The government’s new ‘Action Plan for Jobs’ has a total of 333 initiatives, spread out over 16 departments, and 46 agencies or offices. It is a continuation from the 2012 ‘Action Plan for Jobs’ which, it has been claimed, saw the implementation of 90% of the 270 initiatives contained within it. Despite the high level of implementation, the government makes no mention of how successful the measures were in creating employment. There has been no public evaluation of the 2012 ‘Action Plan’. Without knowing how effective the previous ‘Action Plan’ was it becomes more difficult to assess the suitability of measures contained in the new one. Until a more systematic analysis of the impact of the previous action plan takes place, we are forced to rely on anecdotal evidence and employment statistics to determine the new action plan’s potential. This article will focus on the ‘disruptive reforms’ as they make up the majority of the new initiatives in the Action Plan.
Unemployment remains a key concern for the current government and its ‘Action Plan for Jobs’ is the central pillar of their strategy for job creation. The unemployment rate currently stands at 14.7%, representing a decrease of 0.4% over the past 12 months. This is the first year that the rate has declined since the start of the financial crisis. Recent figures from the CSO confirm this positive trend, with their 4th quarter figures for 2012 showing an increase in the total number of people in employment for the first time since the recession began in 2008. There has been growth in the private sector with approximately 20,000 jobs created last year but this was mitigated by the reduction in the number of people working in the public sector, which fell by approximately 16,000. Emigration also remains a concern, with the rate of emigration playing a role in reducing the severity of the unemployment problem. The unemployment rate of 14.7% compares unfavourably with an EU average of 10.8%. It is the 4th worst rate in the EU, with only Spain, Greece, and Portugal doing worse. The one positive in this is that while the EU rate has increased by 0.6%, the Irish rate has decreased. It is unclear how much of the increase in the overall unemployment level is due to dramatic rises in Spain, Greece and Portugal. The number of people under 25 who are out of work is also cause for concern with an EU average of 23.6% compared with an Irish rate of 32%. The long-term unemployment rate is holding steady at 60%.
Action Plan Initiatives
The structure of the new ‘Action Plan’ raises a few questions. It misrepresents the real number of reforms, and job creation programmes, that the government is implementing. Firstly, many of the initiatives are continuations of previous ones, rather than new proposals themselves. Not only does this exaggerate the figures, but, more importantly, it gives added credence to the argument that a detailed, public review of the 2012 plan is necessary. Secondly, many of the initiatives could have remained as part of a single policy or process, rather than being split into meaningless sub-initiatives. For example; a number of initiatives describe the continuation of existing programmes, promotion of new programmes, or giving consideration to the development of potential programs. Surely considering doing something does not count as an initiative for job creation in itself. There is not a great deal of new thinking in any of the above points, and it is perplexing why they would be counted as distinct initiatives, other than to bump up the numbers. That being said, there are a number of positive proposals in the ‘Action Plan’ that should be beneficial to job creation.
The headline announcement from the government was the launch of seven disruptive reforms to stimulate job creation. They are:
1. Make Ireland the leading country in Europe for Big Data.
2. Produce a greater number of ICT professionals.
3. Streamline and centralise the licensing application system for businesses.
4. Get more small businesses to trade online.
5. JobsPlus, incentivise the hiring of long-term unemployed through wage assistance.
6. Make Ireland more energy efficient.
7. Make Ireland a Health Innovation Hub.
The reforms can be divided into three different groups; efficiencies (reforms 3, 4, 6), industry (reforms 1, 7), and unemployment and retraining (reforms 2 and 5).
1. Efficiencies: Three of the reforms focus on business efficiency and modernisation. The streamlining of the licensing application process is a useful and practical reform that should make life easier for businesses by reducing the regulatory burden on them. Any measure that promotes Ireland as a place where it is easy to do business will bring positive benefits. Promoting online trading should help SME’s to modernise their business models and encourage them to sell more internationally. It is very difficult to develop international sales without first acquiring the skills to promote your business online. This could bring additional benefits to businesses that are currently relying heavily on a stagnant domestic economy. Making businesses more energy-efficient, particularly as fossil fuels become more expensive, has the potential to create significant savings if done correctly. However, this is a long term measure, with targets set for 2020. Energy efficiency is something that will become more important in the future but describing it as a disruptive reform that will generate employment in the short term is misleading. It is a good policy but one that will do little to confront the current unemployment crisis, despite government predictions. The government has overestimated the immediate job creation impact of these reforms, however, they will make SMEs more competitive over a longer period and should be welcomed in that regard.
