Seanad Éireann díospóireacht -
Wednesday, 3 Mar 2010

Vol. 201 No. 5

Job Creation: Statements (Resumed).

Senator Mary M. White

I welcome the Minister of State. The single biggest challenge facing Ireland in 2010 is to create jobs and reduce unemployment. Urgent action is required to improve our competitiveness in order to support job creation and export growth. Speaking on 14 January at the launch of a report, Ireland's Competitive Challenge — Creating a Better Future, Dr. Don Thornhill, chairman of the National Competitiveness Council, said speedy implementation of the priority actions identified in the report is as fundamental to Ireland's future as the steps being taken to address the banking crisis and arrest the decline in public finances.

Improving our export performance and raising productivity across all areas of the economy, including local and international trading sectors and the public services, are the only sustainable strategies for securing long-term prosperity for our people, reducing unemployment and sustaining the standard of living. Although Ireland's competitiveness improved during 2009, to a great extent this was due to the sharpness of the recession rather than to competitive advantages arising from structural change. The priority recommendation in the report by the National Competitiveness Council puts strong emphasis on skilled development which is critical in supporting the competitiveness of existing firms by enhancing their capabilities and increasing productivity growth.

We must reduce the cost of doing business. It must fall relative to that of our trading partners. The priority actions report noted that limited competition and locally traded sectors of the economy, especially in the professions, have serious implications for the cost of doing business in Ireland. We need to drive competition in these sectors and in the legal and accountancy professions and consultancy groups especially with regard to the effective implementation of the competitiveness council's recommendations.

High utility costs that have been in place for years are damaging the competitiveness of exporting sectors such as food, information technology, hardware and engineering industries. Recent energy price reductions were necessary but have not been sufficient. Further actions are required, such as phasing out price supports for renewable energy as the technology matures and deployment increases.

My next point has been raised an unbelievable number of times and still nothing has happened. Careful consideration needs to be given to freezing and, where possible, reducing local authority commercial rates. Every submission made to the Department of Enterprise, Trade and Employment has included this issue. We must prioritise infrastructural investment to support enterprise. Reducing capital expenditure to maintain current expenditure will not help our long-term competitiveness.

I draw attention to the construction industry. Total employment in the industry, both direct and indirect, will fall to approximately 100,000 by the end of 2010, a reduction from 400,000 in 2007. This is a severe blow. Output is set to fall below €10 billion in 2010. In 2007 the industry earned beyond what would be considered normal, namely, €38,500,000. This growth was not sustainable, of course, and was unrealistic. However, there is a crisis in the construction industry now. We are losing skills and professions. Architects, engineers, quantity surveyors, technicians and tradespeople are being lost. We are losing sight of what will happen when our economy recovers in the next two years as the world economy improves. There is no doubt that will happen but we are missing the boat by not maintaining investment in capital expenditure. There is no doubt about the improvement that took place in our roads infrastructure during the past ten years. It is a wonderful sight to behold and a pleasure to drive on. With tendering costs of 25% and the very competitive pricing now available it is a shame not to avail of these. For every worker who loses a job in construction it costs us as much in social welfare payments as the salary that was earned.

I have spoken non-stop on the Order of Business about job creation and employment. The number one priority is to get the banks to free up money to companies. The chicanery and irresponsibility of the banks in this country and their attitude to small and medium-sized businesses are immoral. In time a story will be told about their rough manner and the brutality of their actions towards such companies who employ people.

The good news yesterday was that the Tánaiste launched the Horizon 2020 programme. She made the point that foreign direct investment will continue to be very important to us.

I have raised one point on numerous occasions in this House. I attended the Craig Barrett lecture in the Mansion House. He pointed that the PISA yardstick that measures standards of mathematics shows ours to be only average. It has fallen to average. When Intel came to this country 20 years ago the knowledge of our graduates and young people was much higher than that of the same group today. The more we move towards the technology industries of the future the more mathematics and cognitive thinking will be needed as the base and ground work of these industries. Unfortunately, one can get great points to enter university by learning things off by heart. It takes more effort to study mathematics and science and those points are harder to get. We have a fundamental problem regarding the next generation of industries, nano-technology. The Minister for Education and Science, Deputy O'Keeffe, is addressing this issue. He has been lobbied by multinational companies which have put billions of euro of investment into this country. It is far more efficient for them to reinvest in Ireland rather than having to go to a new country where the standard of education in mathematics is much higher. The bottom line is that cognitive thinking, entrepreneurship and risk-taking are the skills of the future. If Ireland wants to compete, we have to be as good as our competitors in China, India, Israel and Singapore. Europe has lost the game whereas they are the empires of the future.

Senator Feargal Quinn

I welcome the Minister of State. It is impressive to see the amount of work that has been done and the effort made. Some of what we have heard of today is already taking place in many ways. The Minister of State has heard me speak on this issue before because I said something similar to him perhaps two years ago. The point I want to make is that the creation of jobs by Government is not the way to go. We must find a way so that, if jobs are to be created, it would be because there is a need for them.

