Dáil Éireann Debate, Wednesday - 25 January 2012
1Deputy Willie O’Dea asked the Minister for Jobs; Enterprise and Innovation his views on his record on job creation so far; if he has a plan for dealing with job losses; and if he will make a statement on the matter. [4337/12]
Amharc ar fhreagraThe role of Government is not to create jobs directly but to create the appropriate business environment by making the right policy decisions to help enterprise to grow, to create new jobs and to maintain existing jobs. In the wake of many years of unsustainable policies that produced an oversized construction sector, a property bubble, a collapse in the public finances, and years of declining share in export markets, the challenge we face now is to totally transform our economy. This will be a difficult transition, particularly in the face of declining international growth. There is a great deal of restructuring and reform required to enhance the capability of enterprises to create employment.
However, since I came into office, I have been working with my Government colleagues to achieve this objective. We launched a jobs initiative last May, within two months of the Government coming into office, to stimulate domestic demand and restore confidence in the economy internationally.
Key areas which I have been working on since then to support job creation by enterprise include improving access to finance for businesses, reforming the statutory wage setting mechanisms, reducing other costs and administrative burdens for enterprise, improving our export performance and supporting innovation. I have also been co-ordinating the preparation of the first annual action plan for jobs on behalf of the Government, which will outline the measures to be taken across a range of Departments to support job creation in 2012.
Significant progress is being made in spite of the continued difficult economic conditions which pertain globally. Last year, in spite of a continued suppressed global market, IDA Ireland supported the creation of more than 13,000 new jobs in client companies, an increase of 20% on the previous year's figures. The agency won a record 148 new investments in 2011, an increase of 17% on the previous year. The IDA has also made a further four announcements to date in 2012, which will create an additional 332 jobs in client companies and support a further 250 indirect construction jobs.
Enterprise Ireland reported that employment in client companies stabilised in 2011, with 141,228 full-time employees, similar to 2010. The agency has also been able to announce the creation of 337 new jobs in client companies since the start of the year.
Additional information not given on the floor of the House.
Enterprise Ireland also estimates that client companies' export sales last year will exceed the pre-recession record levels of 2008. The CSO's latest trade figures show that, up to November 2011, Irish exports overall increased by 4% compared with the same period in 2010, to in excess of €69 billion.
I thank the Minister for his reply. I heard the Minister talk about the past but we are in the present now and he is a member of a Government which has been given an overwhelming majority by the people as a result of putting forward a policy, the centrepiece of which was to create jobs. The average rate of unemployment in the past 12 months during which the Government has been in office is 14.2%, as opposed to 13.7% the year before and 11.8% the year before that. There are now more than 443,000 people officially unemployed, with more than half of them being unemployed for more than a year. That is approximately the same figure as at the start of the year. According to the best estimate, at least 77,000 people have emigrated during the past 12 months. I presume most of them were not just going off to see the rest of the world but left to seek work. That amounts to 200 people emigrating per day and there are 443,000 on the live register. In view of those figures, does the Minister consider his jobs initiative introduced last May was a success?
The Minister is about to announce a new jobs initiative. It is a case of another year, another jobs initiative. What new ideas does he propose to put forward in that next initiative that will succeed where the last one obviously failed?
The Deputy and his party continually want to pretend that the past never happened but the reality is that the economic collapse-----
This is the present and tomorrow is the future.
-----that we have faced is the product of a number of years of bad policy, and during those years we lost 350,000 jobs under the previous Government's remit.
How many jobs has this Government created?
The challenge for this Government is to pick up a very difficult environment and start to rebuild the economy.
When will the Minister start to do that?
The truth of it is that it will take painstaking work. We have had to restructure the banks to put them in a position where they can once again lend to small businesses.
As I said in my reply, we have had successes in the past 12 months, despite the Deputy's unwillingness to recognise them. For example, in the food sector we have had the best year ever with 14% growth in food exports. That is a sector which clearly has huge connections back into the Irish economy. Its impact on farming and on food processing is enormous. Therefore, there are successes.
