Lisbon AgendaIntegrated Guidelines for Growth and Jobs

IrelandNational Reform Programme 2008-2010

October 2008

ContentsForeword.............................................................................................3

1 Overview.........................................................................................41.1 Introduction..............................................................................................41.2 Economic Outlook.....................................................................................51.3 Banking Guarantee...................................................................................51.4 Budget 2009.............................................................................................61.5 Spring European Council 2006-2008 Priority Actions................................71.6 Points to Watch, 2007.............................................................................101.7 Linkages with Cohesion Policy................................................................111.8 Linkages with Social Policy.....................................................................121.9 North-South Cooperation on the island of Ireland...................................12

2 Macroeconomic Policy Objectives.................................................142.1 Overview................................................................................................142.2 Stability..................................................................................................142.3 Sustainability..........................................................................................152.4 Resource Allocation................................................................................162.5 Wage Developments...............................................................................192.6 Policy Coherence....................................................................................212.7 EMU........................................................................................................23

3 Microeconomic Policy Objectives..................................................253.1 Overview................................................................................................253.2 Investing More in Knowledge and Innovation..........................................253.3 Unlocking Business Potential, Especially of SMEs...................................323.4 Towards an Integrated and Efficient Energy Policy.................................413.5 Transport 21...........................................................................................48

4 Employment Objectives................................................................504.1 Labour Market Priorities 2008-2010........................................................504.2 Labour Market Performance...................................................................504.3 Labour Labour Market Outlook...............................................................524.4 Flexicurity...............................................................................................534.5 Commission Strategic Progress Report, 2007.........................................554.6 Gender Equality......................................................................................68

Annex 1: Euro Area Recommendations................................................70Annex 2: National Development Plan 2009-2011..................................73Annex 3: European Research Area (ERA).............................................75Annex 4: Competition Policy Recommendations...................................77Annex 5: Transport 21 Developments..................................................80Annex 6: National Indicators for European Employment Strategy.........83Annex 7: Expenditure on Employment and Training Supports...............84

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ForewordIn these difficult and uncertain times for the Irish, European and World economies, the Lisbon Agenda for Growth and Jobs assumes an even greater importance.Ireland has made good progress since the first National Reform Programme in 2005, as reflected in economic and employment growth over that period, and some of those achievements are captured in this document.However the economic situation has changed rapidly during the course of 2008, with a domestic slowdown due to declining construction output compounded by the severe international financial crisis. This creates serious economic and fiscal challenges for the Irish Government and is already being reflected in increased unemployment.This updated National Reform Programme sets out the current policies and strategies of the Irish Government in the areas of macroeconomic policy, structural and market reforms, and employment. It also responds to specific issues raised by the Commission in their 2007 Progress Report.The Programme has been prepared after consultation with the social partners under Ireland’s social partnership framework, in particular the Review of Towards 2016 which took place during 2008. It is informed by the shared analysis of the social partners and also takes account of consultation with the relevant Oireachtas Committee and regional assemblies.In view of the fast-changing economic situation, Ireland’s 2009 Budget was brought forward to 14 October 2008. While key elements of the Budget are reflected in this Programme, Government policies will continue to evolve in response to the serious challenges which lie ahead.However, the broad thrust of the Government’s strategy remains clear and is consistent with the priorities identified by the European Council including:

investing in Research & Development and innovation to build a knowledge-based economy

providing a positive climate for entrepreneurship and start-up companies, and supporting export-led growth

improving skill levels throughout the workforce and helping those who lose their jobs back into employment or training, and

increasing energy efficiency and moving towards a low carbon economy.The Government looks forward to implementing this National Reform Programme in co-operation with the social partners and will continue to respond to the competitive pressures and challenges which will arise in the period ahead.

Brian Cowen, T.D.Taoiseach

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1 Overview1.1 IntroductionThis National Reform Programme (NRP) has been prepared during a period of significant economic change and uncertainty with a deteriorating economic outlook, both internationally and domestically.This uncertain and difficult economic environment re-emphasises the importance of the framework provided by the NRP for articulating Ireland’s approach to generating economic growth and job creation. The Government has indicated that it will bring forward revised and new strategies over the period ahead in response to an extremely fast-changing situation.It brings together a broad range of policies and initiatives within the framework of the Towards 2016 social partnership agreement, the implementation of which aim to ensure a return by Ireland to strong economic growth and employment performance as its overall contribution to the renewed Lisbon Agenda over the period to 2010, while stressing also the interdependence of social, environmental and economic goals.The outcome of the review of the Towards 2016 agreement by the Government and Social Partners that took place over recent months is reflected in the Review and Transitional Agreement 2008-20091.The parties endorsed the broad conclusions from the report prepared by the National Economic and Social Council (NESC), The Irish Economy in the Early 21st Century, including that “a combination of factors in 2008 has created an exceptionally difficult policy context in which to manage the economy’s transition to the next phase of development…. The sharp contraction of the domestic construction sector, the global credit market squeeze, greatly increased energy and commodity prices, a strong euro and a major weakening of current tax revenue combine to make it difficult – and even risky or foolhardy in the opinion of some – to look too far ahead”2.The parties also recognised the implications of these developments, in particular higher energy and food prices, for the most vulnerable in society.The Government and the Social Partners concluded that:

