I welcome the Minister of State, Deputy Áine Brady.
Employers’ Job Incentive Scheme: Motion
I move:
Seanad Éireann welcomes the Government's new Employer Job (PRSI) Incentive Scheme which will help to create jobs and get people back to work.
Cuirim fáilte roimh an Aire Stáit. This motion in the name of the Government side welcomes the Government's new employers' job PRSI incentive scheme which will help to create jobs and get people back to work. I appreciate that the detail of it will be discussed over and back, and no doubt the Minister of State will elaborate on it, and therefore I will not go into that other than to state that the Government expects this initiative to create some 10,000 new jobs.
I am particularly pleased that in small and medium-sized enterprises it applies to those who have a maximum of five workers and that the scheme will save an employer in the region of €3,000 from the annual cost of employing an additional worker.
I agree with the analysis of the reasons it has been introduced now. One of the reasons is that those who are short-term unemployed are more likely to join the workforce than those who fall into a longer unemployment pattern after six months and then, consequently, become social welfare dependent. Obviously, the Government has recognised the dangers of this happening and that is one of the reasons it has introduced this initiative.
Of course, employers will not be allowed to substitute existing employees to avail of the scheme. This also limits the maximum participation rate to 5% of their existing workforce or for smaller companies, a maximum of five new jobs.
One of the things that has interested me during my time here is the regular criticism from those who oppose the Government that there is never a plan. It has always bemused me somewhat because there has been and will continue to be a plan which is coherent, effective and that will work.
It is well hidden.
The Government is totally committed to getting people back to work. It is the number one priority of the Government. I fail to understand why there is criticism even outside of the body politic. I doubt if there is one Member of either this House or the other House who is serving as a public representative who is not aware of the acute trauma and pain being experienced by families who find either the breadwinner or his or her siblings unemployed, particularly those who are coming out of second and third level education. Equally, I doubt if there is any Member of this House or the other House who does not want to see the unemployment rate brought down as quickly and as effectively as possible. Let us get rid of the canard straight away that the Government does not care about unemployment or that it is not establishing a coherent and effective plan.
We know the best way to create and sustain employment is firstly to get our own house in order and we are doing that by fixing the banking system, restoring order to the public finances and regaining our competitiveness. We have maintained a very significant capital investment programme which is of the order of €6 billion, which is going towards infrastructural development going into the next year and which is higher than the European Union average despite the severe cutbacks in our budgetary and fiscal policy. We have introduced a wide range of innovative proposals aimed at creating and maintaining jobs, of which this is one of several. This year we are also providing almost 160,000 training and work activation places.
To focus on what the motion is about, I will describe what I refer to as the ten key areas for job generation that the Government has identified. Confidence is No. 1 and is central to our economic recovery and job creation. It is the confidence to lend, spend, invest and hire. International confidence in Ireland has been increased by the difficult decisions we have taken while consumer confidence is improving. These are economic facts. Like those who criticise Government policy, I am somewhat reluctant to refer regularly to international commentators on our financial and fiscal policies. While it is welcome, our initiatives have emerged from sound Government thinking. They have not been created by The Wall Street Journal, the International Herald Tribune or the Financial Times, although those critiques and articles are welcome because they tend to sustain an air of confidence among international investors that Ireland is doing the right thing.
It is amusing that, while these respected international economic and financial commentators seem to be singing from the same hymn sheet, the Government is doing nothing or its actions are wrong according to the domestic political environment. It does not make sense, particularly where credit is concerned. This is a bugbear of mine and the banks have questions to answer. I do not believe everything I hear from the banking sector on lending, in particular to small and medium-sized enterprises, SMEs. Banks are spending a great deal of money on radio, television and newspaper advertising telling us how many people they have lent to and how much they have lent. Senators opposite will agree that the evidence on the ground is that lending is not at the rate it should be despite it being one of the key drivers for the economy. Access to credit is required if SMEs are to grow and create jobs.
I would like to believe the recent banking announcements, including an independent credit review process, and obligations on banks to meet specific lending targets for small firms will work, but it seems that banks are being brought kicking and screaming to the table. No one has sympathy for or empathy with the banks. We know what they did to this country. For years, these people were supposed to be our financial betters. They were surrounded by an architecture of financial and economic advisers and experts. They were supposed to know everything that was occurring. To our country's detriment, we have seen how shallow their knowledge was.
Another key area for job generation is cost. To create and sustain employment, we must ensure we price ourselves back into the market. Although it has been difficult, we have been determined to drive down our cost base by tackling public pay and other barriers to competition, such as energy costs. It was with some sorrow I read the recent EUROSTAT report referred to by all sides of the House yesterday. It indicated that we were the second most expensive country in Europe. On further examination, I came to understand the survey was nine months out of date. Those nine months have been significant. All sides of the House will agree that those who are providing goods and services have successfully been making strenuous efforts to ensure the reduction of our cost base. Our placement in the next EUROSTAT survey will be interesting because the recent report, which examined the situation nine to 12 months ago, was an unfair and inaccurate depiction of the competitiveness of our current cost base.
The Government has committed to investing a total of €40 billion in infrastructure during the next six years. This year, we will invest €6.5 billion, providing up to 70,000 jobs. At 5% of our GNP, this is twice the European average, so the gainsayers should not claim that the Government is not acutely aware of how important it is that we maintain a significant capital programme and look after the most vulnerable in society. The simple facts bear repeating. We are accruing approximately €30 billion per year in taxation, but we are borrowing a further €20 billion in light of the country's running cost of more than €50 billion. Anyone who runs a household knows that, if one is spending more than one is earning, one must find the rest of the money somewhere. That we have moved from a situation of budget surpluses in the early part of the last decade to one of severe budget deficits is sad.
International investors are showing so much confidence in the Irish economy and not just in the financial pages. When the last borrowing requirement for Ireland was put on the market recently, it was three times oversubscribed. This clearly states that those who have money still see Ireland as a safe bet. The sad reality is that borrowing is costing us more than it did 12 or 18 months ago. The cost is 2.5% or 3% greater than it would have been two years ago. I cannot understand the markets' logic in this, but as a financial adviser told me recently, there is no logic in the money markets and one should never believe otherwise. They are lemmings, do not think and follow the trend of the day. People should view the stock market as a barometer of the economic reality in this or any other country.
Innovation is another of the ten key areas. We are committed to developing Ireland as a global innovation hub. The innovation task force estimated that more than 110,000 jobs can be created through supporting innovative business. Foreign direct investment, FDI, which has been the bulwark on which this country has not only survived, but flourished during the past 40 or 50 years under successive Governments, will continue being an important source of new jobs. I praise the IDA. In the most difficult of times, it is still out there battling and competing. Major international firms still have confidence in Ireland as being somewhere they can locate jobs. The new IDA strategy, Horizon 2020, is targeting 105,000 jobs nationwide by 2015. In the past six months, the IDA announced more has 1,200 high-quality jobs through FDI. These are not base line, service-centred or assembly jobs.
Small business has rightly exercised the minds and rhetoric of this and the Lower House. Being from rural Ireland, I know the importance of SMEs. They are the most significant element in the job creation strategy and should receive all the support they need. Enterprise Ireland's objective is to create 40,000 new jobs in the next five years. Last year, the enterprise stabilisation fund supported more than 7,500 jobs. The employment subsidy scheme is estimated to maintain 80,000 jobs. The PRSI job initiative scheme is expected to generate 10,000 new jobs. The car scrappage scheme, the catalyst for the turn in consumer confidence earlier this year, is expected to safeguard 2,000 jobs.
The last three elements of the ten key strategies include green enterprise. The green enterprise action group published proposals on creating 80,000 new jobs in the coming years. To date, 15,000 jobs have been announced. As well as 120,000 primary producers, the Government-supported agrifood sector employs more than 45,000 people in more than 800 companies. A new €100 million fund has been established to improve the food industry's competitiveness during the coming years.
Most importantly of all, the tourism and hospitality sectors support in excess of 200,000 jobs. The overall tourism budget has been increased this year while investment in visitor attractions has trebled to €22 million. The tourism industry is going through a challenging time, but we should remember that we now have a Minister who is innovative, creative and imaginative.
As opposed to the previous Minister.
What about the Tánaiste?
I have no doubt that every element of the Government's actions must be driven by the confidence that the tourism industry can recover and provide jobs that will filter down to every town and parish. I commend the motion to the House.
I second the motion. I welcome the Minister of State, Deputy Áine Brady. The two years between the first quarter of 2008 and the first quarter of this year have been traumatic for those who have lost their jobs and for businesses trying to survive in the face of recession. The number of people in employment peaked at 2.1 million during the first quarter of 2008. According to the most reliable indicator, the quarterly national household survey, the tsunami of the recession has since led to a decrease of 250,000 in the number employed. Thousands have emigrated during this period.
