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Employment Action Plan - April 2002 - Ireland
Tables and charts and appendices one, four and five of the origninal text are excluded
Source: Department of Enterprise, Trade and Employment
Foreword
Preface
Summary and Key Points
II: Views of Social Partners ICTU IBEC Community and Voluntary Pillar
III: Ireland’s Employment Policy Mix
by Mary Harney TD Tanaiste and Minister for Enterprise Trade and Employment
The period of office of the current Government coincides with that of the EU Employment Strategy. Europe, having experienced a period of jobless growth in the early and mid 1990s and with unemployment running over 10% needed new strategies to address these challenges. At the end of 1997 as we prepared the first Employment Action Plan Ireland had an unemployment rate of 10% and long-term unemployment was at 5%.
The transformation in the Irish labour market in the interim has been remarkable and as a result we are facing a new set of short and medium term challenges.
In summary since mid 1997
There are several factors – in both supply and demand terms – which contributed to this success.
To tackle both the tightening labour supply situation and address social inclusion issues we have provided incentives and supports for different groups wishing to join the labour market, including
These measures have encouraged many unemployed or disadvantaged people to take up employment opportunities, encouraged women outside the workforce to avail of jobs and facilitated workers from outside the EEA to fill available vacancies.
In devising and delivering on these strategies we have engaged in a comprehensive set of agreements with the Social Partners. We have also targeted higher investment in the Border Midlands and Western Region to ensure that the skills and jobs are shared across the country.
The past year has seen a downturn in global economic fortunes leading to company closures, redundancies and higher unemployment. Government agencies are engaging directly with firms and their employees to find alternative employment, to avoid skills being lost to the economy and to ensure that any period of unemployment is minimised. There is a general view that the rise in unemployment will be short-term and a growing confidence that strong economic growth will return (and that full employment will again be a sustainable objective). The Government’s objectives over the medium term will be to create more and higher-skilled jobs, to achieve full employment, to eliminate long-term unemployment and to secure balanced jobs and skills throughout the regions.
This medium term outlook is shared throughout Europe. The Barcelona summit reiterated the objective of the EU becoming the leading knowledge based economy in the world, creating more and better jobs, leading to full employment and greater social cohesion. This vision is a mirror image of Ireland’s development strategy as put forward in the National Development Plan, supported by EU Structural Funds, and in the current social partnership agreement, the Programme for Prosperity and Fairness.
The Government shares the view that the best way to tackle social exclusion is a job. In a labour market providing so many opportunities, we are failing people if we confine them to programmes or schemes when there is the possibility that training or other supports can help them to engage in the world of work. Our programmes and policies are designed to give the opportunity of employment to as many as possible of those who wish to work. And yet within that we recognise that there are some people who suffer from such severe disadvantages that keeping or holding a job in the open labour market is not realistic.
The EU will put in place a new strategy from next year, one which will contribute to the EU economic and social vision confirmed at Barcelona. Ireland’s approach over the medium term will be to continue the policy of creating real jobs, providing real incentives to everyone to take up work and ensuring real prospects for anyone who wishes to work. This is the formula which has worked for Ireland and which should be the basis for success at the European level.
We will not rest on our laurels. As to the future, action is needed on a number of fronts. Continuing in 2002 and beyond, our priority actions will include:
This is the fifth Annual Employment Action Plan. The Plan is prepared in response to the European Employment Strategy and annual Employment Guidelines agreed by the Council of Ministers, in accordance with Article 128 of the EU Treaties.
The Employment Guidelines are reviewed each year in the light of the labour market situation in the EU or any other significant policy objectives set by the Union.
Each year's Plan is subjected to peer review by fellow Member States and the European Commission. This process is more commonly referred to as the “open method of coordination.” Following this process, the Council agrees recommendations to each Member State as to where policies might be introduced or adapted.
The European Employment Strategy was originally put in place for a five-year period 1998 – 2002. The Strategy is currently being evaluated at national and EU levels so as to devise a new strategy for the period 2003 – 2010. In that context, this Plan looks at Ireland’s labour market performance over the last five years as well as more recent and planned developments and represents part of Ireland’s input to the evaluation of the Strategy.
The format and content of the Plan is largely in accordance with a template devised by the EU Commission in order to ensure standard presentation among the Member States.
Primary Policy Indicators to monitor labour market Trends are set out in Appendix 1 of the Plan, under the headings of Job Creation, Labour Market, Skills, Incentives to work and Quality.
The Plan was prepared in consultation with the Social Partners. Much of the content is based on material emanating from ongoing negotiations on various topics flowing from the Programme on Prosperity and Fairness. The views of the Social Partners on the Plan are contained in an Appendix.
Section 1 sets out the macroeconomic context and outlook, employment creation policy and social policy development. Section 2 looks in more detail at Ireland’s employment policy mix and considers three aspects at the heart of the EU Employment Strategy, namely employment rates, lifelong learning and “quality in work” issues. Finally Section 3 looks at specific issues based on the individual guidelines agreed under the EU Employment Strategy.
The Labour Market Policy Section would like to thank colleagues in the Department of Enterprise, Trade and Employment and other Government Departments and Agencies, as well as the Social Partners, for their help in preparing this Plan.
Employment Action Plan is produced annually in response to Guidelines agreed by the European Council under the European Employment Strategy to address challenges in the EU labour market.
The Plan is prepared according to a format devised by the European Commission based on the four pillars of the Employment Strategy (Employability, Entrepreneurship, Adaptability and Equality of Opportunities between Women and Men) and the individual Guidelines.
This is the fifth annual plan under the current Employment Strategy (1998 – 2002). This plan therefore reflects data and developments over the past five years. A new strategy is being devised for the period 2003-2010.
2. Employment Action Plan 2001 – Recommendations by the European Council
Following presentation of Ireland’s Employment Action Plan for 2001, the European Council recognised the progress that has been made in terms of growing employment, increasing participation, especially by female workers and in reducing employment. It encouraged Ireland to continue to pursue efforts in relation to three aspects:
Employment grew by 2.9% in 2001, with 49,000 jobs created. This represented a decrease on the rate of job creation in the boom years of 1999 (6.3%) and 2000 (4.7%). The average overall employment rate for 2001 was 65.7%, compared to 65.1% one year earlier and a European average of 63.3% The target under the Employment Strategy is to achieve an EU employment rate of 67% by 2005 and 70 % by 2010.
The female employment rate reached 54.9%, compared to 54.1% in 2000 and an EU average of 54.0%. The EU has set targets of 57% in 2005 and 60 % in 2010.
Unemployment averaged 3.9% during 2001.
Long-term unemployment fell to 1.2 % from 1.4% one year earlier.
The impact of foot and mouth disease early in 2001 and the global economic downturn, particularly in the ICT sectors, and in the wake of the September 11th attacks on the United States, clearly had an impact on job creation, employment and unemployment as 2001 progressed. However it is expected that the downturn will be short lived. The Government expects that employment growth of 24,000 can be expected for 2002, with unemployment rising to 4.7%.
However, the conditions for good economic and employment growth should return over the next 12 to 18 months. Over the medium term, therefore, the following remains the Government’s employment policy
5. 2002 Employment Action Plan
Against that background, and taking account of the recommendations made in relation to last years Plan, the following are the key employment related developments in the 2002 Employment Action Plan:
A Consultative Group including the social partners will report to Government by end 2002 on proposals to address the issues raised following research on the gender wage gap.
1. Economic and Social Development Context
1.1.1 Introduction Employment is often seen as the test of whether economic and social policies are compatible and successful. This Section therefore sets out the macroeconomic situation, the national anti- poverty strategy and the role of the social partnership agreement – the Programme for Prosperity and Fairness – in the context of Ireland’s employment policies and performance.
One of the major factors contributing to the dramatic changes in Ireland’s labour market fortunes – strong employment growth and very low unemployment – has been our ability to create jobs. This Section describes therefore the mix of policies designed to encourage businesses to establish and grow in Ireland.
1.1.2 Outcome of 2001 Following a sustained, strong performance over the last seven years, with GDP growth averaging 9.3% (GNP of 8.3%), the pace of economic expansion slowed markedly during 2001. This is clearly shown in published GDP figures for the first three quarters of the year, and real GDP is estimated to have risen by an order of 6.75% for the year as a whole. Reflecting the large factor outflows generated by the foreign owned sector, GNP is estimated to have grown in real terms by 5.25%. While there was substantial year-on-year growth in the early months, this largely reflected the carry-over of very strong economic activity from 2000.
