Introduction
Good evening ladies and gentlemen.
I am pleased to join you all once again for this event and I want to offer a special word of congratulations to Paul (Rellis) for all he has achieved during his tenure as President of IBEC.
Paul’s ongoing contribution to Microsoft, IBEC and to the wider Irish economy is to be commended. I’ve no doubt Paul will go on to achieve… and to contribute… a lot more in the years ahead.
Also best of luck to John (Kennedy) who will be taking over from Paul as IBEC President.
As you know it has been a year since I last spoke to you at this event. And I think you’ll agree with me that it has been busy and significant year for us all on the road to recovery.
EU Presidency
This time last year the Government and organisations such as IBEC were busy gearing up for what was a very successful Irish Presidency.
From the outset, the Government made the goals of Ireland’s six-month EU Presidency term crystal clear: to drive stability, jobs, and growth.
It was a pro-business Presidency and we placed a strong emphasis on measures to support SMEs, entrepreneurs and companies across Europe and in Ireland.
Progress here included the implementation of the Single Market Act and the Digital Single Market, the new Accounting Directive, and new funding programmes for SMEs.
Securing agreement on a mandate for the start of negotiations on an EU Transatlantic Trade and Investment Partnership was one of the major achievements of our Presidency, and one of genuinely historic potential.
I am also particularly proud of the agreement secured with the European Parliament on the €960 billion EU budget for 2014 to 2020 which has a strong focus on driving growth and reform.
The Presidency was a national team effort. I would like to thank IBEC for its contribution to Ireland’s Presidency including hosting major events during the Presidency at which both Hermann Van Rompuy and José Manuel Barroso spoke.
I am confident that the Presidency has undone much of the reputational damage our country suffered in the wake of the financial crisis.
As business leaders, you understand how valuable a positive and trustworthy reputation is, and how quickly that reputation can be lost.
Prom Note Deal
The Promissory Note deal from earlier this year has also greatly improved confidence in Ireland again.
The reduction in the State’s cash borrowing requirement over the next 10 years by €20 billion has substantially improved the State’s debt position and lowered borrowing costs for the sovereign.
This deal has enabled the Government to take a big step towards successfully exiting our bailout by returning to the long term bond markets at affordable rates.
Broad Economic Outlook
Throughout the past year we have continued to build a solid platform for growth.
While significant risks remain, Ireland and our business community can look out across the horizon of the next twelve months with greater optimism than perhaps at any time in the last five years.
Following three years of contraction, the Irish economy began to recover in 2011, with strong growth of 2.2% recorded. While growth slowed somewhat in 2012, it remained in positive territory.
CSO figures from earlier this week saw economic growth returning to the economy which will further increase confidence.
Stabilising the public finances for the longer-term is one of our top priorities.
It is a prerequisite for confidence, growth and jobs.
Following a very painful period for the people of Ireland, the public finances are continuing to show encouraging signs that they are moving in the right direction.
The performance of tax revenues remains strong and we have met, and in some cases exceeded our deficit reduction targets.
In 2012, our General Government deficit was 7.6% of GDP, well below the programme ceiling of 8.6% of GDP.
Budget 2014
The upcoming budget in October is an important juncture on our road to recovery as we seek to successfully exit the EU/IMF bailout.
This Budget will be driven by two key objectives : 1) to continue the necessary correction in our public finances to ensure our successful exit from the bailout programme at the end of this year and 2) to continue to invest in and incentivise jobs.
The measures introduced by the Government to close the public deficit have been very difficult and painful for many people and families.
But the fact remains we are still adding €1 billion per month onto the national debt to pay for public service salaries, social welfare and other services - this is not sustainable.
This Budget is an opportunity to take those last big steps required to get our national finances under control.
As we frame the budget I can assure you that two key promises will be kept.
Our 12.5% corporation tax remains a cornerstone of Irish industry policy and is not in question from any quarters.
As business you already know that Ireland operates an open, transparent and statute based taxation system.
Throughout the recent Irish presidency of the EU Council, Ireland has been at the forefront of actions seeking to combat aggressive tax planning.
We are also fully supporting the Base Erosion and Profit Shifting project at OECD, and will continue to work with our international partners to ensure fair tax competition.
Secondly, to make sure work pays for families we will reiterate our commitment that income tax will not be increased.
We don’t want to add extra taxes onto jobs and investment which will be a step back in our path of national recovery.
The best way to support the domestic economy is through the creation of jobs.
In line with meeting our deficit reduction targets, any flexibility we might have in the budgetary arithmetic should be used for more investment in job creation.
More investment in schools, primary care, economic infrastructure, transport and tourism projects is what will help get people back to work.
As I said Budget 2014 will be the last hurdle before our exit of the EU/IMF bailout.
It will prove once again that Ireland is a sound location for investment.
This Government will maintain that responsible and sensible approach to the national finances as long as we are in office.
The Irish people have sacrificed too much to fix the fiscal and economic problems built up after years of bad financial policy.
A positive investment environment is essential for job creation as we work hard to get Ireland working again.
Getting Ireland working again
Because creating jobs is what we’re about.
This economic crisis will not be over until we get the unemployment rate down to acceptable levels.
I am keenly aware that many towns and regions have yet to see any signs of improvement.
However, I am encouraged that the private sector is now creating 3,000 new jobs every month.
As a result the unemployment rate is now 13.4%, down from over 15% at the beginning of 2012.
This is still an unacceptably high level – and drives us to continue our work to make the changes necessary to make Ireland more competitive.