After these two traumatic years there are some indications confidence is returning to consumers and business, as measured in various sentiment surveys. The SME business owners who have survived — survival has been a mega achievement — are more confident that we have reached the bottom, whereas even one year ago most of them believed they were in free fall. As confidence returns and businesses gradually find themselves on a better financial footing, firms are cautiously considering taking on extra staff. They are cautious because in most cases they had to lay off loyal staff in the past two years and naturally do not want to rush into recruiting before they are sure this can be justified. The PRSI exemption scheme which encourages the recruitment of a person who has been on the live register for at least six months may provide the necessary encouragement and stimulus employers need to make the move and recruit that extra person or persons in 2010. As businesses are acutely conscious of cost, the PRSI saving of some €43,000 in the first year will provide a significant boost for small companies. Up to five additional staff taken on in 2010 can benefit from the PRSI exemption and up to 5% of the base workforce in the case of larger companies. When SMEs look at the range of persons unemployed eligible to participate in the scheme, they will discover there are many willing and capable people to meet their needs. I urge all Members to publicise the scheme and bring it to the notice of businesses.
I move amendment No. 1:
To delete all words after ‘‘Seanad Éireann'' and substitute the following:
condemns the Government's handling of the economy with more people now on the live register than at any other point in Irish history;
criticises the scale and nature of the Government's banking bail out while still not having any significant jobs plan to get people back to work;
acknowledges that Fine Gael first proposed the policy of an employers' PRSI holiday to promote new job growth in December 2008 and that since then there has been an additional 150,000 people added to the live register;
recognises that the jobs crisis now requires a greater response from Government;
and calls on the Government to implement Fine Gael's Hope for a Lost Generation and NewERA policies to make an immediate impact in the labour market and return the economy to a sustainable and competitive position.
I welcome the Minister of State, Deputy Áine Brady. I do not intend to criticise her personally in saying there are many Ministers of State in the Department of Enterprise, Trade and Innovation and the Department of Finance who could be present. I know the Minister of State has an important job to do in the Department of Health and Children. For a long time I have been asking the Leader to get her into the Seanad to speak on the issue of care of the elderly. We should have one of the Ministers of State from the relevant Departments present.
It is ironic that we are having this discussion tonight, as we had a debate on job creation eight days ago. We are often correctly criticised by people outside the House in this regard. To debate the same issue a few days later seems to make no sense when Senators are making suggestions about issues we need to discuss.
Of course, I welcome the Government's decision to introduce the employers' PRSI incentive scheme, as this proposal was first mooted 19 months ago by Deputy Leo Varadkar on behalf of Fine Gael. The Government failed in that 19 months to introduce the measure but better late than never. An extra 150,000 were made unemployed in that period. I do not want to personally criticise any of the previous speakers, but I have a few things that I want to get off my chest about unemployment.
I acknowledge the efforts made by Senator Mooney over many years to reach out to Irish emigrants overseas. I do not believe anyone in the Oireachtas has done more than he has. However, the sad reality is that his party has ensured there is a new generation of Irish emigrants overseas, people who have had to leave Ireland because they cannot get work here. From the policies recklessly pursued by the Taoiseach when Minister for Finance and other Members of the Cabinet we are reaping an horrific dividend for the population. Very few families do not have members who have either emigrated in the last couple of years or are not considering doing so. A shocking number of my friends have left, mostly to Canada but some to Australia and New Zealand. This is not just a disaster for the economy and their families but also a personal disaster for them. It is the one thing Fianna Fáil and its friends in government can never answer — post the Celtic tiger, Ireland once again has to export its people in order that they can earn a livelihood. The Government failed miserably in its years in office to ensure that when the rainy day came, we were prepared to deal with it.
I acknowledge the Government has made some efforts. When the Minister of State at the Department of Enterprise, Trade and Innovation, Deputy Kelleher, was in the House last week, he outlined what was happening in South-East Asia. That is a shining example of a good news story in the sense that we are now exporting more to China than we are importing from there. There is huge potential in that market. This indicates that there are other avenues open to the Government and its agencies which they must pursue to get out us out of the difficulties we are facing.
Touching on what Senator Mooney had to say about the banking crisis, while I have never held a candle for the banks, the political reality is that many of our financial institutions were very close to the Government in the past 13 years. Some are still very close to it. We are investing billions of euro in the nationalisation and recapitalisation of Anglo Irish Bank, virtually none of which we shall see again. Put simply, it was there for the benefit of developers, their friends and those of Fianna Fáil. This was a political decision. The bank is not of systemic importance to the banking system. The Government is now looking at the Fine Gael proposal of an orderly wind-down of the bank, in which we are investing €22 billion. Will the Minister of State say what we could do with that money in terms of job creation measures? Senator Quinn always makes the point — he is correct — that too much emphasis is often placed by Opposition speakers on the role the Government can play in creating jobs. It is not the Government's responsibility to create jobs, but it is its responsibility to ensure the conditions are created in which jobs can be created. What could we do with that €22 billion, or even a fraction of it, if it had not been thrown down the drain of Anglo Irish Bank? What has happened is completely unjustifiable.
The unemployment statistics are shocking. We have the third highest rate of unemployment in the European Union. It is touching 14%. One in three men under 25 years is unemployed. While the figures are stark, they are masked slightly by the fact that so many have emigrated. Many immigrants, mostly from eastern Europe but from other areas also, who came here to work when the economy was flourishing have also left. It is estimated that somewhere in the region of 17% or 18% have left at this stage.
I challenge the notion that we have turned the corner. I am glad that neither Senator Mooney nor Senator Mary White used this expression, as there is widespread disagreement on the issue. According to the best economic predictions, while there will be growth, it will be growth in the numbers who are jobless. The worst analyses indicate that we have not yet hit the bottom and that there will be further hardship inflicted on the economy and taxpayers in the course of the next year or so.
We are speaking about the employers' job incentive scheme. This issue was last raised in May by Deputy Varadkar in the other House with the Minister for Employment, Trade and Innovation, Deputy Batt O'Keeffe, who deflected it to the Department of Finance. He did not indicate that the Government was prepared to do anything about it.
Something interesting happened a little more than a year ago when the vice president of Pfizer, one of the country's largest employers, pleaded with the Government to introduce measures to protect and create jobs. A couple of months ago Pfizer announced that it was laying off nearly 800 workers. The Government had not acted on the plea of Pfizer's vice president, so the company had to take the action it did. That is a shocking indictment on the Government's slow response to this issue.
The Minister for Finance, Deputy Brian Lenihan, has had four gos at trying to correct the difficulties in the banking sector through recapitalisation. It is clear to all at this stage the only way to ensure a resumption of credit flow to individuals and businesses is through the establishment of a national recovery bank. This was championed several years ago by Deputy Richard Bruton but was never acted upon by the Government. It is acknowledged by most independent observers now that some institutions in the existing banking system will never be able to lend again. Will the Government reconsider the setting up of a national recovery bank, the one mechanism that will lead to cash being injected into the economy once more?
Fine Gael has come up with several job creation proposals. I disagree with the lack of priority given by the Government to tackling unemployment. The State has had fiscal and banking difficulties with the Government placing all its emphasis on resolving the banking one. The only way we can resolve falling tax receipts is through getting people back to work and therefore into the tax net. I have still not heard any realistic proposal in this regard from the Government.
Fine Gael's policy documents on youth unemployment, Hope for a Lost Generation, produced by Deputy Leo Varadkar, and job creation, NewERA, specifically outline several measures the Government could take in job creation. Hope for a Lost Generation proposes a national internship programme with placements in the public sector for people leaving college, second-chance education, an apprenticeship guarantee scheme to be operated with the Office of Public Works, community employment schemes and work share programmes.
I am not convinced the Government has a clear policy on job creation and how to overcome current employment difficulties. I cannot support such a self-congratulatory motion as the one tabled tonight.
I second the amendment to the motion.
Cuirim fáilte roimh an Aire Stáit, an Teachta Áine Brady. While not wishing to be disrespectful to the Minister of State, she is not responsible for an economic ministry. A Minister from either the Department of Enterprise, Trade and Innovation or the Department of Finance should be in the Chamber for this debate.
The Private Members' motion is timely and I welcome the Government's Pauline conversion——
The road to God knows where.
——in embracing Fine Gael's policy on PRSI 24 months after we first announced it. Can the Government Members imagine the numbers not unemployed if they had taken on board this policy 24 months ago?
Senator Mooney gave a fine and commendable speech except for one element of it. The fact is the Government does not care or have a plan. That is why the Minister for Enterprise, Trade and Innovation is not here for this debate. Senator Mooney gave less than a ringing endorsement to the Tánaiste, Deputy Mary Coughlan's time as Minister for Enterprise, Trade and Employment.
Senator Mary White spoke of 2008 as if a wall had been erected then. Life did not end then; it got infinitely worse for many of our fellow citizens. Unemployment figures disguise that many of our fellow citizens have had to emigrate to Canada, New Zealand, Australia and Asia, locations that will replace those synonymous with Irish emigrants such as Cricklewood and the Bronx. Today, 7,500 people applied for 500 jobs at Dublin Airport.