A range of factors, both domestic and external, contributed to the slow-down in growth. On the domestic front, the restrictions put in place to guard against the risk of foot-and-mouth disease (FMD) adversely affected growth, particularly with regard to the agricultural and tourism sectors. Another sector to be hit hard was the high profile information and communication technologies sector (ICT sector) that suffered from a fall in global demand. At the same time, the international economic environment deteriorated significantly compared with earlier expectations.
The less-favourable economic environment was reflected in a more moderate evolution of household expenditure in 2001. The easing in employment growth as unemployment fell to historically low levels, combined with the measures taken to guard against the risk of foot- and-mouth disease are part of the explanation. An element of precautionary saving may also have emerged. It is estimated that the volume of personal consumption increased by about 6% last year.
Employment growth continued to moderate during 2001, reflecting the less plentiful labour supply available and also an easing in the pace of investment as businesses responded to the more muted demand conditions. Against this background the numbers employed grew by 49,000 in 2001, as compared to 77,000 the previous year. Unemployment had fallen to a record low of 3.7% in the first two quarters of 2001. However the less benign economic conditions led to the rate picking up slightly in the second half of last year, most notably in the ICT sector and unemployment averaged 3.9% for the year as a whole. Inflation, as measured by the Consumer Price Index, has followed a broadly downward trend in 2001 after reaching a recent peak of 7% in November 2000. The peak reflected a number of temporary factors both internal and external that had pushed inflation up in 2001. Weakening oil prices and falling interest rates have been countered by a continued rise in services sector inflation. The CPI averaged 4.9% for the year as a whole, compared to an average of 5.6% in 2000.
1.1.3 Outlook for 2002 Budget day forecasts for 2002 are based on a relatively benign scenario in which the global economy picks up during the second half of the year. Given the sharp slowdown during 2001 little carry-over into 2002 is expected. Real GDP is forecast to grow by 3.9%, with GNP growing by 3.5%. However given the anticipated strengthening of international economic activity during the second half of this year, the prospect is that the Irish economy will gain momentum going forward into 2003.
Employment growth is projected to moderate further (to 24,000 in 2002), and this seems unlikely to absorb the total assumed increase in labour force numbers for next year. Accordingly, unemployment is forecast to rise, albeit modestly, to 4.7% representing an increase of 15,000 in the numbers unemployed. Slower overall demand growth should facilitate a closer alignment of earnings outcomes with the terms of the PPF agreement.
For several reasons the outlook for inflation is for a further moderation in the CPI in 2002. Weaker global demand, the easing of employment growth and the more moderate pace of demand growth should prompt some easing in services sector inflation while the sharp increase in food-stuff prices experienced in 2001 seems unlikely to be repeated in 2002. Inflation is therefore expected to average 4.2%.
As noted by the European Commission in their report on the Implementation of the 2001 Broad Economic Policy Guidelines (BEPGs), published in February 2002, Ireland made good progress in implementing the budgetary recommendations of the 2001 BEPGs. Good progress was also made in implementing the 2001 product market recommendations. Measures were taken to enhance competition in the network industries and retail services. Programmes were also established to promote R&D. Progress was also made in implementing labour market recommendations. Further tax changes and funding to promote child care facilities were among the measures to address labour supply. Some progress was also recorded in terms of improving access to early stage financing, for instance through the establishment of a dedicated Government sponsored venture capital scheme.
1.2 Developing Entrepreneurship and Creating Sustainable Employment
1.2.1 National Competitiveness According to the EU Commission’s European Competitiveness Report 2001, GDP per capita caught up with the EU average in 1997. Ireland built its remarkable catching up process on its attraction of foreign capital, but has ingeniously connected inward investments with local strengths. It has attracted dynamic high-tech industries, developed programmes to upgrade qualifications and to cluster firms around the subsidiaries of multinational firms. The supply of skilled labour was a contributing factor.
The output share of manufacturing is rising and, at 32%, is now by far the highest in Europe. The ratio of exports to production is the highest of all the Member States. Value added per employee is also the highest among EU countries. The share of production in marketing- driven and technology-driven industries is high.
Business R&D is moving closer towards the EU average, even though multinational firms still perform a larger share of research in their home country, as compared to production. Skills are highly rated, due to an efficient education system and the supply of new graduates in science and technology is the third strongest. Ireland has a large share of ICT-producing industries. Average innovation expenditures (compared with a fast increasing turnover) are complemented by higher rates of innovation based on co-operation and on continuous research at firm level, as expressed by the capabilities indicators.
The National Competitiveness Council 2001 Report gives Ireland a rank of 1st out of 18 countries in terms of economic performance in 2001, reflecting strong economic growth over the last five years, rapid capital formation, rapid export growth, positive current account and extremely rapid expansion in the numbers at work.
As regards the human resource dimensions there has been strong employment growth and Labour force participation rates for males and females are around the average compared to other EU/OECD countries. Only five developed countries had lower unemployment rates.
However in 1999, Ireland’s score for Education ranks it 16 out of 20. Ireland is fourth lowest as regards the proportion of 25 to 64 year olds participating in continuing education. In 1998 Ireland ranked 23 out of 29 in terms of the 25-64 year olds with at least upper second level education.
In terms of Productivity, Labour Compensation and Unit labour Costs, Ireland ranks 11 out of 16 countries. During the 1990’s, productivity was growing at over 3% per annum (the best of comparator countries). Wages for the economy in general ranked 16th lowest out of 28 countries, using 2001 estimates. Wages for production workers are lower at 7th out of 23 (1999 data). However, labour costs had been rising rapidly, reflecting the tightness of the labour market.
Specific Policy Areas:
1.2.2 Taxation The reductions in both corporate and personal taxation levels and employer social insurance contributions have encouraged the development of new businesses and employment. Budget 2002 reduced the corporation tax rate to 16% in line with agreed arrangements to move to a standard rate of 12.5% by 2003.
1.2.3 Infrastructure The National Development Plan 2000-2006 (NDP) sets out the Irish Government’s proposals for public investment of nearly €52 billion (constant 1999 prices) in the Irish economy over its seven year timeframe. A key focus of the NDP is the provision of economic and social infrastructure consistent with Ireland’s level of economic development. Within this, a key emphasis is the provision of significantly improved road and rail transport, environmental services infrastructure, including water and waste-water services, and social housing. Under the Economic and Social Infrastructure Operational Programme, total public investment of some €22.4 billion is planned. When infrastructural investment in the education sector under the Employment and Human Resources Development Operational Programme and the Local Infrastructure sub-programme (Regional Development Operational Programme) are included, total public investment amounts to some €28.7 billion.
1.2.4 Research, Technological Development and Innovation (RTDI) In recognition of the driving role of RTDI in economic development, provision was made in the National Development Plan 2000 – 2006 for the sum of €1.5 billion for industrial development-related activities. The specific RTDI schemes approved by the European Commission are now established and are being fully implemented.
Science Foundation Ireland (SFI), the National Foundation for Excellence in Scientific Research, was established in 2002. SFI is responsible for the management, allocation, disbursement and evaluation of expenditure of the Technology Foresight Fund of over €635 million for investment in world-class basic research in strategic areas relevant to economic development, particularly Biotechnology and Information Communications Technology (ICTs).
1.2.5 Regional and Local Development
In response to the 2001 Employment Action Plan, the European Commission and Council made the following recommendation:
Recommendation
“In the context of the Spatial Strategy programme, Ireland should address imbalances in employment, unemployment, job creation and human capital endowment between various areas.”
National Development Plan A fundamental policy objective of the National Development Plan is to achieve more balanced regional development and a reduction in the disparities between and within Ireland’s two regions (the Border, Midlands and West (BMW) region and the Southern and Eastern (S&E) region).
The Plan provides that considerable resources will be expended on education and training programmes in each region over the period 2000-2006. These programmes will include provision for both initial training and retraining. In addition, there will also be substantially increased investment in active employment measures (with a particular focus on the long- term unemployed), in education with a special emphasis on literacy and lifelong learning, and in integration/reintegration training for groups wishing to enter the labour force, particularly women, people with disabilities and the socially excluded. While the S&E region is well served by third level institutions, particular attention will be paid to enhancing the quality and range of courses in existing third level institutions in the BMW region. In both regions, distance learning will also be assisted so as to promote the development of higher skills levels outside of the main urban centres.
