Opening Address by Minister Kelleher at the Annual Conference of the National Recruitment Federation

Check Against Delivery

Ladies and gentlemen

It gives me great pleasure to be here today to open your annual conference.

Economic Challenges

As business people you will be fully cognisant of the current severe economic difficulties both globally and here in Ireland. The world economy is in recession – the most severe in decades - and Ireland as a small regional open economy cannot remain immune from the global economic downswing and international financial turmoil.

Some core figures form the recent supplementary budget only serve to underscore our current difficult economic environment:

• GNP is forecast to contract by 8% this year, the largest fall on record,
• Employment is set to fall by over 7% - or over 160,000 job losses. It should be recalled, however, that at 1.9 million at the end of this year, the level of employment will still be high by historical standards;
• Prices are falling; the CPI is forecast to decline by nearly 4% this year.

Clearly, the public finances have been negatively affected by the very weak economy. A significant part of the deficit is not related to economic conditions – the tax base has been eroded so that there is a structural gap between Government revenue and expenditure which will not be recovered when the economy improves.

The Government strategy to tackle the challenges ahead, announced in the supplementary Budget of 7 April, aims to renew the economy and restore public order to the finances by taking action on the banking sector, addressing the deterioration in the public finances, reconstructing the tax base, protecting those in employment and helping those who have lost their jobs.

There is no doubt that we are facing the most challenging global and domestic circumstances in generations. I have outlined the macro-economic response to meet the challenges ahead. Beyond responding to the short-term crisis, appropriate strategies and policies are, at the same time, focussing on actions needed to boost medium and longer term growth and development strategies for the country.

Last December, the Government announced a Framework for Sustainable Economic Renewal, called “Building Ireland’s Smart Economy”. This initiative sets out a clear roadmap for Ireland’s return to economic growth and prosperity, with investment focused on those areas where we can build on our existing strengths, address our weaknesses and position ourselves for the eventual upturn in the global economy.

I will quickly focus on a small number of these policies to put matters in perspective:

Restoring Competitiveness

In a small regional economy like Ireland, economic prosperity ultimately depends on our ability to sell goods and services abroad and therefore on our competitiveness. Building and maintaining competitiveness is a ceaseless and dynamic process. We constantly have to improve, upgrade and change because our competitors are doing the same. Increasingly, companies are under pressure to offer products and services and to use production techniques and skills which are better than those of our competitors. It is undoubtedly clear by now that during the good years when growth was fuelled by domestic consumption, Ireland lost competitiveness in export markets.

The Taoiseach, Minister for Finance and Tanaiste have all made clear in Dial contributions the need for a restoration of competitiveness which must form part of the foundation for export led economic recovery. In essence the message is clear – we need to bring our cost structure and price levels into line with our competitors, reassuring people involved in all sectors that Ireland is not only a good place to do business but a good value place to do business also. That is why we are taking a number of measures across Government to ensure that we identify and address cost issues in our economy and I can assure you here today that driving this work remains at the top of all agendas.

Supporting Enterprise

The Government has not stopped supporting enterprise nor will it stop investing prudently and strategically in our future. Thus supporting enterprise, innovation and research and development remains of vital importance and in this regard, I would point to expenditure of over €500 million in these areas under the budgetary allocations to the Department of Enterprise, Trade and Employment, alone.

Furthermore, the Government has acknowledged the difficult environment in which businesses are operating at present and that in the current climate, assistance needs to be available to companies that are basically viable, but in need of some additional supports to strengthen their business base. With this in mind the Government has approved the creation of an Enterprise Stabilisation Fund with an additional budget of €100 million.

Skills Development and Activation Measures

Our economy has benefited hugely in the past from having a highly skilled labour force. We must continue to invest in our people to ensure that we have the skills and knowledge to support the vision set out in our programme for Sustainable Economic Renewal. We must also support those who have lost jobs due to the economic downturn and provide them with opportunities to re-enter the workplace. To this end, €1.09 billion of my Department's budget for 2009 is targeted at labour force measures, including activation and training programmes for the unemployed, upskilling for those in employment, and employment programmes. Many of these have been refocused to deal with the new labour market realities and the new profile of people signing on the live register. The aim is to prevent the creation of a new cohort of long term unemployed, while simultaneously improving the skills and qualification levels across our labour force.

Strengths and Successes

Let us not focus solely on the challenges we face , but refer to the positives also and to strengths and successes. Let us not forget, for example, that Ireland has a number of critical advantages in realising our potential to return to real long-term growth:

• our well educated population – we have one of the highest numbers of graduates in the 25-34 age group of any country in the EU;
• we have the youngest working population in the EU;
• our significant investment in skills development over the last number of years;
• our significant growth in services, where we are now the eleventh largest exporter of services in the world;
• our increased investment in R&D, with the number of enterprises doing significant R&D having doubled in the last four years;
• we remain the fourteenth largest exporter of goods and eighth largest exporter of services into the US, and also receive the third highest share of US investment into Europe;
• we have a substantial potential in renewable energies,

All these reasons position us for a robust recovery and to again become one of the most competitive successful open economies in the world. How this is working for us even through these tough times is best evidenced by the confidence in Ireland by our investors.

Employment Agencies – Important Role

I am aware based on the number of annual licenses issued to employment agencies in Ireland of the growth and expansion, since the turn of the millennium, in this sector of the economy. This buoyant period could be characterised as one of growing opportunities in the economy characterised by a healthy level of movement into and out of jobs as employees sought new prospects or greater opportunities or indeed were faced with finding a new job as their old job was no longer available. It is widely accepted that a well-developed professional recruitment sector is an essential component of a well-functioning and responsive labour market. Professional services in this sector offer a choice to job seekers and assist employers in their recruitment requirements.

This is all the more necessary if we are to succeed in our objective of keeping Ireland on track, in these more challenging times, to a more skilled, higher value added economy. It is all the more important in these circumstances that all service sectors of the economy, including in the area of recruitment in terms of customer protection and quality control, if we are to attract complex and demanding economic projects to this country. This will enable us convince promoters of such projects that we have the services infrastructure in place to identify and attract the best skilled candidates from both home and overseas skills pools.

Legislative Developments

I will now touch on a number of legislative developments:

Conclusion

I have touched upon the many aspects of the overall Government strategy in my address to you, this morning, aimed at:

• getting confidence back into the business sector,
• continuing to take the necessary action to ensure an adequate flow of lending to the productive sector,
• getting the fiscal situation and our cost competitiveness under control, and
• investing wisely in the infrastructural needs for the future.

The range of measures address the real need of the economy, of future job growth and of people seeking work.

There is undoubtedly a painful readjustment going on in the Irish economy compared to the heady days of record growth, but that will in reality, only serve to make us leaner and better positioned to resume a sustainable growth pattern over the medium term.

It is essential now that we get on with their implementation and put Ireland back on the track to sustainable future prosperity. They are designed to steer us towards more measured but sustainable economic growth. As a society we have successfully addressed critical situations in the past, an experience which gives us confidence in facing the future.

Members of the NRF can contribute in no small manner to meeting the challenges ahead. Your important role in matching persons to jobs, in providing a large range of services to meet client needs, is particularly focussed on fulfilling Ireland’s economic and business needs in the provision of an effective and efficient recruitment service.

I wish you well with your endeavours today and I note the very interesting, valuable and pertinent programme you have in place for your Conference. I wish you every success with your Conference.

ENDS/LA321