The Central Statistics Office's recently published first 2010 quarterly national household survey contained headlines such as, "Employment falls by 5.5% in the year", "Full-time employment declines by 115,700 over the year", "Number of unemployed increases to 275,000", "Long-term unemployment rate increases to 5.3%", "Decline in labour force driven by falling participation", "Number of people not in the labour force grows by 3%" and "Non-Irish national labour force declines by almost 16%". That is an indictment on the policies of a failed Government.
On the other hand, Fine Gael is a party ready to govern with job creation policies, independently costed, that will get Ireland back to work. Today, it was announced 444,900 people are unemployed, the largest number ever on the live register. Every month, this figure reaches another high. When will this end? The Government has bailed out the banks and introduced its budgets to cut public spending but when will rising unemployment end? The Government cannot show us a jobs plan because it does not have one. The consumer confidence referred to by Senator Mooney is not there. Senator Mary White is wrong because more and more small businesses are not taking on new employees or opening on Saturdays and Sundays. Senator Dearey, himself a small businessman, knows well what I am talking about.
Nineteen months after Fine Gael published its job creation plan, the Government decided to take one of its ideas and run with it. It is a pity the Government did not listen to us over the past ten years instead of trying to buy the people with money.
The sad part of all of this is that the people, not the Fourth Estate for which I have no regard, do not see the Government as having the ability or competency to get them out of this mess. More and more people, particularly young families, are living in hardship and poverty faced by large personal debts. When I canvass four days a week, I meet qualified and trades people struggling with economic hardship while the friends of Fianna Fáil, even though they have not got the champagne anymore because it has gone off, are getting away with it, blowing cigar smoke into their faces.
The Government's motion is a disgrace. Some 444,900 people are unemployed. Why has it taken 19 months to take on board the Fine Gael plan? As Senator Phelan stated, we have put together a plan to bring people off the live register and into work. This includes a national internship programme, a second chance education scheme, apprentice guarantees and a work share policy. We have plans and we will do it. Not only will we take over the reins of power, but we will take action. We will be men and women of action who will get Ireland back to work. Confidence will be reinstated and people will have hope. It will not simply be a case of rhetoric or the Taoiseach on the steps of the Dáil talking about getting these people in to talk to them. There will be leadership and a Government of people committed to our fellow citizens.
Let us consider the number of people under 25 years who are unemployed. I am a former teacher. I refer to the leaving certificate applied programme. We offered opportunities to students who were academically not so bright but who were very academic in their own way and very innovative. However, the Government has cut it. Is the Government serious about reaching out to all our students and people to get back to work? I do not believe so.
We need jobs. This is the only issue on the political, economic, civic and civil tables. Alas, we do not have a Government that will get people back to work. The best thing we can do now is to give this Government an unemployment ticket and give another Government the chance to work. I second the amendment.
A job is a very precious thing. It underpins people's lives and provides a bedrock for family stability. It generates a sense of self esteem for the person holding the job and it creates wealth and spending power in the local economy. All of these features are significant pluses in any individual's life. I say as much to underscore my understanding of how important jobs are. Senator Buttimer should note that we care about preserving jobs on this side of the House. It is our first task, followed by creating new jobs and this is where the economy is poised to start to deliver.
I thank Senator Buttimer for his kind comments on my situation and he is correct in this regard. I am a small employer and there is no question but that it has been difficult to hold on to staff with reducing revenues and shorter hours. People have had to go on short time, not full unemployment. If we are to be honest, that distinction must be made. We are not only discussing the employed and unemployed in all cases, varying shades in between arise as well. I do not make little of anyone who is suffering because of short time employment but for some people it is a choice they are pleased to make and take. A combination of work and welfare works for some people. The figures do not tell the whole story. To summarise, these points refer to what jobs really do and to how they have been affected by the recession.
One key impact of a recession is the reduction in the amount of money in the economy, the confidence of people to spend it and, therefore, the number of people needed to provide goods and services in that economy. These are the underlying principles which a recession erodes and they affect job numbers. The corollary is that in recovery confidence begins to return, credit begins to flow and more people are needed to provide the goods and services called for within the economy.
Despite some of the assertions made on the other side of the House to the effect that no attempt is being made to restore jobs in the economy, the underlying assumption behind everything being done is that the grand prize will be job creation. There may be glowing tributes from abroad and statistics which show that from today we are officially out of recession. These are welcome indicators but that is all they amount to. The real satisfaction and joy for any Government will be derived from unemployment numbers coming down rapidly. This will happen eventually if the conditions that allow competitiveness to return to the economy materialise. Figures released recently from the EUROSTAT agency indicate we are not there yet. Ultimately, measures that allow competitiveness to return will pave the way for jobs to be created.
I acknowledge that the Celtic tiger economy was unsustainable, including the 240,000 construction jobs it provided. It was inevitable that when the credit boom went bust, jobs would follow suit. This was neither sustainable nor wise but the job of this Government has been to address that reality and to begin to put right the inherent instability of that economic model. Although it provided good times for a decade or more, it led to an acutely severe bust and recession. We were first into recession and only now are we coming out of it. To say this Government is not focussed on jobs is simply untrue. The ultimate prize will be when our people are employed again and when people return to Ireland, I hope, sooner rather thanlater.
I refer to the specific measure that employer's PRSI should be waived for every job created in 2010. This applies to an employer which employs someone who has been unemployed for six months or more and it is decidedly welcome. There is almost a philosophical case to put that an employer should not be penalised for taking on someone at the moment. This is the principle which the motion acknowledges. There should be no penalty in this regard. Although PRSI has been a valuable and in some respects a targeted source of income for many years, it has also acted as a disincentive to employers to take on an extra person. A given employer may make do with the staff in place and stretch them further rather than consider taking on an extra individual or individuals to provide the services a company needs.
This measure is to be welcomed. It is estimated that it will save approximately €3,000 for an employer per employee in a year, which is not to be sniffed at. It is remarkably difficult to try to generate €3,000 through increased revenues in the current climate. I welcome the specific measure but it also contains recognition that in the longer term, employment must be encouraged job by job and employer by employer. To some extent, employer PRSI has acted as a barrier to employment and this must be addressed in a long-term way. This approach must be embedded in our employment philosophy. There are other ways in which revenues for social insurance can be generated which would not necessarily act as an impediment and I am keen to see the possibilities explored in more detail in future. I welcome the measure. It holds out long-term prospects.
I refer to the assertion that the Government has finally woken up to the Fine Gael idea on the PRSI proposal. One thing that struck me about the NewERA document was the number of ideas in it which are already being enacted. These do not necessarily relate to job creation but to strategic energy supply, broadband infrastructure and so on. Many of the ideas in the NewERA document are already in action, although perhaps not in the aspirational way in which Fine Gael presents its case. However, I would rather an ounce of reality than a kilo of aspiration. There is too much aspiration in the NewERA document and it is not grounded enough.
The wholesale bank proposed in the document would compete against the Exchequer for funds on international markets and, in all likelihood, would drive up the cost of borrowing to the State. This, in turn, could mean higher taxes and less money for vital public services. The proposed bank would also compete against existing banks and could reduce the availability of credit to small businesses, as opposed to increasing it. That might seem slightly tortuous but we need to consider this potential scenario when we debate a new entrant to the wholesale banking market.
I am delighted to have the opportunity to address the House on this important initiative. On Sunday, 20 June, my colleagues, the Taoiseach and the Minister for Social Protection, whom I represent, launched the employer job PRSI incentive scheme, which we expect to play a significant role in helping to create much needed new jobs. This scheme works by exempting employers from a liability to pay their share of PRSI contributions of wages for one calendar year. This amounts to a saving of 8.5% on wages up to €356 per week or 10.75% where pay is above €365 per week. On this basis, an employer paying the average industrial wage will save more than €3,000 from the annual cost of employing an additional worker. We hope this saving will tip the balance in favour of job creation for a significant number of employers.
The Government is acutely aware that employers are wary of taking on new staff in these difficult times. Many have been forced to let staff go in recent years to reduce costs and protect the long-term viability of their businesses. Even though the economy is stabilising, employers will continue to be averse to incurring additional costs, even where sound business opportunities exist. In this environment, it is important that we do all we can to make the decision to employ new staff easier. The decisive action taken by the Government since the current crisis broke has resulted in stability being restored during 2009 and into 2010. The latest indicators are consistent with our expectations of returning the economy to growth during the course of the year. We have to turn this economic stability and growth into jobs. Job creation is the No. 1 challenge facing our society.
This PRSI incentive scheme will play a significant part in meeting this challenge by supporting new jobs. Everybody will win under the scheme. The State will benefit from reduced social welfare costs, employers will get a break on their costs of employment, and, most important, people will be saved from the slide into long-term unemployment and given the dignity of a job once again. The scheme is part of our ongoing work to support job creation and to deal with the difficulties that unemployment creates for people in their daily lives.
In its Employment Outlook 2009, the OECD highlights that where employment creation subsidy schemes are heavily targeted, they can be effective. The scheme is specifically targeted at those who have been on the live register for six months or more. Many people in this category are highly skilled and capable and, therefore, I expect this scheme to have wide appeal across a range of employment sectors.
