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News : Irish Economy Last Updated: Apr 24, 2014 - 9:31 AM

OECD endorses Ireland's Action Plan for Jobs but some key data misunderstood
By Michael Hennigan, Finfacts founder and editor
Apr 23, 2014 - 8:51 AM

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Richard Bruton (c), enterprise minister, with Martin Shanahan, chief executive, Fórfas, and Yves Leterme, deputy secretary general of the OECD. Photograph: Shane O’Neill/ Fennells

Ireland's Action Plan for Jobs framework of quarterly improvement targets in various areas of policy and implementation have got general approval from the Organisation for Economic Co-operation and Development (OECD) but a report [pdf] commissioned by the Government for public relations purposes, that uses some key data that is distorted by tax avoidance, is misunderstood by the think-tank.

The issue of long-term and youth unemployment, and public activation programmes was covered last September in the OECD's Economic Survey of Ireland and the think-tank for 34 mainly developed country governments recommended empirically-proven policies and sunset clauses in enterprise and innovation supports but there is no experience of this in the Irish system. It said the number of programmes and agencies multiplied during the period of booming growth. "There are now over 170 separate budget lines, sometimes for very small amounts of money, and 11 major funding agencies involved in disbursing the Science Budget, although it is small by international standards."

Focus limited fiscal resources on policies empirically-proven to improve employability; this will require systematic evaluation of labour-market programmes through consistent tracking and randomised trials, followed by decisions to close down ineffective schemes while strengthening successful ones.

Reflecting significant uncertainties about the effectiveness of various innovation policy tools, independently and regularly evaluate all actions in this area, strengthen programmes with proven higher returns, and wind down the others. To promote effective evaluation, ensure all innovation and enterprise supports have sunset clauses."

In its current report, the OECD called for a “more sustainable, market-based funding alternatives should be explored - - such as SME loan securitisation (including covered bonds) and mezzanine (hybrid debt/equity) financing instruments.”

The study says that access to non-bank financing has deteriorated in recent years and total venture capital including funding by VC funds and business angels, increased over the period 2007-2010 but declined in both 2011 and 2012.

The OECD says that levels of venture capital have been maintained thanks to state support. Nevertheless, a formal assessment of the costs and benefits of supporting SMEs, through equity, “would be helpful, as equity instruments tend to be of higher cost than standard debt instruments, and are not necessarily suitable for the smaller segment of SMEs.”

Richard Bruton, enterprise minister, said that with 60,000 jobs created in the past year, Ireland has the fastest employment growth rate in the OECD.

Among the conclusions of the report highlighted by Bruton are:

  • The Action Plan for Jobs (APJ) was “a most welcome and important initiative when launched in February 2012”.
  • The APJ’s focus on private sector-led, export-oriented job creation by getting framework conditions right and continually upgrading the business environment is a sound approach
  • The focus on building and strengthening linkages between the domestic SME and multinational sector is also welcome
  • The concerted whole-of-government policy implementation with political buy-in, oversight and direction at the highest level is a significant positive development in Irish public governance – this “marks an important innovation in Irish governance”
  • The rigorous quarterly monitoring and reporting system is another such significant positive development in Irish governance
  • Future improvements should include introducing a comprehensive performance assessment framework to measure progress towards achieving its strategic objectives
  • Future improvements should also include ensuring oversight for strategy-setting, policy execution, and performance monitoring by the Economic Recovery and Jobs Committee.

At a press conference, Richard Bruton denied a Finfacts assertion that the level of job creation in 2013 of 61,000 is subject to uncertainty given the claim that farming jobs surged almost 30,000 in 2013 while the numbers in self-employment without employees, was back to boom times.

Earlier this month, Prof John FitzGerald of the ESRI, said in the institute's quarterly economic report that for the first time in 60 years sectoral data on employment is unreliable.

Irish Economy 2014: Did Ireland add 61,000 jobs in 2013?

On the OECD's study detail on the ICT (information, communications, telecom) sector, I told Yves Leterme, deputy secretary general of the OECD and former Belgian prime minister, that while the OECD's March report on the digital economy and international tax rules, highlighted that Ireland was the second biggest services exporter in the world after India, most of the Irish total was related to tax strategies.

So the ICT data in the report is not reliable.

Martin Shanahan, chief executive, Fórfas, told Finfacts that the estimate of the CSO that ICT employment fell in 2013 to 82,000 was not comparable with a Fórfas report that ICT employment was at 87,000 in 2013.

Shanahan said that the CSO's total covered only functions in for example radio and television - - this claim was also not reliable as should be obvious from the total numbers.

The press handler had already interjected to tell me that the minister wasn't to be interrupted, so there wasn't an opportunity to challenge the claim.

The press handler's job is to try to limit any potential for embarrassment and in 2007 I went to a Fianna Fáil general election press conference where its 250,000 five-year new jobs plan was unveiled by Brian Cowen, finance minister, and Micheál Martin, enterprise minister.

I asked Martin what proportion of jobs were expected in the exporting goods and services sector seeing that only 6,000 of 83,000 new jobs created in 2006 came from there. He claimed my figures weren’t correct; Cowen blustered that I was ignoring services, which I wasn’t and what excited the journalists was the latter’s claim that Pat Rabbitte, the then Labour Party leader, as finance minister, would be a threat to the 12.5% corporation tax rate. 

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