Total expenditure on the Employment and Human Resources Development Operational Programme 2002-2006 will be €14.2billion of which €4.275billion is destined for the BMW region and €9.924billion for the S&E region (or €4,423 and €3,724 per capita respectively.) The European Social Fund that is supporting various investments in Ireland in Human Resource Development provides higher intervention rates to the BMW region (75% funding support) as against the S&E Region (50%). As with all Structural Fund support, the ESF is clearly seeking to provide additional support to those parts of Ireland which have seen less employment growth than other regions.
Local Governance – County/City Development Boards The objectives of new local government structures include the enhancement of Local Government in economic, social, and cultural development. This is being achieved in particular through the County/City Development Boards and by allowing local sectoral interests, including the Social Partners, to participate by way of Strategic Policy Committees. All County/City Development Boards (CDBs) are in the process of completing work on their strategies for economic, social, and cultural development, which were due in early 2002. The strategies will focus, inter alia, on social inclusion and the long-term economic development of both urban and rural areas.
Local Area Partnerships The Local Development Measure in the Regional Operational Programmes 2000-2006 has been designed to build on the experience of the Local Development Programme 1994-99, and will continue to build on the empowerment of communities in sponsoring innovative actions in the areas of services for the unemployed, community development and community-based youth initiatives. Area Development Management Limited (ADM), which oversees the Local Development Measure, has developed its strategy for the 2000-2006 period. Local Partnerships and community groups have prepared their strategic plans. The plans have been assessed and funding for the period 2001-2003 has been agreed. ADM will continue to support Partnerships and Community Groups as they implement their Local Development/Social Inclusion area action plans.
County and City Enterprise Boards Under the two Regional Operational Programmes of the National Development Plan 2000 – 2006, the 35 City and County Enterprise Boards continue to support the development of micro-enterprises with a progressive move to softer forms of support (management development, advice, training) and increasing recourse to repayable forms of assistance (equity, repayable grant). Emphasis is being placed on enterprise projects in the manufacturing and services sectors, which can develop into export entities.
During 2001 the City and County Enterprise Boards:
The promotion of viable and worthwhile ventures for the long-term unemployed, those made redundant and women re-entering the workforce continues to be a priority activity of the Boards.
ESF Support The ESF co-funded ‘Local Social Capital’ measure will commence implementation in 2002 following the successful Pilot Project managed by the Paul Partnership in Limerick. In addition a number of regional bodies are pursuing proposals under the Commission’s call for proposals under Article 6 of the ESF regulation dealing with ‘Local Employment Strategies and Innovations’. ESF contribution will amount to €901.087m with €369.342m allocated for the BMW region and €531.745m allocated for the S&E region over the period 2000-2006.
1.2.6 Business Development Trends in Permanent Full Time Employment in companies supported by IDA Ireland, Enterprise Ireland, Shannon Development and Udaras na Gaeltachta.
Policy has focussed on creating and fostering an economic and business climate conducive to the start-up, development and location of business in Ireland, including small firms, service providers and knowledge-based industries. The broad objective is to create more knowledge- based globally competitive companies, with higher skilled employment.
The mission of Enterprise Ireland, the State Agency for indigenous company development, is to help client companies develop a sustainable competitive advantage leading to increased profitable sales, exports and employment. In terms of job creation, activity is focussed on the creation of new jobs through support of entrepreneurs setting up new High Potential Start-Up Companies, the retention and creation of new jobs in existing companies and enhancing the innovation capability of Ireland at a national and regional level through support for research in companies and third-level institutions.
The prospects for Foreign Direct Investment (FDI) in 2002 will continue to be affected by the US downturn and the slump in the ICT sector in particular. The ICT sector is a major source of FDI for Ireland and while 2002 may show some improvement over 2001, the degree to which it does so is critically dependant on the speed and strength of recovery in the US economy, and the ICT sector in particular. However, some other important sectors such as Healthcare and Pharmaceuticals have been less affected by the downturn and consequently the FDI environment in these areas has remained relatively intact. The main policy objectives for FDI in the current difficult environment are as follows:
Availability of capital continues to be important for business development. In mid 2001, a fund allocation of €95.23m was approved in respect of 12 Venture Capital Funds under a new Seed and Venture Capital Fund Scheme to be operated by Enterprise Ireland. Eight of the Funds have a specific regional or sectoral dimension with the Enterprise Ireland commitment to these totalling €53m. At 31st December 2001 a total of €28m was paid into the various Funds. The Business Expansion Scheme provides income tax relief for Irish resident individuals who subscribe for ordinary shares in unquoted Irish Resident companies engaged in qualified activities. This Scheme has been renewed for a further period of two years. The existing limit on the level of finance that can be raised by a company under the scheme has been increased to €750,000. The Seed Capital Scheme encourages individuals currently or formerly in employment to establish new business ventures by providing refunds or tax paid to individuals who set up in a new qualifying trade. This scheme has been renewed for a further two-year period. The existing limit on investments qualifying for relief in each venture has been increased to €750,000.
High-Tech Services Strategy The main recommendations of the strategic study on the development of the Service Sector are being implemented through the ITS 2007 programme. ‘ITS 2007 – Opportunities for Ireland's High Technology Internationally Traded Services’ is a strategic approach to developing an indigenous presence in high tech, high opportunity enterprises, with particular emphasis on regional dispersion. The strategy envisages the establishment of a number of technology hubs in regional locations, initially Cork, Galway, Waterford and Sligo, with smaller WebWorks in regions with Institutes of Technology. It is expected that the Webworks program will proceed in earnest by the second half of 2002.
The plan sets ambitious targets to be achieved in the identified sectors (Informatics, Digital Media, eBusiness and Health Sciences) by 2007. The aim is to increase sales from €1.4billion at the middle of 1999 to €5.03billion in 2007 (sales reached €2.5 billion in 2000); to increase exports from €0.86billion to €3.77billion (latest available data shows exports of €1.4 billion in 2000); and to increase employment from 12,500 people to 29,500 people (employment in 2001 stood at 21,000).
Promoting Entrepreneurship The County Enterprise Boards, as a priority task, continue to promote an enterprise culture in schools through their involvement in programmes which ensure that students who are considering self-employment, bring to their new enterprises a broad approach, focussed on enterprise issues such as finance and marketing and other rather than just on production alone.
1.2.7 Competition Policy Competition policy is vital to promoting competitiveness, entrepreneurship and job creation in an economy as dependent on external markets as is the Irish economy. A new Competition Act provides a framework for effective competition in the marketplace. The Act consolidates the existing competition and merger legislation and introduces a number of changes, many of which were recommended by the Report of the Competition and Mergers Review Group. This Bill establishes competition law arrangements which will contribute to competitiveness, domestic and international, will penalise anti-competitive and anti-consumer behaviour, protect the competitive process in all sectors of the economy and facilitate the orderly re- structuring of enterprises. In particular, the new legislation will tackle the effects of cartel behaviour, abuses of market power and excessive market concentration.
1.3.1 National Anti-Poverty Strategy
The National Anti-Poverty Strategy has provided the policy focus within which very substantial progress has been made in reducing consistent poverty, in raising the incomes and living standards of those who rely on social welfare and on increasing employment. The focus has been enhanced in the National Development Plan (NDP) and the explicit commitments in the Programme for Prosperity and Fairness (PPF) on measures aimed at promoting social inclusion. The Strategy provides a coherent framework for actions to tackle exclusion and disadvantage into the future. The objective is to ensure that economic progress benefits all in society, but in particular, that the most vulnerable have the opportunities and the skills to participate in economic and social progress.
Unemployment, particularly long-term unemployment was identified under the National Anti-Poverty Strategy in 1997 as a fundamental cause of poverty and consequently was included as one of the five key areas where progress was required in order to achieve a significant reduction in poverty. While targets relating to reducing the rates of unemployment and long term unemployment set under the Strategy in 1997, and revised by Government in 1999 under the National Employment Action Plan, have already been substantially exceeded, labour market participation levels and job progression rates among marginalized and excluded groups still give rise for concern. Groups including lone parents, early school leavers, older people wishing to return to the labour market, certain ethnic minorities and underemployed small farmers remain vulnerable and at risk of long-term unemployment. Such groups are likely to require a more targeted approach from the State’s education and training agencies in order to improve their prospects of employment and remove their vulnerability to poverty.
