Thursday 23 November 2017

Jobs plans are 'impressive but limited', EU experts suggest

CRITICISM: OECD deputy secetary-general Yves Lenterme at last week’s launch in Dublin. Photo: Shane O'Neill/Fennells
CRITICISM: OECD deputy secetary-general Yves Lenterme at last week’s launch in Dublin. Photo: Shane O'Neill/Fennells
Dan O'Brien

Dan O'Brien

IT is easy to conclude that the political and administrative system in Ireland suffers from some kind of organisational sleeping disorder. Almost as soon as pressure to act eases, the system gradually slumps back into its default stupor state.

It rouses again only when the din of crisis disturbs its slumber. Then, as it rubs its eyes, the problems it sees are depressingly familiar. Examples abound. The most egregious relate to jobs.

The 1951 census shows that 1.2 million people were at work in the Republic at that time, as the first chart illustrates. Over the course of the next decade, while the rest of Europe enjoyed a boom, Ireland slumped. By the census of 1961, just over a million people worked, a job-destruction record without parallel anywhere else at that time. The national trauma of unemployment and emigration raised questions about the viability of a State which had only been in existence for a few decades. Crisis eventually brought a change of direction and things improved.

But all too soon it happened again.

From the early Eighties to the late Nineties, Ireland had one of the highest unemployment rates in the developed world, as the second chart shows, and emigration surged again. As late as 1997, more than 10 per cent of the workforce was jobless.

Given these two separate bouts of disaster in the labour market, one might have thought that politicians and senior civil servants would have been hyper-alert to ensuring such awfulness was never repeated.

But with the Celtic Tiger good times rolling, those at the helm reverted to type and went back to sleep. By 2007, according to one less commonly cited measure of unemployment (the share of households in which no adult works), Ireland had the second highest rate among 31 European countries. This huge social and economic problem was simply ignored, if it even registered.

Instead of using the bubble-era cash to invest in skills and services, such as childcare, so that people in these jobless households could be helped clamber out of the welfare safety net and back into work, the easy option of ramping up cash welfare payments and widening eligibility was chosen. The scandals in Fas, the State training agency, were just one manifestation of the system's do-nothing default mode.

Then came the reckoning.

"The onset of the crisis overwhelmed Ireland's fragmented system for the delivery of placement and other employment services." That was the very polite description of the State's preparedness for bad times last week by the Organisation for Economic Co-operation and Development (OECD).

The wonks of the Paris-based organisation – a global brains trust with some of the best expertise in the world on public policy issues – were in town last week. They launched their "preliminary" assessment of the Government's annual Action Plans for Jobs (APJ), the third of which was recently published by Richard Burton, the Minister for Jobs, Enterprise and Innovation who co-ordinates it.

An evaluation by an organisation as respected as the OECD is important in its own right. It is even more important given that, more than any other target, the Government has stressed job creation as the measure of whether its time in office succeeds or fails.

The hard employment numbers are the Coalition's trump card. Ireland has enjoyed the fastest rate of job creation of any country in Europe since the middle of 2012. The speed and scale of the turnaround has been quite extraordinary.

To what extent it is attributable to Government actions is impossible to say with any accuracy, but there is no doubt that the response has been more rapid than in either the Fifties or the Eighties, with changes in those decades respectively occurring as late as 1958 and 1987. The range of measures taken specifically aimed at the labour market by the current administration is also incomparably greater than in the two earlier decades of crisis.

Last week the OECD gave credit where it was due, noting the Plans' considerable number of strengths. These included the scope of their many measures and the use of strict implementation deadlines to keep pressure on the not insignificant few in the system who, even in times of crisis, do not like to have their long-established rhythms disturbed.

But there was also some constructive criticism, even if it was cloaked in subtlety of a kind that was marked even for the OECD (more of which anon). Reforms in the 2013 APJ represent "impressive ambition in a limited number of core areas", the report stated. The qualifier "limited" is (strong) OECD-speak which translated into English means "not proportionate to the scale of the challenge".

And it is the latter criticism that has long been the main critique of the APJ. Where interest groups are large in number and/or deeply embedded in the system, the Government has shown a distinct reticence to discommode them.

"Public training curricula has often been seen as slow to adapt to changing business needs, and trainers often do not have up-to-date skills themselves," the study found. That trainers who are not qualified are still being paid is a serious indictment more than half a decade into the jobs crisis.

One of the many negative results of this weakness is that the alignment between the employment and skills system on the one hand, and employer demand on the other, was ranked seventh out of nine countries in the OECD studied.

On the single biggest programme aimed at helping people back to work, and which accounts for one-third of the total budget devoted to "activation" measures, the report says it should be "reconsidered" because "several evaluations have suggested that it is not a very cost-effective programme, especially in terms of getting the participants back into regular employment". That a centrepiece policy aimed at getting people back to work is "especially" weak at doing just that speaks volumes.

Apart from the reticence to take on politically fraught challenges, the report also identifies long-standing weaknesses of a more managerial and technocratic nature.

Although considerable progress has been made on ramping up the system's capacity to evaluate all kinds of government programmes, the report finds that "implementation could be further supported by a robust performance assessment and monitoring framework that tracks the impact of APJ actions against quantifiable outcomes and results targets".

It also identifies weaknesses in the extent to which the entire effort is joined-up in its approach, stating that "the Monitoring Committee appears to focus mostly on the implementation of specific actions under the APJ, while playing a limited role in policy co-ordination". In one example it urges a more joined-up approach involving functions such as "strategy setting, policy execution and performance monitoring".

Perhaps most surprising about the report was the failure to mention another OECD study from last year (on our poor showing in a survey of adult skills levels), and the toning down of criticisms of the plethora of State supports for innovation made in yet another report last year.

Why?

It may be because last week's report was not part of the normal OECD reporting cycle, but was specifically requested by the Government. Its preparation was overseen by the office of the OECD's Secretary General, not the usual committee system in Paris which involves more people, and arguably more rigour. At the report's launch on Tuesday, the think tank's deputy Secretary General (unusually) shared a platform with Richard Bruton.

Given all this, it is very hard to avoid the impression that punches were pulled. That is good neither for Ireland nor for the OECD itself, whose credibility depends entirely on the rigour of its work. A more arm's-length approach would be best.

Sunday Indo Business

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