I am not normally a supporter of Sinn Féin but I point out that Sinn Féin means "we ourselves". I believe the answer is much more independent creation of jobs by individuals themselves. There is an opportunity in this regard. I told the story some years ago of being on a partnership committee with the objective to create jobs in the particular area I was located. I went to the committee full of enthusiasm for the sort of work we needed to do. We needed our windows cleaned but we could not get somebody in the area to clean them. We needed somebody to supply us with vegetables and jam if we could get these supplied locally. When I went to the meeting, I found that in all cases the committee members wanted to send somebody to Dublin to get the Government, the IDA, FÁS or some other body to come down and do what they could for us.

We have to encourage entrepreneurship and we have to believe that people can create jobs themselves. There are opportunities to do this. In that case, I know a young man who decided, when he heard me make the point about cleaning windows, to set up a window cleaning business, which he then sold on at the end of the year. This shows the potential to create jobs.

I fear there has not been recognition that jobs in distribution are real jobs. It was only last week when we saw Hughes & Hughes and a fashion company go out of business that we began to realise there is a recognition that distribution is the creation of real, permanent jobs and that it is possible to do that, although only if the businesses are successful. In the past, the situation was such that jobs were only regarded as jobs if they were manufacturing some product. In fact, those of us in distribution were regarded almost as parasites.

For example, when I finished studying commerce in university, some years later I met my professor, the dean of the faculty of commerce, in one of my supermarkets. I was in my 20s at the time and as he did not recognise me, I introduced myself to him and he asked what I was doing there. When I said I was working there, he did not realise it was my own shop, and he said it was wonderful that one of his students was actually working in business. For the vast majority in those days, the 1960s, when a person finished university, it was supposed he or she went on to become either a teacher, an accountant or do some other job but not to create a job himself or herself.

I encourage people to realise there is a need and an opportunity for business. To a certain extent, if we talk ourselves into assuming that somebody else will create a job, and ask why somebody does not create a job for us, then it will not happen. The Government has to make it more attractive. We have to remove the barriers to jobs.

Let me take one example of this. Dr. Don Thornhill of the National Competitiveness Council was referred to earlier by Senator Mary White. We need to be more competitive. What can the State do about this? There are some steps it can take. One of the arguments that has been made by the retail sector is that something can be done to avoid the upward rent reviews that are taking place. I can understand somebody who has signed up to pay rent objecting to the fact that this rent is now too high, but if they signed up for the rent, they will have to negotiate with the landlord, who is not likely to change it. However, if an upward rent review is stapled into legislation, that is wrong and does not stand up. I know the Government is taking some action in this regard but it has a long way to go before all the barriers are removed.

Let me deal with one other barrier. I firmly believe the minimum wage is a barrier. We have the second highest minimum wage in Europe, to the best of my knowledge, and, while we want to be competitive, some jobs do not exist at that minimum wage. We can say this is outrageous and that we should be not be paying somebody as little as that, but paying a minimum wage which is a multiple of what it is in other parts of Europe makes us uncompetitive in many ways. Jobs are more important than income. If somebody does not want to work at that rate, they do not have to do so, but if we have a minimum wage that states we must pay this particular rate, and the job does not exist at that rate, it is up to the State to do something about this.

I mentioned some time back that the State of Colorado had reduced its minimum wage recently. It did this because that wage was linked to inflation; therefore, when deflation occurred, as it has been occurring here, it automatically reduced. That does not apply here and, while there are a number of jobs that could exist, they do not exist due to our minimum rate.

I stress that I am not looking for the Government to create jobs. I was chairman of a hospital board in the 1970s. We used to get a letter every month with regard to how many jobs we had managed to create in the hospital and whether we had taken on more nurses, porters and so on. That is exactly what got us into difficulty. We created costs which were far too high and which made the State uneconomical because we were creating jobs which were not necessarily needed. It is not a question of encouraging the State to create jobs.

What we have to do is recognise that if we are going to create jobs, most will come from the State removing barriers to enable entrepreneurs to start businesses and to create those jobs. They will not necessarily be big factories or big employers. There will be hundreds of jobs in small, independent operations run by entrepreneurs. We must recognise that the opportunity for jobs does not come about solely from manufacturing products; it also comes about from distribution. When a shopping centre opens, if it can be made to succeed, that will create jobs in distribution and all of the other areas involved.

To add to that point, while we are blaming the banks for recent events, the banks point out that if a retailer or anybody else has a good idea which can be successful, they are anxious to lend. What they are not anxious to do is to lend to somebody who does not have a concept that can make itself pay. Therefore, we must be able to make that case. If we make that case, we can succeed. I urge the Government to work towards removing barriers to make entrepreneurship much more likely to create jobs.

Senator Ivor Callely

I welcome my good friend and colleague, the Minister of State, Deputy Billy Kelleher. I wish to respond to Senator Quinn. I concur with much of what he said. The clear message from him is that each and every one of us on the island of Ireland has a role to play by going out and buying local. He had a great slogan, if I remember it correctly, "Come for the service and stay for the price".

Senator Feargal Quinn

It was the other way around.

Senator Ivor Callely

Was it? We need to do something of that nature now with regard to shopping locally. We need to encourage the entrepreneur at every parish pump to do what Senator Quinn said and each one of us must walk to our local shop and support local enterprise and business. I congratulate the Senator on his contribution because it is the way forward.