Special European Council - Employment creation in Europe
Ireland welcomes the Special European Council which has been convened to discuss Employment creation in Europe. The 1996 Irish Presidency of the European Union placed the highest priority on Employment and the 1996 December Dublin European Council adopted the Dublin Declaration on Employment - The Jobs Challenge. The inclusion of a Chapter on Employment in the Treaty of Amsterdam has underlined the commitment to a co-ordinated European approach to the problem of European unemployment.
The potential for better co-ordination of the European fight against unemployment in the Treaty of Amsterdam must now be built upon. This Special European Council represents an important first step in this process. A key feature in assisting Member States in formulating employment policy is through the sharing of best practice on policies. Ireland offers this perspective on its own employment experience and strategy to assist the deliberations at the Special European Council and to contribute to the overall reflection by Member States on the formulation of policies on Employment. We in turn look forward to learning from the best practice and policies in other Member States.
Ireland's Continuing Unemployment Challenge
Ireland has enjoyed strong economic growth over recent years - averaging 7.5% over the last 3 years. This has arisen from a coherent strategy involving consistent macroeconomic, income and structural reform policies since 1987.
This strategy has been implemented in a series of National Programmes agreed between the Government and the social partners. These Programmes, in addition to securing the credibility of Irelands overall strategy, have provided a sound basis for employment growth. The principal outcomes have been:
Ireland's economic and employment performance (1987 - 1996).
Average economic growth of 4.9% (7.5% average over the last 3 years).
240,000 extra people in employment.
Unemployment rate down by 5.6 percentage points to 11.5% in 1996.
General Government deficit reduced from 8.6% to 0.4%.
General Government debt reduced from 116.2 % to 72.7%.
Labour Force Growth
This strong employment performance was essential given Ireland's unique employment challenge. This derives from the rate of labour force growth - a total increase of 12.2 % (ILO) over the five years to April 1997 as a result of :
(i) demographic changes, resulting in strong flows of young people into the labour force;
(ii) the relatively low, but rising female labour force participation;
(iii) the large number of Irish people who emigrated over the past 10 years (460,000), many of whom wish to return.
Consequently, in spite of rapid employment growth, Ireland continues to experience a significant unemployment problem, accounting for 10.3% of the labour force (on a standardised basis) in April 1997.
Long-Term Unemployment
A second problem is the extent of long-term unemployment, which increased by about 14% between 1990 and 1993. Long-term unemployment is associated with low levels of education, low skill levels and a chance of finding a job which declines as the duration of unemployment increases.
While the rate of long-term unemployment has fallen from a high of 11% to 5.6% in 1997, this has been possible only through a concerted programme of direct interventions to provide work opportunities in the social economy, and to subsidise the return to employment or self-employment. The numbers involved in these programmes are equivalent to 75% of the numbers recorded as long-term unemployed (ILO basis) in April 1997. Without this major targeted strategy, details of which are set out below, the measured rate of long-term unemployment would be very substantially higher.
Low Employment Rates
The employment challenge in Ireland is also great because of the relatively low activity rate of women in Ireland, (41.49 % in 1996 compared to an EU average of 45.3%) .
Unemployment and Social Exclusion
In addition to the economic burdens, the challenge of unemployment must be addressed because of the close links between unemployment, especially long-term unemployment, and social exclusion. This is especially the case where unemployment is transmitted across the generations and is reinforced by being concentrated in particular areas.
At present, 15% of Irish households containing children under 15 have no person employed. A total of 38 areas have been designated as particularly disadvantaged, using objective criteria, including unemployment rates. In each area, partnership companies have been established to tackle unemployment and social exclusion.
For that reason, reducing unemployment especially long-term unemployment, together with the associated issues of tackling early school leaving and the problem of urban blackspots and rural poverty, are central to Ireland's National Anti-Poverty Strategy. Under the NAPs, the Government are committed to halving the rate of unemployment and of long term unemployment by 2007, relative to the 1996 base figure.
EU Structural/Cohesion Funds
It is clear therefore that tackling unemployment continues to be a major challenge. In addition, Ireland is coming from a position of relative under-development and thus has a major deficit in its infrastructural base. This infrastructural deficit must be tackled over the next decade to ensure that the economy can grow sufficiently to provide for its expanding labour force.