Schemes of this nature must be carefully targeted to avoid deadweight issues. Deadweight is where a scheme supports the creation of a job that would have been created anyway. We need to avoid this as much as possible and use Government expenditure in the most effective way. The proportion of people who return to employment after a short period out of work remains relatively high. However, after six months on the live-register, there is a danger that people will drift into long-term unemployment and welfare dependency. This is why the scheme will only be available for new employees who had been unemployed for six months or more. Another potential issue with schemes of this nature is substitution, where an employer might let a current employee go in order to take on a new employee who would qualify for the exemption. Under the terms of the scheme this will not be allowed, as the employment being created will have to represent an increase on the employer's total workforce over the three months prior to its application.
The scheme is only available for full-time jobs that are wholly new and additional. It is not open to employers operating in seasonal industries or for employees on short-term contracts because the particular focus of this scheme is on supporting the creation of jobs that will be sustainable over the long term. The scheme criteria provide that if a qualifying job ceases within six months of the granting of an exemption then the employer's PRSI exempted under the scheme will have to be paid. However, flexibility is built into the scheme so that these amounts may be deemed not to be due where the cessation is for genuine reasons such as the employee moving on to another employment or the failure of the business venture.
The full scheme criteria are as follows: the employee must have been in receipt of jobseeker's benefit, jobseeker's allowance, one-parent family payment or disability allowance for at least six months or on the work placement programme of more than three months; the job must be full-time — 30 hours or more per week; it must be new and additional — employers will not be allowed to substitute existing employees to avail of the scheme; the employer will be required to furnish an up-to-date tax clearance certificate; employers will be limited to a maximum participation rate of 5% of their existing workforce or, for smaller companies, a maximum of five new jobs; and the job must last for six months or more — if it does not the PRSI exempt amounts will have to be paid by the employer but this provision will not be applied if the job ends for genuine reasons. The scheme will run for 2010 only but the 12-month exemptions will run into 2011.
Any job created in 2010 that meets these criteria will be eligible for the scheme. For example, if a job was created in February, employers will have paid standard employee and employer PRSI since hiring the new worker. They should apply for an exemption but continue to operate PRSI as normal. When their application is approved, they will be granted an exemption from employer's PRSI for 12 months and will be given a date from which to apply the exemption to their payroll. On this basis if an exemption is granted in July, it will run until July 2011. The scheme has been set up in this way to avoid having to refund PRSI, which is administratively cumbersome for the employer and the Department of Social Protection.
Over the past year, we have increased the supports for people going back into education and training and unemployed people can expect more opportunities for work activity in the coming months. This scheme is about also offering them their No. 1 choice, which is the opportunity of new jobs being available. We expect that this scheme will support significant numbers of employers, particularly in small and medium-sized enterprises, in creating the jobs that will add momentum to economic recovery and restore people to the dignity of paid employment.
I thank the Minister of State for her interesting views. I always have a difficulty with Private Members' debates. The Government usually tables a motion, as it did today, stating "Seanad Éireann welcomes the Government's decision..." and the Opposition, in turn, tables an amendment, stating "To delete all words after "Seanad Éireann" and substitute the following "condemns the Government's decision...". However, both sides are anxious to succeed in creating jobs. The hearts of Senators Mooney and Dearey and Opposition Senators are in the right place but the question is whether they will succeed.
I am slightly worried about the term "job creation" coming from the Government because the Government is not engaged in job creation. The Minister of State will have heard me say this previously. When I met the Labor Secretary of the previous US Government, Elaine Chao, she said, "My job is to create the environment so that private enterprise can create the jobs". Approximately 30 years ago I was chairman of a hospital as a job creation programme was put in place. We received letters every month asking how many jobs we had created and how many new nurses and porters we had taken on. That is what caused problems in the 1980s. Jobs were created that were not viable and that is what got us into difficulty back then.
We created costs which were far too high and made the State uneconomical. We created jobs that were not needed.
There are several things we can do which can establish the conditions that make it easier for businesses to employ people in viable jobs. We should do our utmost to avoid putting unnecessary burdens on businesses in terms of red tape. It stifles business in general and entrepreneurship in particular. Perhaps we could introduce a sustainable employment test to block new regulations that will cost jobs. We talk a great deal about this but doing it is the difficult issue because every time something goes wrong people call for more regulation. More regulation means stifling the entrepreneurship we must encourage.
I visited Panama some years ago. The people there told me that in their efforts to encourage job creation and to create new enterprises they set the target of having the least red tape for creating new companies. I asked them what they managed to achieve. They said they looked at countries throughout the world, including Singapore and Hong Kong, and managed to beat them all because a new company can be created with the necessary paperwork in seven hours. Recently, however, all the concerns about deregulation and regulation are such that we are probably going in the opposite direction.
All new proposals should be subjected to rigorous audit. We should also give businesses a chance to highlight where regulation has been poorly designed and to suggest ways to improve it. We must address reductions in the cost of utilities and services for small and medium enterprises. In that regard, recently there was a Government initiative to get rid of legislation that was more than 100 years old. What about legislation that has been passed in more recent times? Perhaps we need a system to reconsider all old legislation that is hindering business and job creation. Interestingly, a few days ago we discussed the Offences Against the State (Amendment) Act. Its provisions must come before the Houses every year to be renewed. That is understandable, and when the Minister was in the House discussing it we talked about whether this should be considered with regard to other legislation we have passed. Perhaps all legislation should have to be renewed every ten years. It might mean we will find that some of the legislation passed ten or 20 years ago is out of date and imposing a burden on job creation by private enterprise.
It is interesting to note that in Spain, workers on full contracts are entitled to severance pay of as much as 45 days pay per year worked, one of the highest levels in Europe. As part of the government's employment reforms, it is planned to reduce this to 33 days for some contracts. The thinking is that if the Spanish Government makes it cheaper for businesses to let employees go, employers will realise that it is cheaper to hire workers, since a worker's cost includes the price of his dismissal. In other words, if one takes on a worker, one must include in one's calculations that one must pay him 45 days per year worked if one lets him go. Reducing that might appear to be the wrong way to go but I understand what it means. It might seem harsh and Machiavellian to some, but we must realise there is no easy way to make businesses start taking people on again. We can only set the conditions that might encourage them to do so, for instance, the cost of hiring employees and letting them go.
Although it is most unpopular, somebody must mention the elephant in the room, the minimum wage. Ireland has the second highest minimum wage in Europe and while we want to be competitive, some jobs do not exist at that minimum wage. I have talked to businesses that want to create jobs and take on people but they simply cannot at the current rate. If somebody does not want to work at that minimum rate, they do not have to do so, but if we have a minimum wage that must be paid at a particular rate, and the job does not exist at that rate, it is up to the State to do something about it.
I mentioned some time ago in the House that the state of Colorado in the US had reduced its minimum wage. It did this because the wage was linked to inflation; therefore, when deflation occurred, as it has been occurring here, it automatically reduced. That does not apply here. While there are a number of jobs that could exist, they do not exist due to our minimum wage rate. Learning from the mistakes of the boom, can we not in future link the minimum wage to deflation as well as inflation? It might appear wrong to think or say this but there are jobs that do not exist at the minimum wage rate, and our rate is the second highest in Europe. A new survey of more than 500 accountants, from the Institute of Certified Public Accountants, showed that 60% of respondents believe the current minimum wage of €8.65 per hour is making Irish business uncompetitive. It is interesting to note that half of the respondents also said that they did not expect to employ more people in their company even if the minimum wage level was reduced.
We must do our utmost to address high levels of long-term unemployment. Over time, people get discouraged and may not seek jobs. Ex-workers gradually lose their skills and their motivation and it is quite likely that they may never work again. Older and less-skilled dislocated workers, who are most likely to have difficulties landing comparable, or any, jobs should be identified early and receive additional services. In this respect, I welcome the new Government scheme to give employers PRSI exemptions for taking on new workers who have been unemployed for six months or more. I hope the measures included in the scheme will cut costs for business and will encourage businesses to take on the people they need. The Minister explained the scheme very well tonight. If it can create anywhere near the figure of 10,000 new jobs, it will be a great success.
I hope the overall conditions in the global economy for Irish businesses will help job creation. The fall in the value of the euro, for example, is very encouraging for Irish exports because companies here benefit more than those in other eurozone nations from the currency's weakness against the dollar and sterling. Also, some people believe that a strong sterling will boost Irish, so-called indigenous exports. Ireland will gain, too, from the fact that it has a higher percentage of its exports in services than any other western economy.
We must recognise that if we are to create jobs, most will come from the State removing barriers to enable entrepreneurs to start businesses and to create those jobs. I hope the Government will take on board some of the ideas put forward today from both sides of the House and play its part, however small, in creating the conditions for business to employ people.
I read an interesting book recently entitled Start-Up Nation: The Story of Israel’s Economic Miracle. The figures are just fascinating. The country has the highest number of start-up companies in the world. There are 3,850 start-ups, one for every 1,844 Israelis. That is huge compared to other countries. A country of 7.1 million people attracted as much venture capital as the United Kingdom, with 61 million people, or the 145 million people in Germany and France combined. The book is interesting because it asks what it is about Israel that got entrepreneurs starting businesses. There is no single easy answer but something, be it the psyche of the Israeli people or whatever else, made Israelis believe in start-up companies that will create viable businesses. One can read about some of the innovation businesses.
