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Employment myths expose weakness of the plan for jobs


Minister for Finance Michael Noonan at the Fine Gael's National Conference 2015 in the TF Royal Hotel Castlebar.
Pic:Mark Condren

Minister for Finance Michael Noonan at the Fine Gael's National Conference 2015 in the TF Royal Hotel Castlebar. Pic:Mark Condren

Minister for Finance Michael Noonan at the Fine Gael's National Conference 2015 in the TF Royal Hotel Castlebar. Pic:Mark Condren

Say something often enough, it becomes accepted wisdom. This communications strategy underlies the Government's emphasis of its Action Plan for Jobs.

We've seen multiple annual launches, more trailers, screenings and reviews of this plan than 'Fifty Shades of Grey'. Do the facts match the hype? Can the Government take full credit for 130,000 less on the live register? Is the plethora of state schemes achieving sustainable employment opportunities? Is the rate of job creation measurably slowing down?

Let's separate fact from fiction.

The first myth to debunk is that the Government creates jobs. Public sector employment has declined since 2011 by more than 30,000 due to successive voluntary early retirement/redundancy incentives.

So private sector employers are the sole conduit for net employment growth. The total workforce increased by 80,000 last year. Unemployment peaked in 2012 at 15.1pc and is now 10.1pc. This is only partly why the jobless figure stood at 355,600 last month. Emigration statistics remain startling. Last year, 42,000 males and 39,900 females departed while it is estimated 11,600 Irish people returned from abroad.

These trends particularly blight rural Ireland, with one in four families having experienced emigration since 2008. The safety valve of young people quitting the country to seek work is as prevalent as it was in the 1950s and 1980s. Cuts in the Jobseekers' allowance and the dis-allowance for those under 25 has accelerated the exodus.

Last year, there was a fanfare surrounding the 'Youth Guarantee'. Every young person who was unemployed for more than six months was assured of either a job, further education, work placement or training. I haven't heard much lately about this EU concept. After many months of deferrals, it simply hasn't materialised.

A major plank of the Government's youth employment policy is JobBridge, with 36,434 participants (aged 18 to 25) having enrolled up to this January. Despite more than 65,000 JobBridge positions being advertised, 45pc of posts advertised were never filled.

Many participants feel the National Internship Scheme is being abused by those seeking free labour and it causes job displacement. The National Youth Council of Ireland recently concluded that only 27pc secure full-time employment, with 31pc remaining unemployed after participating in the scheme.

We need to insist on a meaningful education/training element to such schemes and unskilled jobs should be excluded without valuable work experience.

Doubling the top-up payment from €50 to €100 per week would ensure a focus on the quality of the internship. There should also be a 'cooling-off period' before an employer avails of new recruits, which would close off obvious loopholes of abuse.

Much harsher criticisms apply to state youth training. The changeover from the discredited FAS to Solas has not been subjected to proper public scrutiny.

Last year, only 1,853 people registered in 27 apprenticeship categories covering construction, electrical, motor, engineering and printing. By 2018, acute skills shortages may be remedied. The Apprenticeship Council is still at consultation stages with employers after a year of its existence.

The construction industry is severely hampered due to the lack of qualified tradesmen, particularly in wet trades such as plastering and bricklaying. There's no shift of resources away from an academic college education which sees graduates overqualified, unemployed and not 'work ready' from an employer's perspective.

The most instant impact on jobs can come through the construction sector. Twenty thousand new houses converts into 50,000 jobs. We need 80,000 new houses by 2018.

Finance Minister Michael Noonan rightly calls for an end to the scapegoating of developers. Yet his Government seems devoid of new practical initiatives to immediately stimulate residential building. The biggest impediment to construction is the Government-imposed wedge of 23pc VAT and levies for social housing obligations.

The price differential between construction costs and the sale price of a house is the biggest disincentive to new-builds.

Apart from rhetoric, the Government resists the real initiatives needed to kick-start this labour-intensive sector.

Small, indigenous Irish firms are the backbone of employment.

Credit for extra personnel, plant and machinery is vital. But the banks continually deleverage, reducing net loan books and shrinking balance sheets. Four years of promises of a Strategic Banking Corporation of Ireland which would finance up to €4bn of Small and Medium Enterprise (SME) and cheap credit hasn't materialised.

Lending risks depend largely on commercial banks (mainly Bank of Ireland and AIB), so they'll only provide recourse loans through personal guarantees. Micro-Finance Ireland was to provide start-ups with €8m per annum - it hasn't attained a fraction of the initial targets due to red tape. Past achievements are no guarantee of future success. The IDA did well over the past five years. But inward foreign direct investment continues to cost €14,500 per job and depends on indefinite retention of the 12pc corporation profits tax regime.

Globally, between 2002 and 2013, the biggest game changer has been the emergence of China and India as a source of employment through €300bn investment. We aren't getting our fair share of new emerging corporate manufacturing projects into Europe.

We over-rely on US firms.

Where's the 5-10 year strategy to protect our market share of FDI from Asia, while we enjoy our unique status of being the only English-speaking eurozone currency economy?

The Government claims we'll grow employment by 40,000 jobs each year until 2018. The National Economic and Social Council says we have the worst household unemployment in the EU.

Talking shops like entrepreneur forums, endless reviews of Pathways to Work and lip service about competitiveness are no substitute for practical solutions. Cash subsidies to employers hiring off the dole, SME credit, Asian IDA offices, nationwide apprenticeships, the removal of welfare poverty traps and short-term tax initiatives for house builders would provide real solutions.

Irish Independent