There are, however, continuing difficulties in some sectors about which we know. Our banking sector, unfortunately, got trapped into a lot of property dealing and that sort of banking no longer exists. As I said in my reply, there is painstaking work to be done.
As to whether the initiative made an impact, it has. Cutting employer's PRSI and cutting the low rate of VAT has secured an increase of 6,000 in the number of people in the tourism sector. Therefore, the initiative is working.
Not one net job has been created during the past 12 months that the Government has been in office. The reality is that unemployment is literally at the same point it was at the start of the year.
I have two simple questions for the Minister. First, can he give those who are unemployed and who are emigrating any succour by indicating whether he thinks if we are sitting here in the same position this time next year, that unemployment will have fallen? Second, in regard to the financial services sector, of which he has plenty advance notice that there will be a massive fall-out in terms of employment, has he done any advance planning to address that because it is imminent?
A plan was launched last year by the Taoiseach, as the Deputy may know, in respect of the potential for growth in the financial services sector. It is expected that the financial services sector has the capacity to create 10,000 additional jobs in the foreseeable future. Therefore, there is planning.
Obviously, there are other parts of banking that we know about in light of the recent announcement by some of the banks where there will be a decline and there is a need to support a transfer to the new opportunities. Some of that will involve reskilling. Part of the jobs initiative, of which the Deputy is so critical, included Springboard, a specific initiative aimed at people who have lost their jobs in one sector to reskill and transfer to others. There is a good deal of rebuilding to be done to transform this economy successfully into a strong export-led recovery, but that work is being done and we will see the fruits of that.
2Deputy Peadar Tóibín asked the Minister for Jobs; Enterprise and Innovation if he will establish an emergency enterprise task force within one of the enterprise development agencies in order that such a task force should be able to intervene in businesses that are in serious financial difficulty before they are forced to close and shed workers. [4335/12]
Amharc ar fhreagraJob creation is at the top of the Government's agenda. Since we came into office, this Government has been working to create the improved economic conditions which will support the maintenance of existing jobs and the creation of new ones. Our objective is to put the country back on the road to economic recovery and full employment.
It is an unfortunate reality that companies, for a wide range of reasons, get into difficulty. Early intervention is critical and that intervention must, where possible, occur before the situation is irretrievable. For this reason the enterprise agencies operate an early warning system which triggers the full capacity of the agency concerned to intervene with the company and deal with whatever situation is emerging. I am satisfied this system works well but I will continue to keep it under review to best serve the companies concerned.
Clearly, prevention is better than cure and this is why the enterprise agencies work closely with their client companies in order that strategic interventions can be taken that avoid the company getting into difficulty in the first instance. These interventions help clients make the strategic and operational changes that will retain their competitive position in a rapidly changing global environment. Depending on the company's need, changes can include skills uplift, technology uplift, process improvements such as lean manufacturing, energy efficiency and better logistical management, supports for in-house research and innovation activity, management development such as the leadership for growth programme, assisting a company entering new or emerging geographical markets, support for clients' strategic finance capabilities, access to mentors and so on.
The enterprise agencies work closely with other Departments and partner development agencies to respond to specific incidences where larger companies suffer a significant job losses or where a significant number of jobs are at risk. The objective in these circumstances is to identify all opportunities to maximise the number of jobs maintained, for example, through support for spin-out start-ups, management buy-outs or commercial partnering. Task forces comprising relevant personnel from the Departments and agencies and other key stakeholders are used in these cases.
Additional information not given on the floor of the House
Many small businesses are facing particularly difficult trading conditions. A number of initiatives have been taken to help them. The low rate of PRSI has been halved. The county enterprise boards have also recently introduced a financial health check, reporting and benchmarking tool, in association with Enterprise Ireland lean manufacturing, to help small business assess their difficulties.