I hope that what will emerge from the recent Your Country, Your Call competition initiated by Dr. Martin McAleese will be similar innovative ideas to help Ireland and to create new viable start-ups and entrepreneurial jobs that will solve our huge unemployment problem. However, consider what has happened over the years. We still have a large number of people working, more than were working 20 years ago. There are 800,000 more people working now than in 1990. We did succeed. Let us not dampen our enthusiasm by saying that because we got it right for 15 years and got it wrong for the past four or five years, we should throw everything away. We can achieve. We can set out to achieve what we need but we must do so with a belief in ourselves. If we can believe in ourselves, we can be as good as those countries that have managed to do it elsewhere. We can do it not by paying lower or cheap wages but by investing in the enterprises we have.
It was interesting to hear Senator Buttimer talk about the education system. Senator Buttimer and I were involved in the leaving certificate applied some years ago. The leaving certificate applied does not just measure people's academic ability but what I call their other intelligences. They may be called skills, talents or whatever but I prefer the word "intelligences" because those intelligences help make sure the people who might otherwise have been left at the back of the class and who may be left without jobs are able to show what they can do.
Sir Richard Branson is one example of those who would have been regarded as a failure at school. Sir Bob Geldof is another. I can think of others who would have been regarded as a failure at school. These were people who did not pass the academic examinations but when they were let loose and they discovered their talents, skills, abilities and intelligence in a different way, we all saw what they were able to do. The danger is that we are likely to take our eye off the ball by not encouraging the leaving certificate applied.
One of the areas in which leaving certificate applied students always worked very well is the hospitality business but they are no longer given the CAO points they now need, which they did not need previously. It is in the Government's hands to make sure that those who decide not to do an academic leaving certificate but the leaving certificate applied can go on to third level education. It might not be university level but the sort of education that will give them the chance to develop further.
I was impressed by the Minister's words earlier but also by the words of the Opposition speakers. We must all put our heads together to determine what we can do to ensure this becomes the country where we have start-up operations, and that those start-up operations create jobs.
I acknowledge the sentiments expressed by Senator Quinn. He made sensible suggestions and observations.
During the Celtic tiger years a large number of people were drawing unemployment assistance; I believe the figure was well over 100,000. These were people who never worked at any stage. It is wrong to keep doling out money to somebody who has no intention of seeking work. It is bad for society and for the person, and we should never encourage that.
People should be at least 20% better off financially working than on the dole. I will give the Minister of State an example. Colm McCarthy gave us figures for that in the an bord snip nua report. Someone on the dole can get payments ranging from €25,000 up to €50,000. Why would anybody bother looking for a job in that case, especially if one has a medical card and so on? That must be examined. We must motivate people to work and give them incentives and as Senator Quinn said, we must be competitive also. Why would someone start a business if their overheads are too high and they cannot be competitive?
I spoke to a business person last week who had a small café in a service station. These people are the backbone of the economy. Senator Phelan would know the place I refer to because he visited it also. It is in Cavan. I asked this person how business was and he said he was over-regulated. Representatives of the National Employment Rights Authority, NERA, were calling. If an employee is pregnant there are about eight forms to be completed. He told me one would need a full-time clerical officer to deal with all the forms. If the café is open on a Sunday he has to pay staff treble time. In hotels NERA representatives call in the middle of the night and query all of that while the staff themselves are happy to work at the normal rate to keep their jobs.
Hear, hear.
That is what is happening, and it is mitigating against people in business who wonder if they should bother continuing or shut the doors and stay at home. The local authorities charge people exorbitant prices for water connections. Rates are very high. The local authorities must get their act together in this regard as well.
Senator Quinn made the point about the Government and he is right. It is not the Government's job to create jobs. We must create the environment to enable people create jobs. I asked a person about that one day. People do not start a business with the primary purpose of creating jobs. They start a business to make a profit for themselves but jobs are involved in that.
There are various incentives that can be given to workers. The minimum wage is an issue but there are various incentives available. I know an employer who has a bonus scheme for workers. The more he takes in at the till, the more the worker gets. That is a very good idea.
Some people are involved in worker participation where the workers are involved in management decisions. They bring them in around the management table and ask them their views. It is a good idea to involve workers in that way because it gives them a great interest in their job and shows that the employer values them in every possible way. There are many areas we could examine in that regard.
Another system we all know about is where one wants to check one's PRSI or tax information. A business person made this proposal and it is very sensible. He said there should be one personal database for every citizen. In other words, if someone wanted to inquire about their PRSI, tax or whatever the information would be on one database. The person should not have to go all over the place to get information about themselves, nor should an employer have to do it. There is too much bureaucracy in that regard. One's business is not competitive and therefore there is no incentive to continue.
I welcome the Minister of State. I welcome the PRSI initiative by the Government but we must do much more than that. The main point, and it is being said by people everywhere, is that people should not be better off on the dole than working. There are people getting up at 6 o'clock every morning to go out to work and the person living beside them does not get up until 1 o'clock in the afternoon. They are in pubs and so on and they have no regularity about their lives. That is bad for society. It is a burden on the health service also because it creates social problems, mental problems and various other problems.
I wish to share one minute with Senator Norris with the agreement of the House.
Is that agreed? Agreed.
The Leas-Chathaoirleach might remind me when I have two minutes remaining.
I welcome the Minister of State. This is an important debate but it should be a rolling debate and not only up to the end of this term. We should continue to debate any incentives that will help employment.
As an Opposition spokesperson I will always give credit where due. I welcome this initiative by Government but as my colleagues have said already, this proposal was put to Government by the Fine Gael Party over 19 months ago as a positive incentive to create employment. However, I am glad the Government has adopted that position.
Fine Gael has many more positive proposals to which Government should listen. Senator Brady spoke a great deal of sense. I agree with 99% of what he said regarding the over-burden of regulation, especially for small businesses and companies operating here for many years which are struggling in the current climate.
I too met a restaurateur two weeks ago in Waterford who was almost tearing his hair out. He employs seven people, all of whom are very happy with their employment terms. He wants to remain open at weekends to try to attract people into the city and support the tourism trade but he is over-burdened with regulation. He has NERA, the employment rights authority, breathing down his neck and sending him all kinds of threatening letters. The man does not have the time to correspond with all the information coming to him.
I have written to the Minister on his behalf to outline this man's concerns, and the concerns of many like him. The very least State agencies should do is back off those people who are trying to stimulate employment and growth in the various cities and towns throughout the country. These agencies need to be hauled in somewhat because it appears they are trying to justify their existence. Many of them were recommended for the snip in the Colm McCarthy report. They are going to great lengths now to show their muscle but all they are doing is putting these businesses out of business.
The man I refer to has told me that if heavy pressure comes on him he will have to close the business and let go the seven people he employs. That will be another restaurant closed and boarded up in a city, which is disgraceful. We must start listening to these people who are working hard at the coalface to stimulate our economy.
There are other related charges that have been increasing in the past. The local authorities have done their best to keep the rates down but Government charges have been rising while all other charges are dropping. I agree with Senator Brady and with Senator Feargal Quinn that we need to have a competitive economy so that businesses and entrepreneurship are not smothered.
My family has employed people over many years in a small business. My father employed almost 20 people in a small leather factory; my brother has a small sheet metal manufacturing company that exports as well as creating product for this country. We cannot neglect manufacturing and we cannot give up on manufacturing in this country. Competitiveness is one of the biggest issues but there are areas of innovation and new product development and if the colleges and third level institutions work with small businesses and assist and support them and if there is a better co-operation between Departments and support agencies, we can rescue the situation for manufacturing. I, for one, believe we should not give up in this regard.
I have been vocal with regard to youth unemployment. Highly qualified young graduates have very few job prospects. It is important to try to offer those people some credible reason for getting out of bed in the morning, to go to work and to put their good talents and education to use. We need to find positive ways of engaging those young people.
Fine Gael has proposed initiatives such as internships with the likes of local authorities, the OPW or other State agencies so young engineers, quantity surveyors or others can be given the necessary work experience. This is a win-win situation. Such a scheme takes them off the dole queues, gives them a reason to get up in the morning and to put their talents to good use. We have projects such as schools and community development facilities to build and also infrastructural facilities. It should be possible to introduce some kind of flexible system in the employment legislation to allow people and agencies such as the OPW and the local authorities to take on these young people.
I will give an example for the Minister of State. Significant numbers of local authority houses are boarded up because local authorities do not have the resources to refurbish them and people on the housing lists are using rent supplement in the private rental sector. There must be a way we can find to engage with FÁS to take apprentices on the dole out of that situation and put them in with a master craftsman who is also on the dole who could lead a team of apprentices to refurbish these houses. This would be a very simple exercise that could get people off the dole and back to work. It is a win-win because local authority houses would be refurbished — they do not have the resources to do so — and people would be taken off the housing lists with a saving on rent supplement. This is how we need to think. We need to think of tangible ways to get our young people off the dole queues and into productive employment again. This is the way it has to be. I appeal to the Minister of State to carry the message she is hearing in this House because, as Senator Quinn said, there are good signals from all sides and we are trying to be helpful because there are people who support Fine Gael as much as people who support Fianna Fáil, who are unemployed. If we work together we can certainly help.