A continuation of the performance achieved over the past decade is therefore not alone desirable but also necessary in order to address the still considerable economic and social challenges which Ireland faces.
Resources generated domestically to facilitate economic and employment growth have been augmented in a critically significant way by EU transfers through the Structural and Cohesion Funds. The European Social Fund in particular plays a major role in enhancing access to suitable employment and life long learning and in combating social exclusion. The Structural funds will continue to have a vitally important role to play in enabling Ireland to overcome the disadvantages inherent in its peripheral location and in adapting and modernising its systems of education, training and employment well into the next Millennium.
It would be particularly important to ensure an adequate availability of domestic and EU resources to address the deeply ingrained problems of underdevelopment, unemployment and exclusion in those areas which have not benefited from the positive performance of the economy.
Partnership 2000
The scale of Ireland's employment challenge set out above requires it to remain at the centre of public policy. With the tackling of social inclusion, this challenge is at the heart of Partnership 2000, the current National Programme agreed between the Government and the social partners.
Partnership 2000 provides a framework for the development of Ireland's employment system, including the priorities for the investment of EU Structural Funds, both under the current Community Support Framework and in the next Financial Perspective , arising from Agenda 2000.
It will also provide the basis for the preparation of Ireland's Action Plan, to be prepared in accordance with the Guidelines to be adopted at the Luxembourg European Council on Employment. The Action Plan, which will develop the elements of current policy set out below, will be progressed in consultation with the social partners.
Employment Policy Framework
Ireland fully subscribes to the four pillars of the employment policy framework as set out in the Commission's guidelines of 1 October last on Employment policy. These pillars are:
Entrepreneurship
Employability
Adaptability
Equal Opportunities.
Ireland also fully supports the Commission's assertion that these areas are interlinked and actions taken under each of the headings must form part of an integrated approach and be drawn together into a comprehensive strategy. From its own experience Ireland is convinced that this integrated approach offers the best conditions for achieving both the flexibility needed to adjust to changing market conditions and secure sustainable jobs.
Ireland would like to outline for the information of its partners key measures which have been taken by Ireland under each of the above headings.
Creating a new Culture of Entrepreneurship
Ireland's focus under this heading has been directed primarily at the following areas:
reduction of non-wage labour costs
easing the transition to new employment.
easing the administrative burden on small and medium sized enterprises (SME's).
On foot of these policies the following specific measures have been introduced.
A two tier Employer Pay Related Social Insurance system, with a reduced rate applying to income below a specific level, and a 1% reduction in Employees Pay Related Social Insurance.
An allowance of £80 per week before Pay Related Social Insurance is applied to wages.
Changes in income tax allowance and bands which reduced the tax wedge on low to middle income earners. As a result over the past 10 years the percentage increase in take home pay for a single earner at the average manufacturing wage has been 20 percentage points greater than the increase in their nominal gross pay (P2000 provides for continuation of this policy). In the case of a married couple, one earner with two children, on the same level of income the difference was 11 percentage points.
Introduction of a Back-to-Work Allowance scheme enabling long term unemployed to move into employment or self employment while still retaining part of their welfare entitlements - this scheme now provides 22,000 places.
Easing of the tax administration burden on small and medium sized enterprises.
Development of curricula and links between educational institutions and the business community based on the recognition that education and training for enterprise are a means of developing in young people those qualities which are essential to the promotion of a culture of entrepreneurship and the enhancement of the quality of adult living.
Creating a nationwide support structure - County Enterprise Boards - to support the creation and development of small business.
Promoting local development policies to maximise the economic and employment potential of local and regional economies and, in particular, to link the unemployed to existing and new job opportunities.
Creating a new culture of Employability
Ireland has concentrated considerable resources under this heading so as to equip the unemployed, particularly the long-term and youth unemployed, with the skills necessary to enable them to rejoin the employment market. The key measures which have been introduced are:
Promoting the personal development and employability of the long-term unemployed through support for the social economy. Community Employment (CE) with an average annual participation of 40,000, includes a training and personal development element which aims to increase participants employment prospects. In 1996 CE was revised to give even greater focus to the long term unemployed.
