Avine McNally
‘IRELAND APPEARS TO BE EXPERIENCING A CLASSICAL LABOUR MARKET MISMATCH – SKILLS SHORTAGES IN SOME AREAS COUPLED WITH OVER- SUPPLY IN OTHERS’
Looking at the public sector, it can be seen that employ-
ment in education and public administration remained stable. Tough the bulk of this was technically in the private sector, it is likely that the public purse ultimately foots the bill through agency staff. Despite hiring caps, employment in health, edu- cation and public administration (sectors mostly financed from public spending) increased by over 2,000 in the first half of 2010. On a positive note, the IT and business services sectors rep-
orted modest net hiring; presumably, this reflects a response to ongoing growth in activity in these sectors. However, the posi- tive hiring balances in these areas are notably weaker than the associated activity balances, implying firms continue to adopt a cautious approach to hiring and an aggressive approach to improving productivity and costs.
COSTS
Our ability to create new jobs has been damaged by a loss in competitiveness. Businesses must focus on costs before they start to focus on expanding pay rolls. Tere is a clear need for the Government to now prioritise
the restoration of cost competitiveness to the small business sector, which is the only way to stop further job losses and ultimately lead to job creation. While small Irish firms have taken actions to cut costs
within their businesses, many costs remain outside their con- trol as they are Government controlled. In the absence of reductions of these costs, small busin-
esses will continue to further reduce the costs that are within their control, and this will inevitably mean a further loss of jobs.
EMPLOYER JOB (PRSI) INCENTIVE SCHEME
Te OECD highlights that marginal employment subsidies can be a useful and cost-effective way of strengthening job cre- ation in the early stages of economic recovery. Following lobbying by the SFA, Budget 2011 extended the
Employer Job (PRSI) Incentive Scheme to the end of 2011. Te scheme (which is applied to jobs created in 2010 until the end of 2011) has been a welcome incentive as it can assist in reducing the cost on the employer recruiting new staff, while targeting resources to net job creation and those individuals who have been unemployed for a period of time.
50 OWNER MANAGER VOL 4 ISSUE 1 2011 SKILLS DEVELOPMENT IN SMALL BUSINESS
Te development of our skills base at all levels in Ireland is critical to our economic recovery and future economic suc- cess. Te OECD estimates that 40pc of small business failure is due to lack of management capacity, even in the growth years. In the current economic environment, the development of
management capacity in small businesses should be prioritised to ensure owner-managers can learn the skills necessary to successfully trade and innovate, and thus maintain their busi- nesses and the jobs associated with them. Owner-managers cannot do this alone, they need support. Te continued diversion of the National Training Fund
from in-company training is a concern. While the retraining of workers who have lost their jobs is important, we strongly believe that training support in upskilling existing workers and managers cannot be diminished. Tere has been a recent announcement of €1.4m for SME
training. However, the Government currently funds the Nat- ional Training Fund by a levy of 0.7pc on employers, and it is correctly identified by the Commission on Taxation as more appropriately regarded as a tax. Under law, this money has to be used for skills development and cannot be used for other areas of current Government
expenditure, and it is a concern that Government is using the €205m surplus (end of 2009) in the fund as an accounting offset at present. Te SFA has suggested that the full surplus in the fund
be spent on in-company training, spread over the next three years.
OUTLOOK FOR 2011
Given that the recovery to date has been concentrated in the exporting sectors, with the more labour-intensive domestic sector lagging behind, job creation in the economy is set to remain muted. Employment in 2011 is likely to be flat relative to 2010,
with growth of 1.5pc projected for 2012. In 2011 the common agenda must be to promote econo-
mic growth, to adopt the right policies to ensure that growth comes with jobs, and to increase labour-market efficiency to allow a better match between demand and supply. Job creation must be at the heart of the recovery policies.
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