Cabinet Meeting on Jobs
This is a slightly longer version of the analysis piece I wrote in this morning’s edition of the paper – with some additional commentary – putting the three Government initatives to date on job creation into context:
In less than two years the Government has announced three separate job plans. One has promised 100,000 extra jobs by 2016; the other two each claimed 13,000 new jobs in the economy, a total of 26,000.
It’s when you begin to drill down that you encounter the cliché of ‘lies, damn lies and statistics’. On the employment front, the Government will point to ‘wins’ in tourism, where 6,000 new jobs have been created. There are also the recent Enterprise Ireland and Industrial Development Agency annual figures which collectively show a net gain of more 10,000 new jobs 2012. But then when you turn to the CSO’s National Household Quarterly Survey you see that there was a marginal (0.2 per cent) decrease in the number of people employed at the end of quarter 3 in 2012: falling 4,300 to 1.841 million.
So as the Cabinet meets today to discuss its Jobs Action Plan for 2013, it is against background of being actually further away from achieving its goal of creating 100,000 extra jobs in the Irish economy by 2016 than it was before it started its major plan in 2012.
The Minister for Jobs and Enterprise Richard Bruton has characterised the economy as “one in transition”. He has argued that the Government has been successful in targeting growth in the high-potential sectors where sustainable jobs will be created in future. They include exports; the green economy; the International Financial Services Sector; information and communications technology; cloud computing; food; health and life sciences; pharmaceuticals and medical manufacturing.
Against the good news in certain sectors and pockets of the economy, there is the continuing ‘drag’ on employment in sectors that continue to ‘correct’ as a result of the recession – namely the obvious one of construction; as well as the domestic financial sector and the public sector (the latter which has shed 16,000 jobs since 2011 in central Government and State agencies).
Even before forming a Government, both Coalition parties had made promises of a ‘jobs budget’ within the first 100 days. What materialised in May of 2011 was a slightly lesser animal – a jobs initiative.
The plan, unveiled by Minister for Finance Michael Noonan, was still ambitious, with a budget of €2 billion over four years, funded (controversially) from a raid on private pension funds. In return, Noonan introduced a number of stimuli specifically geared towards tourism. It included a lowering of VAT to 9 per cent targeted at food, hotel, holiday, entertainment and sporting facilities. Air travel tax was also to be reduced if airline companies could show how they would increase passenger numbers. However, the Minister and the airline industry didn’t see eye-to-eye on this and it remained at €2 per head. There was also a reduction of employer PRSI to encourage job creation. The internship scheme, jobsbridge.ie, was also unveiled.
So what bang did the taxpayers get for their buck? The most comprehensive analysis is contained in an appendix to the Medium Term Fiscal Statement in November, which examined the VAT reductions in the tourism sector, which cost €150m per annum.
The study showed there was a “pass through” in prices in this sector, in that they fell marginally once VAT was reduced. It showed the number of jobs in the sector increased by 6,200 but could not say whether all were attributable to this change.
The second specific initiative was the jobs stimulus plan announced by Howlin in July 2012. That committed €2.25 billion to specified capital projects comprising roads, schools and primary health centres, including those in Minister for Health James Reilly’s constituency. It has also claimed that up to 13,000 jobs will be created by a plan which is still in its very early stages.
The third big initiative was the Jobs Action Plan for 2012 announced last January. It set out 270 distinct actions across all 15 Government departments and State agencies. They ranged from major (advanced broadband targets, a national waste strategy, the Credit Guarantee Bill; cloud computing; a microfinance fund) to minor (“leverage the potential for language and roots tourism”) and also included actions that would have happened anywhere. While it was clear from some of actions completed that there was an element of box-ticking, the argument made by Mr Bruton its specific targeted nature would address what commentator Eddie Molloy described as the ‘implementation deficit disorder’.
Still, arguably the Government should have concentrated on what was important and vital rather than throwing everything into the strategy. Some of the 270 actions consisted of getting complicated legislation through while others consisted of nothing more than holding a meeting and agreeing that, yes, this issue was important. Fianna Fail’s record on job creation was dire towards the end of its time in government. Still, there was some merit to Dara Calleary’s argument today that a lot of the actions were vague, and that for some of the, getting them completed seemed meaningless.
An extra 100,000 jobs was promised: 20,000 in manufacturing; 30,000in international traded services; with another 50,000 spin-off jobs. There’s still four full years to go and it is a long-term strategy but its goals are still a long way off.
Jobs Initiative May 2011: Cost €2bn. Goal 13,000 plus jobs
Jobs Action Plan, Jan 2012: Cost: n/a. Goal 100,000 jobs by 2016
Infrastructure Stimulus Plan, July 2012: Cost €2.25bn. Goal 13,000 jobs
Number of people employed September 2012: 1.841m (down 4,300)
Number who have gone through jobsbridge.ie (to end of 2012): 12,000
Net increase in Jobs in tourism sector (byQ3 2012): 6,200
Net increase in jobs under aegis of IDA 2012: 6,000
Net increase in jobs under aegis of EI in 2012: 3,800