Govt lip service will not create a single job
Issued : Saturday 17 April, 2010
Statement by Willie Penrose TD
The motions for discussion on the Agenda here to-day have as a common theme, the need to urgently put in place policies and schemes to deal with the horrendous rise in unemployment which has now reached a level not seen since the 1980's and which represents a waste of talent and resources which will have negative effects for years to come.
The present Government while paying lip service to the need for measures to reduce unemployment is much more preoccupied with rescuing the banks. Their strategy for economic recovery is to make those who benefited least from the boom to pay most for its reckless investments.
In the Nineteenth Century when Irish landlords lost money on the gambling tables in London or Monte Carlo, the rent paid by tenants was raised to pay the debts. Workers and the unemployed must now pay for the gambling debts of some of our Bankers in the form of reduced wages and lower public spending.
Unemployment has negative effects that go beyond the loss of income, on people of any age, and sustained unemployment when young has very negative long term consequences for those who experience it. Young people who are unemployed at the beginning of their working life, tend to have lower productivity, lower incomes and poor labour market experiences later in life.
As the U.K. Economist, David Blanchflower, who is an authority in youth unemployment has written "unemployment in youth creates permanent scars rather than temporary blemishes"
The Labour Party strongly believes that Research, Development and Innovation has a key or central role to play in the development of the Irish Economy.
Recently I.D.A. Ireland launched Horizon 2020, it's strategic blueprint and roadmap for attracting Foreign Direct Investment (FDI) into Ireland for the next decade. Under this strategy, the aim is to create 105,000 new jobs by the end of 2014, and the plan is to attract 640 new foreign direct investments into the country, with 50% of these investments targeted for location outside the major centre of Dublin and Cork. By 2014, I.D.A. Ireland plans to spend in excess of €1.7 billion annually on research, development and innovation to transform the economy and create high quality jobs.
This is a highly ambitious document, and the Labour Party acknowledges the important role that foreign direct investment will play in helping to turn around our economy and rejuvenate enterprise and business.
Attracting and developing high tech enterprise and investing in research and development will be key to developing a strong economy and helping to pull Ireland out of the current recession by creating sustainable jobs, increasing competitiveness and boosting exports.
I salute the IDA and Enterprise Ireland and the work they are doing in their respective areas, but why hasn't the Government prepared a 10 year blueprint or plan to ensure that small and medium sized enterprises prosper and develop, and which up to the beginning of the recession numbered about 250,000 in total and created 750,000 jobs.
There has been an abject failure on the part of the Government to recognise the fact that these small business, many of them family owned and/or operated, were the backbone of the economy, and were resilient and adaptable, and which provided 3, 4, 5, 8 or 12 jobs in many villages and towns across this country, and were instrumental in maintaining the social fabric of rural communities, and instead of coming to the aid of some of these enterprises to help secure them against the cold winds of this recession, the Government have virtually abandoned them.
The Labour Party is committed to supporting enterprise, and in supporting in every way possible the job creation capacity and potential of our indigenous small to medium firms.
The Government has concentrated it's energy and resources upon fixing the Banking crisis and attempting to address the Fiscal Situation, but has failed to address the significant and fundamental problems of the real economy - the plight of the unemployed, where we have witnessed an increase of 250,000 in the number of people who have been registered as unemployed in the past 2 years, and there are forecasts predicting that we could have another 60,000 to 70,000 on the Live Register before the end of the year.
We know the banks have lost their edge in small business lending, and the banks themselves do not appear to have the capacity to lend to S. M. E's and to firms with high growth potential. Therefore it is abundantly clear that we need a new investment bank to address the project capital and S.M.E funding gaps that are glaringly apparent, and which will play a crucial role in helping to reduce unemployment.
Viable businesses are being forced out of business, others are being prevented from expanding by the shortage of credit, and new ones with potential, are being denied an opportunity to get off the ground at all. This is why the Labour Party has launched a proposal for the establishment of a Strategic Investment Bank, which we believe would play a central role in the recovery and transformation of the Irish Economy. We believe that the Irish Economy must be weaned off its dependence on property and consumer credit, and be re-invented as an export-led sustainable investment economy.
The Strategic Investment Bank would represent a new Greenfield bank modelled on a mixture of the ICC/ACC concept, which would have a clear mission to support investment in SME's and innovative firms, and to assist in the funding of infrastructural investment. Labour has always argued that necessary action to deal with the banking crisis and with the budget deficit, must also be accompanied by a strategy for jobs. To this end, we believe and more importantly know that the S.I.B would play a vital role in that jobs strategy, securing the existing jobs, and creating new ones.
