Monday, 13 April 2009

Labour proposals on job creation

Slí eile: Being a small island country on the edge of Europe, there was a time when we were taught at school that ‘Ireland has no natural resources like coal – we just have peat in the bogs and grass for cattle’. That was proven wrong by the long-term impact of a significant investment in education that bore fruit in the 1990s (along with other factors).

While nobody should claim that education and training are the magic silver bullet to deliver peace, prosperity and progress, the most recent Labour Party proposals for economic recovery (published 6 April, and following an earlier document on the Emergency Budget), Just the Job, hit the nail on the head in identifying investment in ‘a skilled population’ as the cornerstone of a plan to move to a new phase of economic development in this island’s history. The price placed by markets on bricks, mortar and financial pieces of paper with promises to pay someone, sometime, somewhere may have collapsed, but, as incoming President Obama said in his inaugural speech in January:

Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year. Our capacity remains undiminished.

Following, by now, the familiar pattern of numerical listings – ‘ten-point’ plan (ICTU), ‘ten lessons’ (Henriksson), ‘5 action areas (Government Smart Economy Action Areas) – Labour proposes ‘ten ideas’. Eight of these refer to education and training.

Ten ideas

  1. Redraw the NDP to prioritise labour-intensive projects (with specific mention of school buildings);

  2. Incentivise job creation (including measures to eliminate employer PRSI temporarily when they employ someone out of work for more than 6 months);

  3. Reduce the cost of doing business (especially in particular ‘sheltered’ sectors via competition policy, regulation and direct price controls where necessary);

  4. ‘Earn and Learn’ combining work and training and protection of most of worker’s income during periods of shorter working time combined with part-time training;

  5. Bridge the GAP from unemployment to work via a ‘Graduate and Apprentice Placement Scheme’;

  6. Reduce the qualifying time for Back to Education allowance (from 12 to 3 months);

  7. Lift the cap on places in Post-Leaving Certificate programmes (currently at 30,000), expand VTOS and BTEI places for the unemployed as well as make better use of existing capacity in IOTs;

  8. Create skills exchanges;

  9. Make literacy a national priority; and

  10. Tax back for full-time study (with a maximum claim of two years and an initial limit of 2,000 applicants)

The thrust of these proposals is correct – making better use of existing schemes rather than launching new ones, prioritising skills especially among those most vulnerable to job loss, removing some existing anomalies and disincentives to learning while working or while unemployed. ‘Flexicurity’ is already a well established practice in Scandinavian countries and the Netherlands, combining social protection arrangements with job protection. In an Irish context, a more proactive approach by public agencies in seeking out and training persons at risk of unemployment is needed.

On the downside, some of the proposals need more careful consideration and debate – in particular the following:

  • Is reducing employer PRSI a cost-effective way of incentivising employment, especially considering the internationally low level of employer PRSI contributions here?

  • While proposed schemes such as GAP and improvements to VTOS, BTEI and the like would be most welcome – should more emphasis be given to people who are effectively excluded from the labour force for one reason or another?

  • What role is there for ‘demand management’* policies to complement the supply-side proposals in this document?

  • Is the idea of giving ‘tax back for full-time study’ sensible, given that the country is awash with all sorts of tax reliefs for all sorts of deadweight activities?

* by demand-management it may be possible to generate new employment, new skills and meet new social needs in areas such as social housing, pre-school centres and primary health care teams by taking charge of ‘written-down’ assets in our soon-to-be-nationalised banks, not to mention the toxic one we have already nationalised.

In summary, we have a choice –

We can try and cut our way out of this economic impasse and, in the process, accept a rising level of unemployment with all the waste and human tragedy that this involves (that is the way the UK and Chile did it over quarter of a century ago); or

We can try and invest our way of this economic impasse and, in the process, re-position Ireland in a very different global market where more than ever educated, skilled and wise peoples will have the opportunity not only to compete with other peoples but cooperate with them to raise living standards and the true quality of life (that is the way Sweden and Finland did it in the 1990s).


Anonymous said...

At the same time we need to have a discussion about the focus of education and training, which is often very narrow and influenced by short-term economic interests

Keith said...

I genuinely enjoyed this article.

I don't think we should lower employer PRSI, not for the reason of our comparitively low rates, but more that currently at that rate is forms 34.6% of the Social Welfare Budget.

But Labours proposals may offset that with the increased employer PRSI intake...


Mark Nejmeh said...

I believe this article comes from a very narrow perspective. Investment in these types of areas must be accompanied by investment in real technology development simultaneously. Why not also have more support of the commercialization of technology and protection of the intellectual properties that change the world. Large conglomerates are strangling the innovator and the financing arena for start-ups is completely broken. Want full employment? Protect the innovator and promote investment in tangible technologies. Thw world can move ahead together. Education improvement should be a constant at the same time all the time.