I wish to raise the issue of older redundant workers. In Waterford city alone, more than 600 people have been made redundant in the past year from Waterford Crystal and many more were made redundant from ABB, a transformer factory that closed in Waterford and a pharmaceutical factory, TEVA, which will have 315 redundancies this summer. Many of the people employed there are older and may not want to go back to college. The only courses these workers are being offered are fork-lift training or computer licence courses through FÁS. We need to be more flexible with these people and get them back into tangible work such as craft work or landscaping or some options to give them an avenue and an incentive to go back to education and back to employment. Not everybody wants to go back to do a third level degree. We need to come up with practical measures that allow people who may have left school at 15 or 16 years of age ——
I do not wish to interrupt the Senator but it seems I will be the next speaker. Senator Coffey is in such passionate flow in his contribution I do not want to take the last minute from him. What he says is extremely interesting.
I am just about to conclude. I thank Senator Norris. I am trying to make the point about older redundant workers who do not have the same requirements as younger workers. They may not necessarily want to go back to college and we have to find new ways of engaging with them. I will conclude as I would like to give that minute to Senator Norris.
The Senator is most gracious and I thank him very much. I listened with great interest to his passionate contribution.
I refer the Minister of State to what I believe is a contradiction in her speech. She says on the first page she is aware of the difficult times, that employers are wary of taking on new staff and that many have been forced to let staff go over the past few years. There is a suggestion there they will take them back or re-employ them but on the next page she states the scheme is only available in relation to full-time jobs that are wholly new and additional. This suggests very clearly that they cannot re-hire in the same area and in the same job and they certainly cannot re-hire the same people. I ask the Minister of State to provide an explanation.
This is a very valuable motion and I find I can agree with both sides. It seems the Government is saying the PRSI incentive scheme is a very good thing and Fine Gael is agreeing and saying it was actually its idea and that the Government has stolen its clothes. In that case, I wholeheartedly support this because it is shocking to think that 450,000 people are unemployed. This is a vast figure and it is a reproach to all of us and it is a particular reproach to people who have not chosen to speak in this debate, which I find astonishing.
I remember the bad times. I remember the last recession and we are still 800,000 jobs ahead of where we were then, partly because the population has increased. What will happen small businesses and people who are self-employed? They do not seem to be covered in this scheme. I refer to very small businesses with one person. Many of these have crashed all over the country. These people have invested in a business and have worked extremely hard.
I note there are some good indicators. I am delighted to hear that, technically, the recession is over. We should be trumpeting this. However, there is a caveat and that caveat is this refers to gross domestic product and not gross national product, or whatever it is. The difference is that in one, the multinational companies are included and they frequently repatriate a great amount of their profits. We have to be careful that we are compensating in our calculations for this leakage.
We should also be aware that there are some other good news stories in which this House has played a significant role. We had a debate on bio-fuels in which Senator Coffey took a very important part and so did Senator Phelan, Senator O'Reilly and Senator Cummins. As a result of that debate, there has been the development of a very significant industry in the Waterford region, which I know is very close to the Senator Coffey's heart. I learned yesterday that this company, which without the assistance of Seanad Éireann would possibly have had to go out of business, has been awarded a major award in recognition of its work in the area of green industry. Just last week I drew the attention of the House to the fact that a young man was outside the gate getting publicity for a company in County Clare where he has produced a biodegradable plastic bottle. This is potentially of huge significance because plastic bottles are used all over the world and virtually no one else, to my knowledge, has cracked the nut of making them biodegradable. We should be proud of this achievement. There is lots of energy, lots of initiative and lots of talented, young, educated people and we need as much support as possible. I am not normally a fence-sitter. It will be some wrench of my conscience to decide on which point in this debate I will come down but having been graciously granted time by Senator Coffey, I feel I shall have to vote with Fine Gael on this motion——
The Senator is selling his soul. He has been bought.
I did my damned best to get Senator Mooney back into the House and look where he is now, sitting on the Front Bench of the Government side. I cannot claim sole credit for it but I was with him, spiritually, and he knows that.
I will be eternally grateful.
I do not think that is necessary because I think the Senator is an ornament to this House. I always thought that, even though we disagree. I certainly agree with the thrust of both the motion and the amendment, that anything we can do in terms of jobs incentives, removing certain tax schemes, incentivising people by the removal of certain PRSI requirements, anything that will get the engine of the economy going in this country again, is to be greatly welcomed.
The employer job PRSI incentive scheme was announced in the 2010 budget. The scheme is a job creation support scheme. The objective of the programme is to counter the drift of people into long-term unemployment and welfare dependency by exempting employers from liability to pay their share of PRSI contributions – 8.5% or 10.75% of gross pay. The scheme will run for the calendar year 2010. However, any qualifying employment created in 2010 will be eligible for the scheme, which will be structured so the employment created prior to the launch can participate for 12 months from the time of launch and employment created later in the year will participate for 12 months to the corresponding date in 2011. For example, in the case of a qualifying employment created prior to the launch of the scheme, standard employer and employee PRSI will be paid but following approval for the scheme the employer will benefit from a PRSI exemption for 12 months from the date of approval. Rebates of PRSI will not be a feature of the scheme. Some 500 employers have signed on since the scheme was proposed in budget 2010 and this has given us 3,000 jobs. This speaks for the success of the scheme. I welcome sustainable funds, employment subsidy funds and the other initiatives of the Government to create up to 5,000 jobs up to July.
We all know that it is not the public sector or the Government that will bring the economy back from where it is today. The self-employed and those who give employment through the years will do so. Looking back on the 1987 recession, there were 1.1 million people employed in the country. Today, some 1.78 million people are employed. That is a major amount of work done by the Government over the past number of years and particularly the Governments over the past 20 years. They have worked to create 700,000 new jobs on the island of Ireland. A great deal has been achieved and we have gone through a difficult time. I welcome the €6 billion committed in the last budget from the two major banks over the next two years. This will be a great help to people who can give employment and who are employers with a good track record. I call on the Government to ensure the watchdog monitoring the €6 billion for new jobs to be created reports to the Government on a bimonthly basis. This House intends to be the watchdog of that committee and intends the Minister to be answerable and present in the House to update us on the situation, the moneys made available and the employment generated from the investment of the €6 billion. Some 1,200 new jobs were announced by the IDA this year, 20,000 jobs promised to be created in the next 12 months and 35,000 jobs in the following 12 months.
Fine Gael has 100,000 jobs.
That will be created under the Fianna Fáil Government and — health warning — may not happen if Fianna Fáil is not in government.
What about our 100,000 jobs?
The Leas-Chathaoirleach knows how he must behave in this House.
I am trying to help Senator Cassidy.
I acknowledge the great working relationship we have had and the great example the Leas-Chathaoirleach has given us over the years.
Enterprise Ireland has been an outstanding success and projects 25,000 jobs from next year. We must work on jobs strategy. We must work together, with Opposition and Government, because no one has the definitive share of expert knowledge on keeping the country going and getting back to work. I welcome the proposals from the Opposition and am working with the party leaders to ensure we bring this to the attention of all Ministers in all portfolios so the Government can have the benefit of all of this, not just colleagues on either side of the House.
The family of Deputy Áine Brady has a track record in public life par excellence that is second to none. I knew her late father when he was Minister of State and I worked closely with her two brothers as Ministers of State and Chief Whip. I wish the Minister of State well in her effort to assist the House by updating us on what is happening in the Department of Enterprise, Trade and Innovation.
The employers job PRSI incentive scheme is only one of the initiatives to help people over the current dilemma. The banks are giving employers, large and small, very little help. There is an onus on the banks because the Government did not create this problem. Across the world, the banks created the problem of the downturn.
That is not what Senator Brady said.
Right across the world——-
What about red tape?
I am entitled to my opinion and I can give the House the benefit of my opinion. Senator Quinn gave tens of thousands of people jobs and in some small way I assisted by doing likewise through my family business. While recognising those who made a contribution in other fields, the return of our economy will occur in the credit line. The credit line must be freed up. If it is not available, how can we operate without the tools of the trade? I refer to getting the credit line flowing. We can have no commerce if there is a continuous credit crunch. The €6 billion allocated by the Government in the budget is of crucial importance and should be made available as soon as possible to sustainable projects with a job creation value.
I welcome the employer job PRSI incentive scheme and fully support Senator Brady in introducing this motion for our consideration in Private Members' time.
I propose to share time with Senator Mullen.
Is that agreed? Agreed.
I remind Senator Cassidy that one of the reasons we are in trouble is the lack of initiatives from the Government. Fine Gael pointed out the PRSI holiday to the Government in 2008. Fine Gael proposed it in the budget of 2008 and that is over two years ago. It is only now the Government sees the benefit.
