Committee Reports::Report - Proposal to Establish a Centralised State Agency for Persons Registering for Employment or Training::31 May, 1984::Appendix


Extract from ESRI Report

Employment and Unemployment Policy for Ireland

Manpower Policy

Manpower policy has many different meanings. Chapter 16 concentrated on five key issues in this area: the role of education; vocational and industrial training; placement activities; the effect of tax/benefit measures on labour supply; and the overall co-ordination of manpower policy.

Commencing with education, it is generally accepted that it is impossible to plan its restructuring simply on the basis of perceived changes in the labour market. There is a long lead-in time in effecting changes in education, while shifts can occur more rapidly in employment structures and practices. Also the overriding role of education lies in preparation for life. However, these are not reasons why the educational system should evolve in a way increasingly out of tune with labour market developments. Three aspects in particular call for attention. First, the number of early school leavers with no qualifications whatever poses a special problem in Ireland. The major policy issue is whether the problem should be confronted by innovation within the educational system, or by a separate approach on the AnCO lines. Second, there is inflexibility and over-academic bias associated with some aspects of second-level education. Again, a policy choice arises between adapting the existing system or moving towards a generally comprehensive one. Third, the demographic patterns and increased participation rates in education have provided increases in teaching jobs since the 1960s which absorbed a very substantial number of third-level graduates. The situation has now stabilised but the higher education sector does not seem to have grasped the implications.

In vocational and industrial training, the role originally envisaged for AnCO was consistent with the objectives of manpower policy as set out in the late 1960s. But with the changed economic situation and projected scenario it seems appropriate to re-assess some activities. The apprenticeship schemes have indeed been in the process of change over the last few years, but progress needs to be accelerated. Within AnCO training centres, a major objective is to provide training and retraining for unemployed persons on the supposition that they will get a job. Given the levels of unemployment, however, activities might advantageously diversify more into teaching the skills necessary for self-employment. In regard to industry grants for training, a more selective or strategic base for payment could lead to increased benefits.

The placement activities vested in the National Manpower Service were originally envisaged as a service to employers in filling vacancies. The motivation owed much to the economic climate of the 1960s and to a belief that full employment was quickly approaching. Whatever about the usefulness of the Service then, recent evidence suggests that the great majority of current placements occur without any involvement from the National Manpower Service. It would now seem more appropriate for the Service to concentrate on certain groups with special needs (e.g., the young unemployed and the long-term unemployed) and also on assisting new industries with their initial recruitment.

Notwithstanding the popular view that incentive/disincentives affecting the willingness to work are a major cause of unemployment, there is little foundation for that view in the economic literature. The claim is frequently heard nowadays, as in previous periods of high unemployment, that improvements in unemployment compensation act as a disincentive to seeking work, so lengthening the duration of individual unemployment and raising the aggregate level of unemployment. Conflicting findings have been reported in the literature so that no clear conclusion emerges. But even those economists who believe it is a significant factor, do not claim that it could account for more than a fraction of the overall problem. Nevertheless, if unemployment benefits were to continue to grow at the same real rate as in recent years, it would create dissatisfaction among ordinary workers who have suffered decline in their real disposable income, and could diminish the prospects of pay restraint. It is also the case that there is no clear support in the economic literature for the widely held view that high marginal tax rates discourage work effort. There is a stronger possibility that high tax rates encourage workers into activities where the burden can be avoided. This suggests a degree of caution about over-use of the income tax system as a source of revenue or as a means of redistribution, but it also suggests the need for devising more effective methods of tax collection, especially in the case of the self-employed.

Overall, the most striking deficiency in the manpower area is the absence of a sufficient degree of co-ordination by Government. The department primarily concerned with the labour market area is the Department of Labour, but it has not assumed a dominant role in the whole field. There is an urgent need for central co-ordination of all the agencies operating in the sphere because, currently, responsibility is fragmented, accountability is difficult to enforce, inter-agency friction occurs and agencies are left to form policy which is properly the prerogative of Government Ministers and their departments. For this purpose departments must be equipped with the necessary qualified staff to interpret economic information, to examine policy options and to contribute to the design of suitable manpower measures. It is essential that manpower policy be sufficiently flexible to adjust as the overall position changes. Given the likely future changes in the demographic structure, the priority now rightly attached to youth unemployment may have to shift later on to older workers or to other groups. Finally, co-ordination at interdepartmental level is also of major importance, particularly as the dividing line between where education ends and training begins is becoming increasingly blurred.