A review of the National Anti-Poverty Strategy has been undertaken in consultation with the Social Partners, to review the underlying methodology, revise existing targets, agree new targets in the areas of child poverty, women’s poverty, health, older people and housing /accommodation and to ensure that the Employment Action Plan and the National Development Plan are consistent with strategies to address poverty. The review process entailed extensive consultations between Government, and Social Partners representatives under six themes comprising:
· Educational disadvantage
Child poverty, women’s poverty, needs of older people and ethnic minority groups were also considered as cross cutting issues under the review process. The review process has been completed and the revised National Anti-Poverty Strategy ‘Building an Inclusive Society’ was launched on 27th February 2002.
The Working Group dealing with employment/unemployment, while acknowledging the gains in employment and the reduction in employment levels, identifies the need to improve access to employment and training as a major challenge and contributor towards reducing the number of jobless households who are particularly at high risk of poverty. In addition, the Working Group identified the need, given the advances in employment, the impact of the National Minimum Wage and tax reductions focussed on the lower paid, for placing increased emphasis on ensuring that those in employment have the opportunity to progress to better paid, higher skilled and more fulfilling employment jobs.
The overall objective is to provide maximum opportunity for the most vulnerable members of society to gain employment and to progress to a better paid and more fulfilling job. To achieve this objective the following key employment/unemployment targets have been set:
The overall broad approach towards achieving these key targets will be to:
Since 1987, Ireland has had five national-level social partnership agreements, negotiated on a voluntary basis between the Government and the social partners - that is, the main employer, trade union and farming organisations and, in the case of the two most recent agreements, the community and voluntary sector as well. Each agreement has covered pay as well as an increasingly wide range of national economic and social policy areas, such as the workplace environment, infrastructural investment, sustainable growth, the development of the different industry sectors, social inclusion and equality, Lifelong Learning, the Information Society and childcare.
Since their inception the social partnership agreements have been a feature of the radical transformation in Ireland's economic and social fortunes. In particular, the social partnership agreements were a part of a virtuous circle in the economy encompassing pay, profitability, investment, employment and tax reform, which replaced a vicious circle of stagnation, rising taxation and spiralling debt in the preceding period. They have also presented established business and potential investors with the prospect of stability and certainty over a multi- annual timeframe, thereby stimulating investment and job creation. They have yielded significant benefits in terms of industrial peace.
The current agreement, the Programme for Prosperity and Fairness (PPF) was concluded in early 2000 and set out to:
The PPF contains a wide range of actions relating to many of the policy areas covered by the four pillars of the EU Employment Strategy as follows:
Considerable progress has been made across all these areas and in the implementation of the Programme more generally.
A recent significant development has been the establishment of the National Centre for Partnership and Performance to work with relevant organisations in deepening partnership and performance at the workplace - in both the private and public sectors - including through:
The main focus of the Centre's activities to date has been the preparation, following extensive consultation with relevant interests, of a strategic plan and associated with this, a detailed operational plan. The strategy and plan for the Centre was launched in March 2002.
The PPF expires at the end of 2002 and formal discussions between the Government and the social partners about the initiation of negotiations on a successor agreement are likely to begin in the autumn.
The Employment Action Plan process -because there is a significant degree of overlap in the policy issues concerned and because the Social Partners are required to contribute to the implementation of certain Guidelines -is founded primarily on the PPF and the actions ensuing from it. As a result, many of the actions described in this Action Plan are, of necessity, in a state of negotiation or development. It is important to underline however that the actions are grounded in a set of policy objectives agreed by the Social Partners under each of the frameworks.
As consultation and negotiation of various policies and initiatives are ongoing, there remain differing positions and views. In that context, views expressed by some of the partners on some of the issues in the Plan are contained in separate submissions, which for ease of reference are appended to this Plan - Appendix II. It is the intention that these views will continue to be expressed through the appropriate fora under the PPF.
2.1 Employment Policy and Strategy
2.1.1 Introduction Deriving from the broader economic and social policy context outlined in Section 1, this Section sets out Ireland’s employment policy mix and the main instruments of that policy. It goes on to examine the evolution of employment rates in Ireland towards the medium and longer-term targets agreed by the European Council. Finally it examines two cross-cutting guidelines under the EU employment Strategy – Lifelong Learning and “Quality in Work.”
2.1.2 The EU Employment Strategy The Strategy was devised and implemented from 1997/98 against a background of high unemployment and jobless growth in Europe. More recently, flowing from the Lisbon (March 2000) and subsequent European Councils, there has been a focus on creating more and better jobs and the achievement of higher employment rates.
At the Lisbon Summit, it was agreed that Europe should aim to become “the most dynamic knowledge based economy in the world, leading to more and better jobs and greater social cohesion”. It was agreed to reset the conditions for full employment. Furthermore the Heads of State and Government agreed to set targets for employment as follows:
“To raise the employment rate from an average of 61% today to as close as possible to 70% by 2010 and to increase the number of women in employment from an average of 51% today to more than 60% by 2010.”
The Stockholm Council in 2001 added new targets
The strategy was envisaged for a five-year period to 2002. A series of EU-wide and national level evaluations is currently underway with a view to devising a new strategy from 2003.
2.2 Ireland’s Employment Policy Mix
2.2.1 Overall Policy In Ireland, as in the EU generally, the view is that unemployment will rise in the immediate term and that there are adequate measures in place to minimise the impact. Over the medium term it is expected that the conditions for a return to strong growth and full employment will re-emerge. In that context the broad labour market policy, as set out in earlier Employment Action Plans, remains valid i.e.:
The twin strategy being adopted to achieve the above objectives is to provide supports and mobilise labour supply from all available sources and to provide the necessary education, training and lifelong learning opportunities to ensure that supply matches demand and that employed persons and those seeking employment have the required skills. A fuller discussion of the medium term policy mix is set out at Appendix III
2.2.2 Employment and Human Resources Development Operational Programme 2000- 2006 and the Role of the European Social Fund
Operational Programme In terms of achieving these policy objectives, the Employment and Human Resources Development Operational Programme (EHRD-OP) represents the investment plan for the development of human capital in Ireland over the period 2000-2006.As with the framework for the European Employment Strategy, the EHRD-OP is constructed around the four pillars of Employability, Entrepreneurship, Adaptability and Equality. The objectives under each pillar are as follows:
Employability:
Entrepreneurship:
Adaptability:
Equality:
Expenditure under the OP has been divided among the four pillars as follows, with the Balance of €3 billion spent on Infrastructure
Some 51 measures and sub-measures have been selected to underpin these four pillars with 21 of these measures attracting ESF assistance and the other 30 being exclusively funded through exchequer resources.
A detail of spending on employment under the EHRDOP is contained in Appendix IV, along with a description of measures co-funded by the ESF.
2.2.3 New Strategy for FÁS – the Training and Employment Agency A significant new development, in keeping with medium term policy on the labour market was the strategic review undertaken by the Government’s main labour market agency, FÁS, in 2001. The revised strategy to 2005 will include a new emphasis on training and upskilling of the labour force. This will target not only the apprenticeships programme, but engage in the upskilling and continued training of those in the national workforce. This approach is in the context of instilling the concept of lifelong learning among the labour force which will enhance the quality of labour and the competitiveness of firms.
Launched in December 2001, the revised strategy also aims to further stem the flow into long-term unemployment by strengthening the preventive strategy through increasing earlier intervention with the newly unemployed. The agency aims to provide a focused service for the individual and to equip them with the portable skills necessary, through training, to regain employment. This approach has been effective most recently, in response to large scale redundancies, which has seen FÁS step in immediately to provide information, advice and training to those facing redundancy.
FÁS will continue to meet the demands of the labour market, by mobilising labour supply and enhancing skills, to meet identified labour market needs. FÁS will aim to ensure that the marginalisation of the unemployed reduces and that the cycle of low education / long-term unemployment is broken.
2.3.1 Recent Developments The Irish labour market has been transformed in recent years.
In summary, comparing the 4th Quarter of 1997(the base year for the EU Employment Strategy) with the statistics for 2001, we see the following:
More details of changes in Labour force, Employment and Unemployment are contained in Appendix V.