Other initiatives such as the Jobs Initiative (full-time jobs in the social economy targeted at those over 5 years unemployed) and Jobstart (recruitment subsidies for those who employ the long-term unemployed) are also aimed at the long term unemployed.
Establishment of a Local Employment Service directed by partnerships of employees, trade unions, local communities and the relevant state agencies. The LES is located in areas of greatest economic and social disadvantage and it is intended to provide the gateway or access point to a full range of options which should be available to enable the long term unemployed person or the marginalised young person to return to the world of work including guidance, training, education and employment supports.
Young unemployed people are offered guidance and support after 6 months. The primary objective is to ensure that they are brought into contact with the range of supports available from the public employment service. A customised development programme is offered to those who require particular assistance.
Promoting the skills needed for employment in the modern economy - the Government recently launched a £250 million Education Technology Investment Fund which will be used to develop technology education at all levels, ranging from primary schools to advanced research.
Promoting and encouraging adaptability
Ireland has focused its industrial, social development and fiscal policies on creating enterprises that are able to adapt rapidly to meet the challenges of the new world economy. This has involved the following measures:
Progressive adaptation of welfare and employment regulation systems to new work patterns, for example by extending social insurance and employee protection to part-time workers.
Investment in education, training, transport and communications infrastructure. This is particularly important in view of Ireland's peripheral location and the need to maintain and enhance the skill base of our economy at a time of rapid globalisation and technological change.
Improving the responsiveness of the education and training systems to meet education, social and economic needs.
Providing a range of preventive actions to optimise the participation in education of young people at risk of under-achievement and early school leaving.
Ensuring a balanced range of actions covering initial education and training, continuing training for those in employment and skills training for the unemployed to encourage the social and labour market participation of the disadvantaged and the unemployed.
Fostering the concept and attaining the reality of an Information Society. Ireland's development strategy for foreign and indigenous direct investment has focused to a significant degree on knowledge-based industries and operations in the information technology sector. This requires a particular emphasis on access to skills training and learning opportunities generally, especially in the interest of social inclusion.
Promoting flexibility through extending social partnership to the level of the enterprise. A National Centre for Partnership has been established with the social partners to encourage the development and
diffusion of arrangements for consultation, participation and gain-sharing.
Strengthening the policies for equal employment opportunity.
Ireland is committed to attaining full gender equality in the workplace by:
Ensuring women can participate on an equal basis in the workplace. The ongoing convergence of Irish participation rates with the European average is a clear signal that this is being achieved. Four of five people joining the Irish workforce at present are women.
Ensuring equality of access to employment supports, particularly training by:
- removing any remaining barriers to women's participation in training,
- reviewing training and education in non traditional areas for both men and women.
Developing a national framework for the development of the childcare sector.
Providing capital infrastructure for childcare in disadvantaged areas and developing new equal opportunity childcare initiatives.
Developing new work arrangements for both men and women which will be supportive of families in reconciling work with family life thereby helping to increase the number of women participating in the workforce.
A strategy which enhances equality and which develops a framework to pursue the full integration of women and of other marginalised groups into Irish society is being actively pursued. This strategy is being developed using a number of mechanisms including legislation. It is proposed to introduce employment equality, equal status and parental leave legislation. These measures, which will be pursued in tandem with non-legislative initiatives, will lay the foundation for a more equal and inclusive society in Ireland in the future.
Ireland very much welcomes the greatly enhanced co-operation and co-ordination of Employment Policies facilitated by the Treaty of Amsterdam. We look forward to the system of Annual Employment Action Plans and surveillance at EU level leading to a better employment performance in all Member States and in Europe as a whole. Our common objective should be that the new system we are establishing will have the same beneficial effects as the economic policy surveillance system which has helped to generate sound macroeconomic policies across the Union.
We believe that the Irish strategy of Social Partnership in tandem with proactive measures has proven its worth in terms of employment creation. The strategy requires to be maintained and developed in order to address Ireland's very significant employment challenge, especially in the interests of tackling social exclusion. Ireland is committed to engaging intensively in the enhanced process of co-operation and co-ordination of EU employment policy so as to ensure that the Union can deliver on the greatest priority of all for its citizens; access to secure, sustainable and satisfying employment.
19 November 1997