2. Industry: Industries with large growth potential and a need for a highly-skilled workforce will receive large government support and investment. Over the last few years Ireland has developed a reputation as an ICT hub, and our ability to attract leading ICT firms is increasing rapidly. IDA Ireland has been very successful in attracting such industries to Ireland, and they have continued to create employment over the last number of years. Jobs are available in this sector for people with the right qualifications. ‘Big Data’ was highlighted as an area of ICT in which there is a global shortage of companies and talent. Over the next few years the government plans to make Ireland a centre for big data. This is one of the most constructive initiatives in the ‘Action Plan’ and it will build on our past successes in the sector. The second disruptive reform addressing Irish industry is the goal of making Ireland a health innovation hub. It is similar to the ICT initiative in that it will build on past achievements in attracting leading medtech and biopharma companies to Ireland. It is also an industry that has continued to grow rapidly through the recession. The IDA has excelled at attracting these companies to Ireland and it is important that the government can match the level of FDI with sufficient numbers of qualified graduates.
3. Unemployment and Retraining: The goal of producing more ICT professionals is a useful adjunct to making Ireland a centre for Big Data. This also follows the recommendations of the EGFSN which has identified skills shortages across the industry. ICT also has the highest percentage of ‘difficult-to-fill’ roles (33%) of any industry. Springboard made available +2200 ICT places in 2012, and the one-year skills conversion course has provided a further 769 places. The government has funded 6,000 ICT places since 2011. The 2,000 ICT professionals that the government has promised this year will come from these pre-existing initiatives, as well as the increase in full-time university students graduating with ICT qualifications. Despite the fact that the work has already been done to accomplish this target, the long-term goal of increasing the number of ICT professionals will be beneficial, as the ICT sector continues to expand. The most innovative reform is the ‘Jobs Plus’ initiative aimed at encouraging businesses to hire a long-term unemployed person. The state has promised to pay 23% of the minimum wage cost, over 2 years, of an employee hired from the long-term unemployed. The hope is that by reducing the wage burden businesses will be more inclined to hire from this under-skilled group. The extra training required when hiring someone who has been unemployed for a long time will be mitigated by the savings provided by the government scheme.
Young men from the ages of 20-30, with a background in construction, are the most difficult group to get employed again, as their skills are not readily transferable to other industries. It is worth questioning just how suitable an ICT retraining program would be in getting these people back to work. ICT is a challenging career that not everyone is capable of thriving in. Internships and training programs that focus on ICT, finance, and science will only capture a very small portion of this segment of the workforce. The government is overlooking one of the largest segments of the unemployed by focusing its recovery programme on such a narrow set of industries. Increasing the amount of talent available for industries that are prospering is the right thing to do, but it should not be the sole focus of government programmes aimed at solving the unemployment crisis, because it will be to the detriment of a significant amount of those seeking work. Initiatives aimed at retraining this group need to be revisited.
Potential for Success
The numbers enrolling in back to education and retraining programs are reassuring, but more needs to be done if we hope to see a dent in the long-term unemployment figure of 60%. These are the most difficult people to get back to work because they often lack appropriate skills and know-how. A large proportion of these people are also under 25 and so have a shortage of work experience as well as skills. The ‘Jobs Plus’ scheme should be helpful in this regard, and along with ‘Job Bridge’, which has 5790 people currently on internships, will assist these groups in returning to work.
Despite some positive signs, unemployment levels remain significantly above EU averages. The process of retraining, however, is a gradual one. The government has provided a significant number of targeted retraining programs since 2011. We should expect to see these initiatives start to bear fruit over the next couple of years as people finish their courses. Nevertheless, retraining is only one aspect of job creation. The government has not been successful when it comes to stimulating growth in the domestic economy. Its achievements, however notable, have been confined to the export sector. A decent start has been made but there is still a long way to go.
Colman Collins, Managing Director of Collins McNicholas says:
“I attended a Chamber of Commerce Seminar in Galway on March 25th where Minister Bruton gave an update on the Action Plan for Jobs and then took a wide range of questions from the large audience who attended this event. The Minister clearly had an excellent grasp of his brief and fielded all questions confidently and comprehensively.
The general consensus at the meeting was that the initiatives were welcome but that many companies were unaware of the range of incentives available to employers and it was also felt that employers, particularly those with limited finance personnel, would struggle to draw down the grants available.
The Minister was fully aware that the drawdown on the various schemes was very low and he fully accepted that the major challenge facing his department is to communicate the schemes more effectively to employers and to also to make them more understandable to employers who want to concentrate on their core business activities and not be trying to be doing the job of Company Accountant.”
* Jobs Image courtesy of Stuart Miles at FreeDigitalPhotos.net