2.3.2 Supply and Demand (short-term and medium term)
Labour Force Supply
Since the mid 1990’s, growth in the Irish labour force has been driven by two principal factors.
First, the expansion of the labour force reflected growth in the population of working age, due to a natural increase in the domestic population, and to net immigration.
Second, labour force growth was augmented by rising labour force participation rates among those of working age; primarily women. Together, these factors were responsible for the large increase in the labour force between 1998 and 1999. However, almost all of the growth in the labour force between the fourth quarters of 1999 and 2000 was due to an expansion of the population of working age, i.e. those between 15 and 64 years. As much as one-third of the contribution of population growth to the expansion of the labour force in 2000 was attributable directly to net immigration inflows. The graph below illustrates the components of labour force growth, broken down by gender, for the years 1999 to 2001.
According to the Government’s Expert Group on Future Skills Needs (EGFSN) the current slowdown will have a negative impact on the demand for labour in the short term, with employment growth set to be much lower in 2002 and possibly even negative. Unemployment rates are forecast to rise in the short term but should return to a level closer to full employment in the medium term. A decrease in demand in labour will appear across all sectors with the exception of non-market services.
The EGFSN suggests that although the short term will see an increase in unemployment rates, it will also see a reduction in the supply of labour with a decrease in the number of students entering the workforce, static female participation and a reduction in net in-migration. In the medium term the supply of labour should be broadly in line with aggregate demand which will meet with average growth rates of 5%.
The analysis indicates that the medium-term outlook for the Irish labour market is positive and that policy should be focused on helping address medium-term needs. Hence, while increasing the labour supply is of less immediate relevance in the short-term, it is consistent with maintaining competitiveness internationally and increasing the employment rate in the medium term. The analysis by EGSFN outlines some avenues toward achieving this.
2.3.3 Future Prospects – Towards EU targets The following table shows the trends in employment rates in recent times and their movement towards the targets set at Lisbon.
The average EU-wide employment rate targets to be reached by 2010, and the interim targets set at Stockholm, mean that steady progress has to be made over the period. A critical element underpinning the employment scenario for the EU as a whole, centres on likely future average annual growth in GDP (which in turn is dependant on the successful implementation of the employment and labour market structural strategies identified in the Lisbon conclusions).
Ireland, on the basis of the employment and labour market policies being pursued, is fully committed to the goal of full employment. This goal, has been clearly articulated commencing with the first national Employment Action Plan in April 1998, and underpins the policies, strategies and actions notified in all subsequent annual Employment Action Plans to date. Strong economic growth and labour market reforms have translated into substantial and sustained employment growth in recent years. Significant improvements in the employment rate have been achieved with both male and female employment rates increasing by 6.3 and 6.5 percentage points, respectively, since 1997.
It is clear however that achievement of the Lisbon targets will not be easy, a situation which the uncertain extent and impact of the current global economic situation has only exacerbated.
Against that background the EU made the following recommendation to Ireland on foot of the 2001 Employment Action Plan.
Recommendation
“Pursue further its comprehensive strategy to increase labour supply and employment rates. Particular efforts should be undertaken to mobilise and integrate further into the labour market economically inactive people, in particular women, by removing tax barriers, increasing the number of affordable childcare places and taking action with the aim of reducing the gender pay gap”
As set out earlier the main approaches to boosting labour supply include increasing female participation, equal opportunities for disadvantaged or otherwise inactive groups and a balanced increase in immigration. Specific actions are described in later sections and are summarised here.
Engagement with the Unemployed – (See Section 3.1) Pro-active engagement by FÁS with those in unemployment for a relatively short time is critical to their reinsertion into employment either directly or with the aid of education, training or other supports. The process, introduced on foot of the EU Employment Strategy, has been very successful to date.
Increasing the Incentive to work – (See Section 3.3) In recent years there have been significant reductions in personal tax rates, removal of substantial numbers of low-paid from the tax net and reform of the tax system through introduction of tax credits and tax individualisation. These measures have been complemented by reforms in the social welfare sphere geared towards facilitating participation in employment. The Department of Social, Community and Family Affairs has recently commenced a welfare to work audit of social welfare income maintenance schemes with a view to identifying potential disincentives to participation in employment, education and training opportunities.
Education and Training (See Sections 2.2 and 2.4) More fundamentally there is a range of training and education measures to boost labour supply and employment rates by
Integration of Disadvantaged – (See Sections 3.2, 3.4 and 3.6) Despite the rapid decrease in long-term Unemployment there remains a range and scale of Active Labour Market Programs (ALMPS) on offer amounting to almost 40% of registered unemployment in 2001. New supports aimed at those suffering from specific disadvantage include the Social Economy Programme aimed at those over 35 and unemployed for three years; a new ‘High Supports’ process for long-term unemployed with multiple disadvantage; mainstreaming of training and other supports for people with disabilities; enforcement of equality legislation. The new EU EQUAL Initiative has been successfully targeted and rolled out.
Immigration – (See Section 3.4) Immigration of non-EEA citizens rose to a record 33% of total inward migration in the year to 2001. Work Permits to non-EEA citizens rose from 6,230 in 1999 to 36,436 in 2001. Recognising that immigration is likely to be a permanent feature of labour market supply into the future, draft legislation is under preparation.
Female Participation- (See Section 3.9) Investment in childcare infrastructure continues to be rolled out and the newly created National Framework Committee including the Social Partners is promoting the introduction of family-friendly policies. Part time work has increased by 33,700 (13.3%) since 1997 mainly taken up by female participants. The question of gender pay has been the subject of in-depth research which is currently being examined by a Group established under the Programme for Prosperity and Fairness.
Active Ageing –(See Section 3.5) Ireland’s participation rate for Older Workers (55-64 years old) is 46.4% against an EU average of 38.3%. This is primarily because Ireland’s demographic curve is behind the trend in the EU generally. In labour supply terms there is no immediate problem for Ireland. In order to avoid any deterioration, there is an onus on employers in the first instance to seek ways to retain their most experienced employees.
The Role of the Employment Services – (See Section 3.1 and 3.4) The role of the public employment services is critical to a number of the above issues e.g. matching jobseekers to existing vacancies, intervening with the unemployed, supporting the sourcing of labour and skills from outside Ireland, determining and providing appropriate training options, targeting particular groups such as women returners and long-term unemployed. Under the new FÁS strategy, the Employment Services will operate as the gateway to FÁS and other interventions. A review of the role of the Employment Services is underway.
2.5 Lifelong Learning and Business Investment in Training
2.5.1 Introduction The continuous updating of knowledge and skills is crucial to both the employability of individuals and the adaptability of firms in an ever-changing business and working environment.
In response to the 2001 Employment Action Plan, the European Council and Commission made the following recommendation.
Recommendation
“ pursue efforts to sustain productivity growth and upgrade skills and qualifications in the workforce, through increased emphasis on in-company training and the further development of lifelong learning, including the setting of overall targets, and in this respect promote active involvement of the social partners in implementing the Programme for Prosperity and Fairness.”
The development of a strategic framework for lifelong learning is seen as critical in the move to a knowledge-based society where the emphasis is increasingly on the ability to continuously acquire knowledge skills and competencies in an environment of constant change. The goal of “work for life” is increasingly supplanting that of “a job for life”.
The explosion in access to information brought about by the communications revolution and the internet is shifting the emphasis away from storing and memorising facts towards a more sophisticated view which brings together information (know what), technique (know how) and understanding (know why).
Where previously lifelong learning might have been seen as, at best, the province of the professionals or knowledge workers the need to continuously adapt and upgrade knowledge skills and competencies is now seen to apply across the gamut of jobs and workplaces.
In addition to the economic imperative, there are a number of social concerns that are driving the lifelong learning agenda. Foremost amongst these is the interrelationship between employability and social inclusion and the view that access to “more and better jobs” is a fundamental underpinning of an inclusive society. This view is supplemented by the belief in the potential of lifelong learning to promote and develop “active citizenship”, whereby people are empowered to contribute proactively to the development of society, whether through politics, community development, business or the arts and sciences.
Lifelong learning also brings the issue of the individual’s personal development to the forefront and endorses the individual’s right to grow and develop intellectually and holistically.