I welcome the Minister of State and wish her well. Senator Brady referred to local authorities and how they must get their act together. Local authorities are responsible for water and sewerage charges and rates but are starved of cash. There is little they can do about it. On several occasions I called for a debate on the funding of local authorities. This debate must take place. How will local authorities be funded? There is little scope for change so local authorities can get their act together. Benchmarking has taken its toll and there is a high cost base for manufacturing in this country. That is one of our problems.
I have referred to our tourism industry on numerous occasions. Only 8 million tourists came to this country, a reduction of 10% over the past number of years. This happens at a time when we never had a better product. We have never had better access through regional airports and Dublin Airport. We never had more hotels in this country, with hotels in every village. We were never better fixed for roads and a rail network. The tourist board has fallen down over the past number of years.
Thousands of young people from this country have gone to Australia in the past number of years. In order to get a visa for Australia, all a young person has to do is go to the travel agent and get the visa. Thousands of Chinese people want to come to this country to work, for tourism or for educational purposes. However, getting a visa to come from China to Ireland can take up to nine or ten months, which should be contrasted with how we operate when sending people to Australia. An unbelievable number of measures could be taken to attract people to this country. I suggest the Minister of State should examine the obstacles confronting both ordinary and educational tourism, as Ireland has a great product. It is evident from the Minister of State's contribution that one major obstacle in this regard is the cost to an employer who has to make a contribution of €3,000 to employ someone on the average industrial wage. As this constitutes a major disincentive to employing people, I welcome the Government's initiative in introducing what has been described as a PRSI holiday. At the same time, however, the figure of €3,000 that applies to all workers is a huge cost.
On foot of Senator Norris's comments that he could opt for either the motion or the amendment, I ask the Minister of State to consider seriously taking on board Fine Gael's amendment. As Senator Cassidy remarked, we all must work together because otherwise we will not get out of the mess we are in. As Senators Phelan and Coffey noted, Fine Gael came up with the idea of having a PRSI holiday two years ago but the Government has only now introduced it. Consequently, I ask that the amendment proposed by this side of the House be taken on board.
Cuirim fáilte roimh an Aire Stáit. I welcome the introduction of the PRSI incentive scheme that exempts employers from their liability to pay their share of PRSI for certain employees for 12 months. It is open to employers who create new and additional jobs in 2010. Frankly, this is a no-brainer and my only criticism of the scheme, to echo Senator Burke's remarks, is that I cannot understand the reason the scheme was not announced two years ago when the economic crisis first hit.
I agree with those commentators who believe we have turned or are in the process of turning the economic corner. However, I must disagree fundamentally with anyone who might suggest there will be a rapid return to growth. It may be the case that there will be as many as 70,000 additional job losses this year. It has been reported today that 5,800 people have been added to the live register in June. The seasonally adjusted figure now stands at 452,882, a shocking figure, while the unemployment rate now stands at 13.4%. While hearing such depressing news, it is worth noting that the rate of increase in unemployment, that is, the level of increase, is lower than last year. However, the overall figure is still moving in the wrong direction. Moreover, various indicators show that although economic output is higher, this also must be put in context and one must be highly cautious
This year we have seen 652 firms go to the wall, of which 194 were construction firms, 83 were in the hospitality sector and 78 in the retail sector. Unfortunately, the only real growth industry is the insolvency industry. In this context, I urge Members to examine Insolvencyjournal.ie because it is both a source of useful statistics and a horrifying account of the broken dreams of far too many Irish entrepreneurs who have been annihilated in the economic downturn. Moreover, we are far from being out of this trend because international experience demonstrates that insolvencies and the associated job losses tend to take place at the end of a recession, rather than at the beginning.
As for the threat to jobs, there is massive over-capacity in a number of key industries. Hotels have been mentioned. There are simply too many hotels and golf courses for the size of the country. Even if everyone was to go on a permanent holiday, I greatly doubt whether we could fill all the hotel beds now available. Every developer thought it necessary to build a hotel solely for tax purposes and it now appears as though NAMA will be the biggest hotel owner in the country. This has massive employment implications. In addition, banks are not lending. Even if one has a business which is a going concern, banks are not lending but are hoarding cash to rebuild their balance sheets. Cash flow is the lifeblood of business, but credit is not flowing and Irish businesses are struggling as a result. If the Government is serious about getting people back to work, it must address this issue as a matter of urgency.
All Members should be wary of excessive enthusiasm in the cutting of Exchequer spending. Tough decisions are not always the best ones. Cutting Exchequer expenditure entails taking even more cash out of the economy and may not be the best course of action. Members will recall that it was Churchill who stated it was not the end, not even the beginning of the end but the end of the beginning. For the foreseeable future the Government has nothing to offer the people but blood, toil, tears and sweat, as we struggle to pay Anglo Irish Bank's enormous debts and balance the budget.
I ask Members to urge the Government to do something to ameliorate the plight of the self-employed who have lost their businesses and livelihoods. In the good times their taxes paid for our services and their energy created employment. Consequently, we should not abandon them now. Mar achoimre beag ar an méid atá ráite agam, is léir go bhfuil dúshlán romhainn. Níl deireadh na troda in ndán dúinn. Chun an fhírinne a rá, nílimid ach ag deireadh tús na troda. Ba chóir dúinn díriú isteach go háirithe orthu siúd a bhí féinfhostaithe, ach a bhfuil teipthe anois ar a gcuid gnóthaí agus atá ag fulaingt dá bharr. Nuair a bhí rudaí ag dul ar aghaidh go maith, d'íoc cáin na ndaoine féinfhostaithe as na seirbhísí a bhí á sholáthar againn. Leis an fuinnimh a bhí acu, chruthaigh said postanna nua. Agus muid in am an ghátar, ní chóir dúinn iad a fhágáil ar lár, nó dearmad a dhéanamh orthu.
Cuirim fáilte roimh an Aire Stáit. San óráid a thug sí, dúirt sí gur bua í an scéim seo do gach éinne. Más bua é an polasaí seo do gach éinne — an té atá ag cur fostaíochta ar fáil agus an té atá amuigh as obair agus ag lorg fostaíochta — agus don Stát, cén fáth fur ghlac an Rialtas an oiread seo ama é a thabhairt isteach? Chualamar inniu go bhfuil na mílte daoine sa bhreis ar liosta dífhostaíochta na tíre seo. Tá níos mó ná 450,000 duine dífhostaithe anois. Tá scéim beag amháin á thabhairt chun tosaigh ag an Rialtas tar éis blianta de chúlú eacnamaíochta. Tá na mílte daoine fágtha gan post agus na mílte daoine óga, go háirithe, ag fágáil na tíre.
The Minister of State has noted that this is a win-win for everyone. There are serious questions to be asked about allowing employers to take a PRSI holiday at a time when the Exchequer and the Department of Finance must bolster the social insurance fund because of the demise of the latter. However, if the Minister of State really believes this is a scheme in which everyone wins, that is, employers, employees and the State, why has it taken so long for the Government which is meant to be focused on job creation to come up with this simple and basic measure to save, create and retain jobs? Why has it taken until now when we have reached the point where 450,000 people are unemployed to come up with such a simple measure? The answer to this question is that the Government does not have a job creation strategy. This is a feeble attempt by it, on a night when the CSO figures have been published, to portray the image that it is doing something about the problem. Regardless of whether one agrees with the PRSI exemption scheme, its impact will be tiny in the face of the current massive crisis, the effects of which are felt in every street, village and townland. I come from County Donegal, in which one third of the workforce is unemployed. I challenge the Minister of State to inform me of any other county in which one third of the workforce is unemployed or on the live register. It is an absolute disgrace and the legacy of the Government.
Moreover, the Government is wasting two hours in the Seanad debating a job retention scheme that only deals with a tiny part of a massive puzzle that must be put together to get the aforementioned 450,000 people back to work. It must get to come back the people who have left the country because they no longer have hope the Government and the country's leaders are providing solutions to enable them to use the academic or technical skills they have acquired through third level courses or the institutes of technology to build the economy. They have given up and left the country. What is happening in the House tonight is a farce. It is a charade aimed at trying to fool the public and showing that Fianna Fáil and the Government have a job creation strategy.
I do not support the Fine Gael amendment. Fine Gael's NewERA policy is flawed. The only people who would be put to work in the next year under that policy are the NewERA board of directors. However, that is not my major concern, which is that Fine Gael would sell off State assets such as Bord Gáis. I come from a county in which there is no gas supply, as is also the case in many rural areas in the west. I do not wish to be in the position we are in today with Eircom where the Taoiseach and Ministers have to go down on one knee to beg it to provide basic services such as broadband connectivity for rural towns and villages. We do not wish to see that happen in the supply of gas. I hope areas such as County Donegal will be connected to the gas network in the future. That is my major concern with the NewERA policy.