To reach our goal of Ireland becoming the best small country in the world for business by 2016.
Action Plan for Jobs 2013
At the centre of this effort is the Government’s Action Plan for Jobs.
When I spoke to you at this event last year, we were eight months through the first instalment of the annual Action Plan for Jobs process. Implementation at that stage was good, but a strong finish was needed, and was delivered.
During 2012 we cut employers’ PRSI, new job-creation from foreign-direct investment reached a decade high and exporting companies reported their highest jobs-gain since 2006. Connect Ireland has also started to attract new FDI jobs into Ireland’s smaller towns and locations.
The positive impact of the Action Plan for Jobs can be seen across the enterprise landscape.
But assessing it in the round, Ireland has become significantly more competitive on foot of all of our efforts.
This is borne out by the recently published World Competitiveness Yearbook, which shows Ireland’s headline position continuing to improve to 17th, up from 20th in 2012, and 24th in 2011 – this is an improvement of seven places since this Government came into office.
We still have a way to go. The Government published its second Action Plan for Jobs in February last. This second instalment, which contains 333 actions to be implemented by all Government Departments and 46 agencies, is building on the progress made in 2012.
IBEC’s sectoral publications and surveys have provided important additional input into these plans.
All of this, all of our shared activities, have the same goal: more jobs & growth.
Pathways to Work
As the labour market showed signs of stabilisation over the past year the Government has made a lot of progress in implementing our ‘Pathways to Work’ strategy.
The failure of successive Governments and public administrations to make the deep reforms necessary to our welfare and employment services has condemned far too many families to hide in society’s shadow, cast adrift in long term unemployment.
When this Government came into office we declared that we
could no longer tolerate a passive welfare system that abandoned hundreds of thousands of people to unemployment without any real support or engagement.
Instead of being cast adrift by the State, jobseekers now face group engagements, one-on-one interviews, skills and experience assessments, training and work placements, as we continue to roll out one stop shop Intreo offices nationwide.
Engagement with these services is now fully compulsory if jobseekers wish to continue to receive benefits.
In particular interest for employers the Government has recently launched two new schemes to help jobseekers find employment.
JobBridge has proven to be a very successful internship scheme which provides invaluable work experience for jobseekers. It has some of the best job progression rates of comparable schemes in Europe.
JobsPlus was launched in July and will offer employers a grant paid over two years of €7,500 for recruiting a jobseeker between 12 and 24 months unemployed and €10,000 to recruit a jobseeker over two years unemployed.
The value of this scheme is in its simplicity.
I would ask all those employers who have not yet done so to examine how these schemes can help their business grow and get jobseekers back into work.
In conjunction with these reforms we have to ensure that work pays.
The vast majority of jobseekers genuinely want to return to work at the first available opportunity but for some this is difficult as the system has them caught in a welfare trap.
Long term unemployment perpetuates a cycle of poverty, inactivity and hopelessness… We need to break that cycle.
Unfortunately, long term unemployment has been a long term problem for Ireland.
Even during the so-called boom years with full employment we had an above average level of jobless households when compared to our European neighbours.
Today after the crash a shocking 22% of households are categorised as jobless, double the European average. This is a completely unacceptable situation which threatens the social fabric of Irish society if allowed to fester.
We cannot reply on previous experience of long term unemployment shocks such as the 1980’s or 1990’s.
Back then the return to economic growth and increased demand for labour was filled from unemployed Irish people and returning Irish emigrants.
Following the expansion of the EU in 2004 and 2007 Ireland is now part of a labour market of over 500 million people.
The new reality is that many new highly educated and skilled workers from Eastern Europe are lured to Ireland’s high standard of living and are prepared to seek employment in direct competition with unemployed Irish workers.
Without significant reform of the social welfare system Ireland could be facing a prolonged period of long term unemployment unlike that experienced before.
These are just some of the big challenges the Government will be addressing in the coming year as we continue our programme of reform.
Public Service Reform
We have shown over the past twelve months that we are a Government driven by a genuine reforming zeal.
The new personal insolvency regime and service is but one example of necessary reform that will improve Ireland’s business environment.
Within the public service Minister Howlin, Kieran Mulvey and the trade union leaders are to be commended in their work to produce the Haddington Road Agreement.
With pay and pensions accounting for 36% of current expenditure, a contribution of €1 billion in savings from the public pay and pension bill was needed to continue the correction in the public finances.
In addition to significant pay and pension savings, the Agreement also provides for almost 15 million additional working hours in the Public Service which will deliver significant efficiency savings.
In times of scarce resources businesses know better than anyone else that we need to cut back on unnecessary costs.
The political system is no different. Getting Ireland working again requires change and reform in every sector of our economy and society.
Conclusion
The past year has seen much hard won progress.
The year ahead promises much of the same.
When we successfully exit the EU/IMF bailout later this year and regain full control of our economic affairs it will close a chapter on one of the most difficult times in modern Irish history.
I believe it has the potential to have an enormous positive effect for our people and that of business.
For no-one will look at this time with rose-tinted glasses.
For Government, business and families alike it showed our capacity to reach deep… to find new levels of determination… to change… to survive.
The next year will be instrumental on our path to recovery.
We must drive on with our jobs plans.
We must get borrowing back to sustainable levels.
We must work tirelessly to create the opportunities our people deserve.
The business community has its part to play and will continue to find support from Government in your efforts to grow and create jobs.
Working together we can restore Ireland’s good name among the nations of the world and see our people prosper once again.
Thank you