2.5.2 Response to Recommendation In response to the recommendation, Ireland sees the development of a strategic framework for lifelong learning as essential if a coherent strategy is to be developed which encompasses more than incremental additions to education and training capacity. A Taskforce was established under the Programme for Prosperity and Fairness to · Identify existing provision · Map provision in terms of adequacy and coverage and · Propose and cost priority actions.
The Taskforce Report is well advanced and its report is expected to be published very shortly.
The Taskforce developed a vision for lifelong learning i.e. that: · Each of us has the skills, motivation, supports / tools, resources and time to engage learning on a lifelong basis. · We apply our learning to enrich our lives and develop a more prosperous, more inclusive society. It also developed a strategic framework to underpin this vision as follows:
Developments under these key headings of the strategic framework are detailed in the following sections.
The National Framework of Qualifications The development of lifelong learning in Ireland has been somewhat held back due to the absence of a coherent framework of qualifications. However, this is now being addressed as the Ireland’s new qualifications infrastructure is coming into full operation.
That infrastructure involves the National Qualifications Authority of Ireland (NQAI) and two awarding Councils (the Further and Higher Education and Training Awards Councils FETAC and HETAC, respectively) operating under the statutory remit defined in the National Qualifications (Education and Training) Act, 1999.
Key objectives of the new structures are to provide for access, transfer and progression within a coherent overall framework. The NQAI released a comprehensive discussion document- Towards a Framework of Qualifications (November 2001)- setting out the key issues on which the Authority wishes to focus the debate leading to the drawing up of the framework. These include the need for the framework to fully facilitate access, transfer and progression, the potential for modularisation and the need for accreditation of prior and experiential learning.
The Authority completed an extensive consultation process in relation to the document in February 2002. The Authority will publish an outline framework and procedures for centrality of access, transfer and progression by Summer 2002.
Basic Skills There is much debate about what constitutes basic skills. However, there is general agreement that, at a minimum, basic skills encompass reading and writing, listening, speaking, and mathematics/numeracy for everyday life. Increasingly, the ability to use computers and communication technology and software is also being seen as part of the basic skills portfolio. Taking a slightly more expansive view, problem solving, managing information and learning to learn can also be seen as essential to a lifelong learning portfolio of basic skills.
The IALS 1997 (International Adult Literacy Survey) revealed significant problems with literacy and numeracy in Ireland, especially among older age cohorts. This issue was dealt with comprehensively in the White Paper on Adult Education published in August 2000.
In regard to adult literacy, since publication of the survey the provision in the education sector for adult literacy has increased from a base of €1.079m in 1997 €16.476m in 2002. €93.4m has been committed to this area in the National Development Plan 2000-2006, with a target of reaching 113,000 clients.
With the increase in funds to date,
Other developments in progressing the Adult Education Agenda include
An Advisory Group which includes FÁS and the Employment Services, has been established representing key agencies to oversee the development of the overall project. Phase 1 of the development of the service began in 2000 through the establishment of a guidance service in 11 areas, and Phase 2, with a further 8 areas, is currently being implemented. Proposals for Phase 3 have been advertised for implementation in 2002.
Delivery, Access and Funding In many countries, Ireland included, current delivery systems are not optimally adapted to lifelong learning. The predominant model remains that of full time attendance during “office hours”. The Taskforce on Lifelong Learning proposes to make a range of recommendations to Government regarding the development of more flexible delivery systems in regard to both the opening hours of institutions, the move to modular courses and the potential of open and distance learning. In addition, the Taskforce is recommending that Government reconsider the current position in regard to fees, where ‘free fees’ are only available to full time learners.
The Workplace The recently published Continuing Vocational Training Survey Results (for year 1999) show that expenditure on in company training is increasing.
The key results of the survey are summarised below:
The major changes between the two surveys were the increased duration of time spent on training and the increased cost of courses. Average duration rose from 1.7 days per employee in 1993 to 2.4 in 1999. The cost per day of training courses also rose from an estimated £139 in 1993 to £198 in 1999.
2.5.3 Strategic Re-orientation of Enterprise Training Policy
During 2001/2002 a significant focus of enterprise training policy was a strategic change of focus from predominantly firm-specific initiatives towards more horizontal approaches. The value of this shift was exemplified by the findings of an external evaluation of the “Skillnets” Training Networks Pilot Programme concluded in January 2002. The evaluators found:
On foot of these findings, a decision in principle has been taken to continue the programme for a further period.
In the context of its new Strategy for the period of 2002 – 2005, FÁS has set as priorities the promotion of investment in training by employers and to accelerate the development and delivery of a comprehensive range of programmes and services for employers and those in employment, based on identified labour market needs. A significant element of the FÁS strategy will be the development of occupational standards and qualifications across a range of sectors of the economy, building on work already undertaken in the Construction and Food Sectors. Enterprise Ireland is also developing more horizontal initiatives to complement the grant aid given to companies to support overall business development plans.
2.5.4 National Training Fund and National Training Advisory Committee
The National Training Fund was established under the National Training Fund Act, 2000, as a dedicated fund to finance a range of schemes aimed at:
The Fund is resourced by a levy on employers of 0.7% of reckonable earning in respect of employees in Class A and Class H employments. This represents approximately 75% of all insured employees. In 2001, the National Training Fund supported schemes operated by FÁS, Enterprise Ireland, IDA Ireland, Shannon Development and Skillnets.
The National Training Advisory Committee was established in November 2001 to:
The Committee held its inaugural meeting in December 2001.
2.5.5 Apprenticeship Training
The upward trend in Apprenticeship numbers since the mid-1990’s was maintained in 2001 with the Apprenticeship population increasing by over 6% to over 25,000 by the year end.
This has placed extra demand on FÁS off-the-job training provision for Phase 2 and on Institutes of Technology in relation to Phase 4 and 6 training. FÁS increased its Phase 2 capacity from 7,024 places in 2000 to 7,800 in 2001, while the Institutes expanded the available places from 9,600 to 11,700 in the same period.
The development of policies for better quality in work has been pursued in the light of conclusions drawn from the Lisbon, Nice and Stockholm European Councils, as well as Commission Communications setting out the multi-faceted dimensions of quality. Quality in work is at the heart of the European social model. The Council has agreed a “definition” of “Quality in Work” under ten headings with indicators where appropriate as set out below. The all-encompassing nature of ‘Quality in Work’ emphasises its cross-societal nature. Aspects of job satisfaction, training and skills, gender aspects, health and safety, flexible working, social protection systems, employment supports, family-friendly practices, social dialogue and acceptance of diversity are all implied as being part of the bigger picture that is “Quality in Work”. It is therefore an issue, which goes beyond the labour market and touches on an array of policy areas, both economic and social. It is seen as linking the dual goals of economic competitiveness and social cohesion in a sustainable way, with clear economic benefits flowing from investing in people and strong, supportive, social systems.
In the Irish context, many of the issues relating to the identifiable cross cutting components of quality in work are subject to social dialogue at the national level. The following is a summary look at the issues embraced under ‘Quality in Work’. Most of the issues are treated in more detail throughout this Plan (as referenced).
Intrinsic Job Quality
Overall Work Performance
Skills, Lifelong Learning and Career Development – (See Section 2.4)
Health and Safety at Work – (See Section 3.7)
Flexibility and Security – (See Section 3.7)
Inclusion and Access to the Labour Market – (See also Sections 3.2 and 3.4)
Work Organisation and Work-life Balance – (See Sections 3.7 and 3.9)
Social Dialogue and Worker Involvement – (See Section 1.4)
Diversity and non-discrimination – (See Sections 3.2 and 3.4)
3. Implementing the European Employment Strategy
Introduction Section 3 provides details of the context and actions relating to specific themes or guidelines provided for in the EU Employment Strategy. The themes treated in this section are:
3.1 Preventing Long-term Unemployment
3.1.1 Context The trends in long-term unemployment in Ireland give an indication of its unorthodox dynamic, increasing slightly, from 125,000 in 1993 to 128,000 in 1994, before falling steadily and quite dramatically to 63,500 in the 2nd quarter of 1998 and to 20,500 in the 2nd quarter of 2001.
More recently long-term unemployment is recorded at 21,300 for the 4th quarter of 2001. Thus, between 1993 and 2000, total unemployment fell by 70%, long-term unemployment by 84% and short-term unemployment by 47%.