That said, the amendment has many aspects. It mentions the reality of the Government's handling of the economy and its injection of our money time and again into zombie banks instead of getting people back to work. I have said many times in the Chamber that everyone who becomes involved in politics does so to better society and improve the country to the best of his or her ability. However, sometimes people are out of touch. I saw this clearly on Tuesday when I attended the protest organised against the cuts in funding for services for people with intellectual disabilities. Respite care services are being reduced. Given the scarce resources invested by the Government in the past and now being withdrawn, it was heartbreaking to see people in wheelchairs outside Leinster House, while at the same time being aware that in the coming days or weeks I would be debating legislation in the House to put billions of euro into zombie banks and collapsed institutions at their expense.
There is no way I can support the Government's proposal because it does not go far enough. If one really wants to deal with the crisis, one needs to look at the various options provided. As a party, we have provided detailed, costed proposals to get the country back to work. One of the proposals involves a youth jobs fund to create 20,000 jobs which was costed by the Department. Another proposal involves producing an individual plan covering the long-term prospects of every person under 25 years of age on the live register. More than 86,000 in that age category are unemployed. Why are we not looking at their long-term prospects? Shifting them from here to there on courses is not good enough. We have argued that 2,000 places should be provided under a "one more language scheme" to give young unemployed people a chance to learn a foreign language. That would help to support the export-driven economy which we must create. We have argued that 10,000 additional community employment scheme places should be provided, with 1,000 places on conversion courses, to help third level graduates who have acquired skills that are no longer in demand to acquire skills more in demand. Another proposal involves a national development scheme to employ 2,000 people directly on public works projects. If the Minister of State had come to the House with such a series of proposals, we would have considered them.
As a party, we have costed our proposals, showing where one could receive the finance and generate the income for the stimulus injection for which we are calling to put people back to work and give hope to those calling to my office and those of other Members in both Houses looking for help in seeking passports and organising their farewell parties as they head off to Australia, America or other far-flung destinations, some perhaps never to return. It would only be in that context that I would support a Government initiative. Whether one agrees with the proposed scheme, the reality is that it does not go far enough. This debate is nothing more than a charade.
I welcome the Minister of State, Deputy Áine Brady. Unlike a previous speaker who criticised the fact that she was present, I am pleased that the two Ministers in the Department of Enterprise, Trade and Innovation might well be travelling around the world hustling for jobs. That would be a better use of their time. As has been pointed out, this is an issue on which we spoke relatively recently.
On a day when the CSO statistics were published it is important to reflect on the situation. Even if the recession is technically considered over, that is not the case for the many who remain unemployed. It is not a happy day in any home in which there is someone unemployed. That is the major concern of the Government, as it should be. It has created the environment that will allow jobs to be created.
I wish to resume where Senator Quinn finished. Other speakers also referred to him. He is a man who has created many jobs and knows how to conduct business. I do not wish to single him out, as the same is true of many others in the House. Senator Brady also said the Government needed to create an environment in which jobs could be created. However, we cannot have a situation where everyone is dependent on the Government to create jobs. That is something we need to make clear. I appreciate the initiatives proposed by the Government because they are part of the enabling environment being created. We need to ensure we listen at all times to those involved in the small and medium enterprise sector because it is the backbone of the economy to learn how we can assist them to create more jobs. That is where we will build sustainability.
We all need to do our bit. For example, last year it was apparent that many were travelling to the North to do their shopping. When I was at school, my school supported the guaranteed Irish campaign. We should aim to keep jobs in local towns. If we support local businesses, they, in turn, will support us. That is always the way it was and communities thrived as a result. We must get back to that principle, whether it is in the local shop in a city or rural area. We must remember that we must be consumers of services. There is growth in the economy, which means we can loosen the purse strings and spend a little.
An interesting point was made on the news this evening, that while we should not forget the unemployed, we should also not forget the under-employed, those who are highly qualified but not doing the work they are qualified to do. The Government will not rest until the unemployment figures come down again. We got it right previously. Through tax incentives and other measures we have managed to create strong and viable industries. We must return to that goal by means of the Government creating the enabling environment and cutting down on red tape in order that jobs can be created. I, therefore, welcome the scheme, as one of the initiatives needed to achieve that goal.
I thank Members on all sides of the House for participating in an interesting and incisive debate. I am the first to acknowledge that just because public representatives, Deputies or Senators, are in opposition they are not devoid of ideas.
Democracy works through the pooling of ideas. If one has an effective Opposition, it should be in a position not only to criticise and call the Government to account but also to bring forward viable and positive proposals to help the generality of the population. I would be the first to acknowledge the comments made on the Opposition side.
Once again, I am somewhat disappointed with the Sinn Féin representative, Senator Doherty. I appreciate that Sinn Féin is the party of protest but to make the speech the Senator made in the House without making even one solid proposal to resolve the issues we have been debating gives an insight into the way the party thinks in terms of its contribution to the democratic institutions of the State. However, Sinn Féin is a party of protest and I suppose one must forgive it.
A point I made was repeated by speakers on all sides of the House, namely, that what this country now needs, apart from specific job creation proposals, is confidence. We must have confidence to proceed towards generating more work to get those on the live register back into employment. Already consumer confidence has kicked in. I referred to the scrappage scheme as a possible catalyst for change. Having spoken to people in my part of the country and Senators from all sides of the House, I note there has certainly been a positive upturn in business and consumer confidence since the earlier part of the year. The Minister of State has said we are now officially out of recession. This is only a statistical conclusion and we must realise there are still people who are hurting.
I want to nail again the suggestion that the Government does not care. If it means re-emphasising this to the point where it sounds boring, I will do so because it does care about unemployment. One must accept that we are all human and live in our own environments, towns and villages. Not only are people in our own families facing the trauma of unemployment; so, too, are friends and neighbours. It is churlish to suggest that, collectively, the Government has somehow taken its eye off the ball and is looking in directions other than the main focus. The theme running through this debate has been how we can reduce the number of unemployed and get more people back to work. That is why I, with others on the Government side, have outlined several proposals and actions to reduce the number.
I acknowledge that the number on the live register has again shown a monthly increase. Behind the statistics, there are several thousand people who were working last month but who are not working this month. One must reach out to them in the best way possible and understand how difficult it must be for them and their families. However, the number on the live register rises every June, without exception, owing to seasonal factors. I have no doubt this trend will be reversed in the autumn.
A significant number of those who have been on the live register since the beginning of May are people who have been supported in a return to education and training through the back-to-education and training allowance. Recipients of the allowance qualify for the jobseeker's payment during the summer break. We cannot lose sight of the fact that, despite the global downturn which is not confined to this country, we have still managed to retain 1.8 million in the workforce. This point was repeated in the debate. In 1997 there were a little under 1 million in the workforce. The number reached a high of 2.1 million or 2.2 million during the height of the Celtic tiger.
As a result of the downturn and recession in recent years, primarily but not exclusively in the construction sector, and the breakdown in consumer confidence, whereby the savings ratio reached its highest value ever, people just did not want to spend money. They are now beginning to loosen the purse strings. If this confidence continues to ripple through the economy and is coupled with the Government's initiatives, particularly the PRSI initiative, I have no doubt that there will be a significant drop in the number unemployed. I will not be a crystal ball gazer and predict a particular figure, but I have every confidence that the Government initiatives are working their way through the economy and creating and maintaining jobs. I have every confidence also that by the end of the year there will be a significant reduction in the number unemployed.
I thank the Minister of State, Deputy Áine Brady, for being present for the debate and for her very positive and upbeat contribution. I commend the motion to the House.
Amendment put.
The Seanad divided: Tá, 16; Níl, 30.
Tá
- Bradford, Paul.
- Burke, Paddy.
- Buttimer, Jerry.
- Coffey, Paudie.
- Coghlan, Paul.
- Cummins, Maurice.
- Donohoe, Paschal.
- Fitzgerald, Frances.
- Healy Eames, Fidelma.
- McFadden, Nicky.
- Mullen, Rónán.
- Norris, David.
- O’Reilly, Joe.
- O’Toole, Joe.
- Phelan, John Paul.
- Regan, Eugene.
Níl
- Boyle, Dan.
- Brady, Martin.
- Butler, Larry.
- Callely, Ivor.
- Carroll, James.
- Carty, John.
- Cassidy, Donie.
- Corrigan, Maria.
- Daly, Mark.
- Dearey, Mark.
- Doherty, Pearse.
- Ellis, John.
- Feeney, Geraldine.
- Glynn, Camillus.
- Hanafin, John.
- Keaveney, Cecilia.
- Leyden, Terry.
- MacSharry, Marc.
- Mooney, Paschal.
- Ó Brolcháin, Niall.
- Ó Domhnaill, Brian.
- Ó Murchú, Labhrás.
- O’Brien, Francis.
- O’Donovan, Denis.
- O’Malley, Fiona.
- O’Sullivan, Ned.
- Ormonde, Ann.
- Walsh, Jim.
- White, Mary M.
- Wilson, Diarmuid.
Tellers: Tá, Senators Maurice Cummins and John Paul Phelan; Níl, Senators Niall Ó Brolcháin and Diarmuid Wilson.
Amendment declared lost.
Question, "That the motion be agreed to," put and declared carried.