The S.I.B. will have a mandate to lend directly to the enterprise sector - providing working capital and growth capital, including asset finance, such as for fixtures and fittings, or for capital equipment. It could if required make venture capital investments on behalf of the State in innovative SME's with high growth potential, especially in the digital economy and low carbon technologies.
Ireland needs investment in infrastructure like renewable energy and next generation communication networks. This will create the environment for a new wave of indigenous companies focused on the huge opportunities that will arise as a result of the expansion of digital technologies and the transition to a low carbon economy over the coming decades. Providing finance for this new innovative economy will be one of the roles of the S.I.B.
Creating jobs is the key to getting Ireland moving again, and the Strategic Investment Bank is just one of a number of proposals that The Labour Party has advanced as part of our Jobs Strategy. We remain automonous and have sovereign competence in respect of decisions we make in relation to taxation, so why has a proposal we made, in relation to "P.R.S.I. holiday" for up to 18 months in respect of Employer's P.R.S.I. where a firm takes on a person who is unemployed for a set period, for a real job, which is full time and is not a replacement job, not been taken on board by the Government as a constructive proposal.
We are aware that every person on the live register costs more that €20,000 each year in terms of social welfare payments and tax foregone. So we have to be innovative, and old solutions dressed up in new clothes are no longer appropriate. We also need to fund a major programme of further education training and work experience for young unemployed people.
We need to generate far more sustainable jobs in local communities and County Enterprise Boards have been very effective in such job creation but they are hampered by limitations on the type of enterprises they may assist and on the number of jobs such enterprises may create.
We will strengthen and expand the role of County Enterprise Boards who have played a pivotal role in promoting microenterprises, and helping to generate more innovative companies, which is the cornerstone of the whole innovation cycle in Ireland. In this respect, can I quote the comments of the C.E.O. of Satellite Broadband, Kevin Ryan, who is based in Mullingar, and who together with Sean Og Brennan in little over 18 months have created over 30 jobs, with a promise of 20 more in the next 12 months, when he addressed the Joint Oireachtas Committee on Enterprise, Trade and Employment, in relation to providing broadband facilities to the people of rural Ireland, which they identified as a niche market
"Without the funding lifeline, the mentoring and support we received from Westmeath County Enterprise Board, we would not be where we are today, so it is important to keeping this funding door open".
Our pledge is to do exactly that and more, as we see these microenterprises and small businesses as playing a pivotal role in ensuring that we recover quickly, and give hope and confidence to our people, and especially the 435,000 of our fellow citizens who are currently unemployed.
We must subject The National Development Plan to scrutiny and prioritise all the projects which are "shovel ready" to proceed, and thereby give a boost to the many thousands of construction workers who have lost their jobs.
Likewise, there are hundreds of schools across this country which are in urgent need of upgrading and refurbishment, and in some areas new schools are required. We can now get great advantages in terms of construction tenders which are extremely competitive, and in pursuing this policy we can get rid of a pre-fab culture which has taken hold across the country, as a very expensive answer to accomodation needs. We can also provide warm and comfortable accommodation for the students and staff alike, and of course again boost employment opportunities for all the requisite skills in the construction industry. It is a win-win situation for everyone concerned, and we all can see it except this obstinate and ostrich like Government.
The Tallaght East Branch has called on the party to oppose the abolition of the national minimum wage and Galway West Constituency Council calls for the protection of the rights of vulnerable workers. I fully support both these motions. As always happens when unemployment rises, the political right, not willing to accept the failure of their policies, seek to explain unemployment as being the result of unemployment benefits or the minimum wage level, USA employment is higher in states that have a minimum wage than those that do not. The Scandinavian countries have the highest unemployment benefits in the world but have low unemployment. There is ample evidence from many countries that what Marx called the reserve army of the unemployed is a conscript army, not a volunteer army.
We need to adopt a much more pro-active training programme both for redundant workers and for new entrants to the labour force. The cap on the VTOS scheme should be lifted at once and the Institutes of Technology should be given more resources to enable them to expand the number of places they provide. Because of declining numbers of school leavers some of the I.T's have spare capacity which could be used for training and retraining workers. The time which must elapse before an unemployed person is entitled to Back to Education Allowance should be shortened or eliminated. In Sweden a worker made redundant is immediately entitled to a training place or further education. We still have a Victorian attitude to the unemployed whereby they must be made suffer a period of deprivation before they are entitled to enhance their employment prospects.
We need to generate hope, instil confidence, impart solid leadership, and together we can get to tackle the threat of long term unemployment, and remove the spectre of the emigration plane which has bedevilled our country in the past, and which is raising it's head again, in the past year.