In the 3rd quarter of 1998 the number of long-term unemployed fell below the number of short- term unemployed for the first time in over a decade-and-a-half. Between the 2nd quarters of 1998 and 2001, short-term unemployment fell by 18,000 and long-term unemployment by 43,000. The long-term unemployment rate dropped from 9% in 1993 to 4% in 1999 and to 1.2% in 2001. The most recent Age by Duration analysis of the Live Register indicated that the increase of 1,793 in the Live Register in the year to October 2001 comprised a fall of 8,639 (or 16.0%) for long-term claimants and an increase of 10,432 (or 12.2%) for persons signing on for less than one year.
The dramatic reduction in long-term unemployment in a relatively short period of time represents a remarkable achievement in reintegrating the more disadvantaged into the work force. We would expect that during an employment boom the ‘short-term’ unemployed would be hired first both because the long-term unemployed are likely to be more disadvantaged in terms of skills and work experience than the ‘short-term’ unemployed and because of the effects of ‘state dependence’ which suggests that the longer an individual has been unemployed the lower the probability that that individual will escape from unemployment and re-enter work. In Ireland, however, most of the reduction in unemployment has occurred in respect of long-term unemployment.
3.1.2 The Preventive Strategy The most significant new dimension to policy, arising from the EU Employment Strategy, has been the implementation of the Preventive Strategy of engaging systematically with people at an early stage of unemployment, thus preventing the drift to long-term unemployment. Guideline 1 of the Strategy commits Ireland to assist the unemployed after a certain period by offering them a job or employability support.
Systematic engagement with young unemployed (Under 25) as they cross six months of unemployment commenced in September 1998. A similar process has been in operation in respect of adults (25-55 year olds) as they reach nine months unemployed since July 2000.
On a cumulative basis, since the process commenced in 1998, up to the end of December 2001, 69,979 persons had been referred to FÁS. Of which, 68.0% (47,540) had left the Live Register.
During 2001 24,119 persons were referred under the process. Of these, 61.1% (14,727) had left the Live Register. Of those who left the Live Register, 56.5% (8,322) had left for positive reasons; that is, to take up employment, training or to re-enter education.
In addition, the process of ‘full engagement’ with all unemployed (both flows and stocks) was carried out in Clondalkin and Galway in 2001. (This followed the pilot projects in Kilkenny and Ballyfermot that had been very positively evaluated in 2000.) In total, 2,062 persons were referred in these two locations, and, by the end of the year, 1,463 (71%) had left the Live Register.
Retrospective Analysis A retrospective analysis of the Preventive Strategy was carried out by FÁS at the request of the Department of Enterprise, Trade and Employment as an input to the national evaluation of the EU Employment Strategy. The analysis reports on people’s progression at two points in time- three months after the date of their referral to FÁS for the under 25s age group and 12 months later for those aged 25-54 years. The analysis relates to persons referred between June 1999 and September 2000.
The analysis indicates that the strategy is achieving positive and sustained results for those involved. Overall,
On average each interviewee had almost 5 contacts with FÁS. Approximately 80% of those who remain unplaced after three months are helped, through the assistance of FÁS and in co- operation with other agencies, to leave unemployment over the subsequent months. Further analysis of outcomes using the specific methodology agreed at EU level is covered in Appendix VI.
3.1.3 FÁS Employment Service FÁS also play an active role in respect to company layoffs and closures. Along with the business development agencies and relevant local organisations, FÁS makes a major contribution to various Taskforces set up to address large-scale redundancies. The standard practice is that FÁS, with the agreement of the employer and worker representatives, will begin engagement with those facing redundancy, before the actual lay-off takes effect.
As part of its new strategy, FÁS intends over the medium term to move to a situation where all jobseekers will register with the Employment Service. At that point, FÁS will provide a preliminary guidance service. For those who remain unemployed after three months, FÁS will guarantee more intensive guidance and counselling in relation to the range of job placement, training and other employment supports available.
3.2. Activating the Unemployed
Guideline 2 of the EU Employment Guidelines state that Member States should “Promote measures for unemployed and inactive people to acquire or upgrade skills, including IT and communication skills, thereby facilitating their access to the labour market and reducing skills gaps. To this end, each Member State will fix a target for active measures involving education, training or similar measures offered to the unemployed thereby aiming at gradually achieving the average of the three most advanced Member States, and at least 20 per cent.”
3.2.1 Active Labour Market Programmes-ALMP’s Despite the considerable reduction in unemployment levels, Ireland retains a large range and scale of ALMP’s aimed at facilitating access by long-term unemployed and other disadvantaged groups to the labour market. The development and enhancement of activation measures with a view to increasing the proportion of unemployed and inactive people benefiting from employability supports continued during 2001, and the following table shows the indicative level and scale of programmes for the year. This suggests an indicative activation rate of 38.4% if using Live Register figures and a figure 52.8% if using QNHS data, a more widely used source regarding unemployment.
3.2.2 ALMP Policy Development The Programme for Prosperity and Fairness provides for an overall appraisal of active labour market programmes with a view to improving outcomes. It is intended that this appraisal will now be undertaken in 2002 under the auspices of the Standing Committee on the Labour Market, which includes Social Partners, after it has met other urgent commitments under the PPF.
Community Employment A very important policy change was implemented for Community Employment in 2001. This recognised that Community Employment had become, in some sectors, a substitute for the provision of normal employment. To rectify this, a system of ‘mainstreaming’ was agreed and introduced, in the first instance, for Community Employment projects in schools. From September 2001, schools became eligible for a new system of funding which would allow them to employ people, under normal employment contracts, to carry out the kinds of jobs (e.g. caretakers, secretaries, assistants) previously undertaken under Community Employment.
In addition to the reduction in Community Employment due to the ‘mainstreaming’ policy, the numbers were also reduced in recognition of the continued fall in the number of long- term unemployed in recent years. By the end of 2001 there were 30,809 persons on Community Employment, a fall of 2,700 since the end of 2000.
Continuing the policy developments of 2001, the number of persons on Community Employment will decline further in 2002 for two reasons. Firstly, the ‘mainstreaming’ process is to be extended to statutory Health and possibly Local Authority projects. Secondly, there will also be a further reduction in relation to the overall numbers on CE, in line with the overall restructuring of the programme approved by Government in 1999 in favour of a strategic shift in policy towards greater investment in training and other supports e.g. the Social Economy Programme or “High Supports” process (see below). This is with a view to achieving more successful employment outcomes. Average participation levels in 2001 of 32,500 are expected to fall to 27,800 in 2002. At year-end there should be approximately 25,000 participants on the scheme.
Social Economy The Social Economy Programme, which was incepted in September 2000, supports the development of social economy enterprises whose services both help the regeneration of local disadvantaged areas and provide employment opportunities for the long-term unemployed and other disadvantaged persons. The aim is to create 2,500 employment opportunities by the end 2003. To date (April 2002) funding to support 1000 jobs has been approved.
RAPID Programme As part of a process to target particularly disadvantaged localities FÁS is participating in the new RAPID initiative in respect of areas of high unemployment in October 2001. Further details in Section 3.6
Back to Work Schemes and Back to Education Programme Following the publication of the Indecon evaluation of the Back-to-Work schemes in December 2000, a series of reforms have been instituted geared towards achieving a more enhanced focus on the longer-term unemployed and self-employed. In April 2001, the period of attachment to the Live Register for qualification under the scheme was increased from 12 to 15 months in the case of the employee strand of the scheme, in order to afford priority to the longer term unemployed. In addition, the range of additional incentives and supports provided under the scheme for those interested in self-employment were enhanced during 2001. New measures included the provision of financial assistance towards the cost of public liability insurance.
A number of special measures aimed at attracting young unemployed, early school leavers and the long-term unemployed back into education and training were introduced under the Back-To-Education allowance scheme during 2001. Further changes to the programme in 2002 will benefit women in welfare dependent households in particular. Under new arrangements to apply from September 2002, in line with a recommendation of the P2000 Working Group on Women’s Access to the Labour Market, qualified adults of persons with an existing entitlement to BTEA will be paid the full personal rate of the qualifying payment.
