NESC publishes Council Report 125: Promoting Economic Recovery and Employment in Ireland

• 2 February 2012
• Types: Press Releases

Dublin, Ireland

• Austerity on its own will not be enough, additional policy initiatives are needed to promote economic growth and employment. The search for practical measures must be relentless and must engage the entire policy system and all economic and social organisations.  The Irish National Economic and Social Council, today, argue that current policies will not, on their own or as currently designed, be sufficient to promote an acceptable recovery of the economy and employment.

This report, Promoting Economic Recovery and Employment, identifies possible additional policy measures that Ireland could take to encourage domestic demand, enhance the flow of credit to business, increase employment and strengthen business development.  The report notes, for example, that there are still households that have significant financial resources, and that detailed consumer and behavioural research could help understand how to bring forward some of this potential spending power. It reports that there is a need to  find ways to stimulate higher levels of  investment in energy efficiency as some of the current incentives have had less impact on the level of investment in energy efficiency than was expected or hoped for. It highlights that many SMEs, particularly high tech start-ups, are not be able to compete for large public contracts and that the use of pre-competitive tendering processes could result in more success for smaller local enterprises.  It also notes that  many local and civil-society groups are seeking ways to promote economic activity and meet unmet needs.  In this context, it argues that the public system needs to be just as imaginative and given constrained resources needs to consider other ways in which it can support local programmes.

The other main findings in the report include:

• The development of appropriate financial services for business requires active involvement of the state. The Council is deeply concerned about the flow of credit and the quality of financial services provided by the banks.  There have been a number of very important developments: the launch of the strategic investment fund, the establishment of a Credit Review Office and a bank relationship unit within Enterprise Ireland.  However there is still evidence of insufficient credit:  in  the six month period to September 2011 23 per cent of loan applications from Irish SMEs were rejected compared to average for the Euro area of 10 per cent. This comes on the back of  longer-term weaknesses in the Irish banking system which saw capital misallocated to the point where, in 2007, approximately two-thirds of outstanding loans were related to property and another one-sixth to the financial sector itself.  To assess the scope and nature of further policy action the Council highlight three actions.   First,  extend and  build on the actions initiated in the past year, involving Enterprise Ireland, the Banks and the Credit Review Office.  Second, consult with pension fund companies and large private sector companies about funding possibilities for Irish investment.  Third, use both pieces of work to help inform the establishment of the State Investment Bank as set out in the Programme for Government.
• There needs to be renewed focus on home-grown businesses and natural resources.  The crisis has brought to the fore the need to value hugely, and insist more strongly on, indigenous industrial development. It reinforces the importance of economic activities which are linked to sustainable use of Ireland’s natural resources, i.e. renewable sources of energy, tourism, food, marine, education and culture, language and music. Enterprises associated with natural resources not only source a large proportion of their inputs from elsewhere in the economy but generate jobs in areas and communities where alternatives are often very limited.  The Council believe that the strategies of bodies with responsibility for Ireland’s natural resources (e.g., Tourism Ireland, Bord Bia, the Marine Institute, Coillte, Sustainable Energy Authority and Education Ireland) should be given heightened urgency at the present time.
• A Board or entity which can identify and vet public works projects is required. Given the scale of unemployment new forms of public works projects should be considered.  Programmes are needed which provide people with employment opportunities and have value to local communities.  Such projects, for example, have figured prominently in Australia’s response to the emergence of high unemployment in some of its regions (e.g., National Bike Paths in its ‘Jobs Fund’, 2009–2011).  However, even three years into this unemployment crisis,  fora or clearing houses are still lacking where the many actors who are in positions to identify, manage and deliver valuable projects and ensure that people on the Live Register are employed on them in a satisfactory way, have not been established. A Board or entity, in which Local and Regional Authorities would have a strong role, is urgently required. This Board would identify and assess ideas for projects that would both create valuable infrastructure and increase employment.

Download Documents

To download the report and the executive summary, visit the publications section of the website.

Webcasts

Video webcasts providing further detail on the main areas of the report are available here.  The webcasts are provided by:

• Dr. Rory O’Donnell, NESC Director
• Dr. Michael O’Sullivan, Credit Suisse
• Danny McCoy, IBEC
• Prof. Sean O’Riain, NUI Maynooth.

Further information

For further information, please contact:

Dr. Larry O’Connell,
Senior Policy Analyst, NESC

Email: Larry.oconnell@nesc.ie
Mobile: +353-86 6069758
Landline: +353-1-8146331

Note to Editors

This report was circulated to key Government departments in advance of Budget 2012. The report is also being used to inform the Government’s forthcoming Pathways to Work plan and the Action Plan for Jobs.