing many of the issues in the paper, Towards a Job-Rich Recovery. They are in the jobs action plan and Pathways to Work. We are probably ahead of the scheme in Europe.
In regard to removing obstacles to finding a job in another EU country and improving the co-ordination of employment policies and initiatives, the aim of the Government and the committee is to create jobs here but in the short term, we probably need to see if there are opportunities in Europe which people in this country could avail of, although keeping them as close to home as we possibly can. Committees from Germany, Finland and Sweden have visited us and there seem to be little niches and opportunities in other European countries into which we could tap. The German committee told us of the availability of certain courses in Germany. I am sure it is the same in other countries where there are supply issues. We have demand issues. Perhaps we could work closely on those issues with other Ministers. In our discussions with the Finnish committee, we heard Finland has a shortage of nurses. I imagine there are little pockets and gaps throughout Europe into which we could possibly tap. Are these issues discussed at these meetings? I know the Minister's aim is to create jobs and keep people here but in the short term, are these issues at which we could look, for example, at an exchange programme where people go abroad for jobs in certain areas. Short term contracts and so on might be worth looking at. Could this be discussed at these meetings?
The Minister covered youth unemployment but he might want to add some comments. As he knows, we are working on a report on the whole area of youth unemployment which is being spearheaded by Deputies Lyons and Conaghan, who are due to report in July. The Minister is familiar with it and he has touched on it but he may have other comments. I invite the Minister to conclude and thank him and his officials for attending.
The truth is that while everybody supports the concept of a youth guarantee, it is a question of how one gives life to it in various countries given the resources available and various pressures. Countries with relatively low rates of unemployment, where youth unemployment is a bit of an outlier, have the capacity to offer much stronger guarantees than countries with greater challenges and less domestic activity in which to leverage opportunities. Everyone supports the concept; it is a question of how it can be implemented in the most meaningful way.
On job opportunities across European countries, the Commission has a number of initiatives. There are exchange programmes such as Erasmus and also EURES, the European employment service. A Commission communication states the Commission proposes:
To transform the European Employment Services (EURES) into a comprehensive European employment instrument aligned with the Europe 2020 objectives, by:
- Positioning it as a demand-driven European placement and recruitment tool that satisfies economic needs, while fulfilling the legal obligation of ensuring transparency of vacancies with innovative on-line job matching tools, including mobile internet applications to ensure the best possible outreach and availability;
- Rolling out from 2013 the innovative on-line self-service "Match and Map" to instantly provide users with a clear geographic mapping of the European job offers matching users' profiles and providing at the same time individual feedback on why jobs and skills do not match, together with corresponding information on where learning opportunities to acquire the missing skills are available.
The EURES programme is dipping pretty much into what the Deputy referred to. It is based in the Department of Social Protection as part of the national employment service. There will be meetings of EURES in Ireland under the Presidency. There is active engagement on that agenda, in addition to interesting initiatives. I hope they will open up opportunities.
How could the proposed changes to the Erasmus criteria be beneficial in broadening the gateway of engagement for young people travelling abroad for training, as opposed to travelling as higher-level students, as was the case traditionally?
Perhaps that is a matter for the Minister for Education and Skills, Deputy Ruairí Quinn, unless the Minister for Jobs, Enterprise and Innovation has anything to add.
Okay.
I am not fully up to speed on that, to be honest.
He has his own Department to keep an eye on.
I thank the Minister and his officials for attending. We have had a useful meeting. We may have strayed slightly from the Minister's agenda but it will all be helpful. I thank the members for their work. We will be in touch.
The joint committee adjourned at 11.25 a.m. sine die.