At the end of 2001, there were over 32,000 people participating in the Back to Work Scheme and 5,300 on the Back to Education Scheme. However, new participation in the Back to Work Scheme fell by some 7,000 in 2001, reflecting the decrease in the priority target group i.e. the long term unemployed and the tightening of the eligibility criteria on the employee strand. An evaluation of outcomes under the Back-To-Work schemes and Back-To- Education programme is being undertaken in line with Government obligations under the National Development Plan in 2002. This will facilitate the assessment of the effectiveness of both schemes.
Outcomes for ALMP’s While comparison across programmes is difficult, the survey data outlined below gives a useful indication as to the employment outcomes for those participants partaking in certain ALMP’s. The figures quoted below refer to the most recent follow up surveys for the respective ALMP’s.
3.3 Reward of Work: Taxation and Benefits
A key aspect of labour supply motivation is the need to increase the reward for work. This is being achieved through a balanced strategy of removing the low paid from the tax net, reducing the burden of personal taxation more generally and a fundamental reform of the tax system with a move to tax credits and tax individualisation of the standard rate band.
3.3.1 Tax Reform Continuing with Budget 2002 there has been sustained reform of the taxation system with the implementation of tax individualisation and the tax credit systems. Since 1997 personal income tax rates have been reduced to 20% and 42% from 28% and 48% respectively. Budget 2002, while not impacting on tax rates, did maintain the impetus of reform with considerable widening of tax bands and increases in the level of personal tax credits. The tax changes will remove approximately 79,000 taxpayers on low incomes from the tax net and approximately 57,000 will be removed from the top rate of tax. The average tax rate for low wage earners in Ireland compares favourably with EU rates in terms of maximising the reward for work for those who enter the labour market at a low wage or who find themselves in relatively low wage employment.
3.3.2 Social Welfare Policy The strategy underpinning the evolution of social welfare policy in recent years is based on the development of a welfare system which facilitates participation in employment. The use of child income support as an employment incentive mechanism has been a fundamental part of this strategy. In recognition of the employment disincentives associated with the loss of child dependent allowances for those moving from welfare to work, successive Government’s have concentrated resources for child income support on child benefit, rather than increasing child dependent allowances. This has ensured that the income supports for children provided by the State are more neutral vis-à-vis the employment status of the parents. This policy was intensified in the Budget for 2001, by the initiation of a three year programme of substantial annual increases which aims to triple the value of the child benefit payment by 2003.
A range of further measures are provided for in Budget 2002 designed to remove potential disincentives to return to work for those out of work after a prolonged period of incapacity and those who have retired early from the workforce. In addition, the Department of Social, Community and Family Affairs is conducting a welfare to work audit of its income maintenance schemes with a view to addressing any further impediments in the social welfare system to participation in employment, education or training opportunities. The audit is expected to be completed by the end of 2003.
3.3.3 National Minimum Wage
The National Minimum Wage was introduced in April 2000 at a rate of €5.59.per hour for experienced adult workers. The rate was increased on 1st July 2001 to €5.97 per hour and will increase again on 1st October 2002 to €6.35 per hour.
During 2001 a survey to establish the impact of the National Minimum Wage since its introduction was undertaken. While the survey found a very high level of awareness of the national minimum wage, its main finding was that of 2.7% of all male workers are paid at NMW levels while 7.3% of female workers are paid at this level. This amounted to an estimated 5% of all employees that benefited as a direct result of the introduction of the National Minimum Wage.
The aforementioned tax measures include the provision that the entry point to tax system was raised from €183 at present to €209 i.e. 90% of the current minimum wage.
3.4.1 Primary Indicator FÁS Vacancy Levels
A sample survey found that 76% of the vacancies had been filled 3-4 months later and that 54% of these had been filled by job seekers sent by FÁS. FÁS’ free vacancy-filling service was centralised under the IT based CALLNET system during 2001. Employers can register vacancies via a call centre or have the option of directly logging-on to the Job Bank computer system and making their vacancy directly available to all job-seekers.
Using the EURES system FÁS developed specific joint ventures with the National Employment Services of several countries. In the case of Germany, for example, FÁS organised three job recruitment events in Berlin, Magdeburg and Leipzig. Irish employers in four specific sectors - catering, call centres, health care and construction - attended these events. FÁS will continue its policy of selective overseas recruitment promotion in 2002. It is intended that specific recruitment events will be run in seven EU countries in 2002.
FÁS Employment Services register unemployed and other job-seekers and provide advice and assistance on jobs and career opportunities. In 2001 a total of 121,616 persons registered with FÁS Employment Services during the year. FÁS Employment Services placed 111,587 persons in jobs or FÁS programmes during the year.
3.4.2 Immigration. Ireland does not have a formal quota-based migration policy with country quotas or (with certain exceptions) special category immigration visas. We promote a system of work permits, work authorizations and work visas which aims to meet the needs of the economy while taking account of available labour in the domestic and wider EEA Labour Market.
The Work Permit scheme applies to all sectors and all skills. The Working Visa/Work Authorisation Scheme was introduced in March, 2000 to facilitate the recruitment of suitably qualified people for designated sectors where skill shortages are particularly acute. The designated categories were initially confined to information and computing technology professionals, construction professionals and nursing but it hoped to extend the scope of the Scheme to cover a range of professionals in the medical, health and social care sectors.
In light of the slowdown in the economy in 2001 and the more subdued employment performance predicted over the next two years, changes to the Work Permit Scheme were announced in December 2001. The guiding principles which underpin the new approach are as to ensure that:
In response to the range of issues to which the operation of the current Employment Permit schemes are giving rise it has been decided to introduce new legislation in this area. The preparation of legislation in this area is now at an advanced stage.
3.4.3 Future Skills The Government appointed an Expert Group on Future Skills Needs (EGFSN) in 1997 to address shortages in particular skills and sectors, and specifically in the IT domain. The Group was re-established with a formal mandate from the Minister for Enterprise Trade and Employment and the Minister for Education and Science during 2001. The analytical resources available to the Expert Group were strengthened through the establishment in FÁS of a new Skills and Labour Market Research Unit.
The Expert Group issued its third report in July of 2001. The report focused on the following skills areas: Construction, ICT Skills, Researchers and Life Sciences. A key theme running through the recommendations of the Group was the need for upskilling of those already in employment, especially in the ICT and Construction sectors.
The report also points out that at an occupational level, the occupations most vulnerable in the current economic slowdown are semi-skilled production operatives, skilled maintenance workers and scientific and technical workers. In the medium term, the labour supply should be broadly in line with demand at an aggregate level; the most significant growth rates are expected for managers, professionals and sales workers. The latest breakdown of employment by occupation and gender is contained in Appendix V. The following Table provides a forecast of occupations over the short term.
3.4.4 FÁS Skills Training
FÁS, through the provision of skills training for unemployed and redundant people, and co- funded by the ESF, has continued to take a proactive approach in dealing with skills shortages in I.T. and other sectors. This has been done in association with the Expert Group on Future Skills Needs. In the eighteen months to end June 2001 19,770 received training, well on target for the overall target of 35,000 for the period to 2006, while the placement rate is considered satisfactory at 46 per cent.
Compared to other EU countries the problem of an ageing workforce is not as acute in Ireland at the present time but will become more significant over the coming decade. Ireland’s demographic patterns, mirroring that of a decade or two ago throughout Europe, will see considerably less young people entering the workforce in the coming decade; hence the desire to see older people extending their working life as a source of valuable and experienced labour supply.
Ireland’s employment rate for older workers rose by six percentage points between 1997 and 2001. It can be seen that a comparatively high level of male employment in the cohort coupled with increasing female rates sees Ireland favourably placed in terms of achieving the EU target to 2010 of 50% employment within the age group. (The Irish employment rate for the 55-64 age group is almost eight percentage points above the EU average.)
While Ireland currently enjoys one of the most favourable employment rates in the EU for those between the ages of 55 and 64, demographic projections, as well as changing attitudes to work and retirement mean that a strategic approach towards recruiting, retaining and facilitating this group needs to be adopted. The imperative of mobilising labour supply from this group should be mutually compatible with their requirements for equality and social justice, thereby facilitating choice when the time comes to make the decision whether to stay in work or reap the benefits of pension entitlements they have gained over their working life. There is a particular obligation on employers to seek ways of retaining their older most experienced employees given the continuing tightness in the labour market. At the level of the workplace, the retention of older people is linked to the need for updated skills, flexibility in work arrangements and reconciliation betwe