The Government has intervened to help businesses who are struggling to get credit. The Government has imposed lending targets on the two domestic pillar banks for 2012 and 2013. Businesses having difficulty with credit refusals can use the services of the Credit Review Office which will carry out an independent and impartial review of a bank's decision to refuse or reduce credit.
The economy is undergoing a difficult transformation. Some sectors grew to a scale that was unsustainable. Part of the challenge for Government is to help people move into new sectors of opportunity. In the context of the action plan for jobs, we are looking at other ways in which business can be assisted in overcoming difficulties.
The Government's priority is not job creation. There were €20 million worth of new job creation ideas in the last budget but 150 times that amount is going into bailing out the banks. The Government's priority is the inverse of what the Minister says. Its priority is the opposite of job creation. The Government is prioritising the bailing out of banks.
There is an avalanche of businesses within the system that are at the edge of viability. Many of these will be forced to close over the next number of months and years. The corporate and sovereignty figures show that 1,683 businesses closed last year, up 16% from 2009, with construction, retail and hospitality bearing the brunt of this. In my home town, Spicers Bakery was on the go for 180 years. It has had to let go 27 employees, with the remaining 20 employees hanging by a thread. When I called the Minister's office and asked that he engage with Spicers Bakery, I was told by an official that the bakery was not a client company of Enterprise Ireland or the IDA and that there was no mechanism to engage with the business, even though it is a manufacturing business.
Given that so many jobs are hanging by a thread and that enterprise agencies engage with small new start-ups, why is there not an agency within the Department that would engage with all types of businesses before they come to the final stage of not being viable and being forced to lay off staff?
The reason for that is that we have agencies, such as Enterprise Ireland which specialises in the support of indigenous companies and IDA which specialises in the support of foreign owned companies who come to locate here. They have the competitive advantage within the State system of understanding the needs of those businesses. To suggest, as the Deputy is doing, that we create a new agency to pick up casualties within the Enterprise Ireland or IDA brief does not make sense. We need to ensure that Enterprise Ireland, IDA and, where appropriate, county enterprise boards have the advance knowledge - the early warning system I spoke of - and supporting instruments. A business must come forward with a credible business plan before it can draw down support from these agencies in terms of rebuilding its economy.
The Deputy suggests that the budget is anti-jobs. The whole thrust of what the Minister for Finance has done is pro-jobs. He cut the VAT and PRSI rates, improved the research and development tax credit, gave small start-ups three years free of taxation and reformed the seed capital scheme so that people who want to start up a business can draw down up to €600,000 of the tax they paid in previous years to establish a new business. It is all about trying to drive new enterprises to grow and develop.
We are in a difficult financial area, and everyone understands that, but the measures being taken are trying, against that background, to maximise the chances for growth.
The Minister reminds me of an estate agent who tries to sell a famine cottage as a rustic residence with character. The Government's policies are hollow. They are merely tinkering around the edges. The cost of each additional person on social welfare is €20,000. I have given the Minister an example of a business with which the Department and the enterprise agencies are not engaging. Many business people who are in the same situation will read the text of today's debate and ask where the Department was when their businesses were teetering on the edge. If the agencies currently working in this area are carrying out these roles why have their remits not been broadened to include all businesses that are teetering on the edge?
The economy is undergoing a difficult transformation. Some sectors grew to a scale that is not sustainable. As the Deputy knows, the construction sector grew to unsustainable levels. The task of Government is to help companies that have a viable future to create that future, but we must also look at companies that are not able to survive in their present form but can be helped to establish new spin-off business. We have seen many such companies being successful. Recently we had the very difficult experience in Waterford where a company, for all sorts of reasons that we know about, closed down. We have been working to try to redevelop that and we now have an indigenous enterprise, driven by Waterford-based people setting up a leading edge company and using many of the existing talents. That company has a strong future.
In some cases a transition has to happen. That is what we are seeking to support.