the Irish economy can be strong and dynamic again, provided the right decisions are taken during this difficult period,

services, exports and employment can be further expanded, while manufacturing, including the export orientated food and drink processing sector, will continue to have a key role in Ireland’s economic development,

people’s skills and capabilities are the core economic asset, Ireland’s continuing economic and social infrastructure deficit means that

a high level of investment in infrastructure should be sustained, there is a need to fine-tune some of the strategic investments in the

National Development Plan and Towards 2016, elements of which need modification in the light of new information and understanding,

social partnership, which has contributed to the economic and social progress of the last two decades, continues to have an important potential contribution in managing a difficult transition for the economy and protecting the vulnerable during what is an uncertain conjuncture.

1 http://www.taoiseach.gov.ie/index.asp?locID=231&docID=40332 http://www.nesc.ie/dynamic/docs/Report%20117-The%20Irish%20Economy%20in%20the%20Early%2021st%20Century.pdf

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The Government and Social Partners intend therefore to work together through the current period of economic transition and uncertainty to ensure that the Vision and Goals set down in Towards 2016 can still be achieved.This NRP summarises progress in 2007 and 2008 while setting out a renewed approach for the period ahead based, in particular, on the recent review of Towards 2016 and Budget 2009.

1.2 Economic OutlookThis year the Irish economy has experienced multiple shocks, as an unparalleled confluence of international and domestic developments has impacted upon our economy. Reflecting these developments, the economy has moved into recession. After GDP growth of 6% during 2007, the economy is forecast to contract by -1.3% this year and remain in recession during 2009 with economic activity declining by -0.8%. Thereafter a pick-up to 2.7% in 2010 and 3.7% in 2011 is expected, with growth averaging 1.9% per annum over the period 2009- 2011.GNP is projected to contract by -1.6% this year and by -1.0% in 2009.As signalled in our 2007 progress report, the transition of the house building sector to more sustainable levels of output is having a significant dampening effect upon the economy. Compounding this situation are adverse developments in the international economy.The Budget forecast for the General Government Balance (GGB) in 2008 is now a deficit of 5.5% of GDP. This can be explained for the most part by a projected shortfall in taxes for 2008 of about €6.5 billion, a worsening in the accrual of tax (VAT and PAYE) receipts of €400 million, as well as a worsening in the surplus of the Social Insurance Fund of the order of €760 million and the buyout by the Government of the M50 Westlink toll bridge costing €550 million. The debt to GDP ratio for 2008 is forecast to be 36%.The numbers in employment are expected to remain static this year and decline by 20,000 (-0.9%) in 2009. A modest increase of 10,000 (0.5 %) is projected for 2010 and this rise will accelerate by a further 25,000 (1.2%) the following year. The unemployment rate is forecast to rise to 7% in 2009 from 5.8% in 2008. It will broadly stabilise in 2010 and then subsequently ease back.As measured by the Harmonised Index of Consumer Prices (HICP), inflation in Ireland was 3.2% in the twelve months to September 2008. Inflation in 2008 has largely been driven by external developments – mainly increases in agricultural and energy commodity prices on global markets. Pressures have been similar elsewhere in the euro area where HICP inflation has been higher than in Ireland, at 3.6% in the twelve months to September. For Ireland, the outlook is for an easing of inflation towards the end of this year and into the next due to the overall slowdown in the economy and a range of technical factors. HICP inflation is expected to average 3½% for 2008 as a whole and 2¼% in 2009.As output in the housing sector moves towards sustainable levels and a pick-up in the global economy emerges, it is expected that a return to trend GDP growth can be achieved over the medium term. Developments in the housing market will continue to be closely monitored. To safeguard our economic growth prospects, measures to improve competitiveness and productivity have been introduced.This NRP takes account of the National Development Plan (2007-2013), which was launched in early 2007 and sets out an indicative investment allocation of €184 billion for investment up to the end of 2013.  However, annual decisions on Government investment and expenditure under the NDP are, and will be, taken by Government with due regard to the policy of maintaining economic and budgetary sustainability and to the availability of resources.

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1.3 Banking GuaranteeThe Government has put in place a wide guarantee for the banking system in Ireland which has to date been successful in bringing stability during an unprecedented period in international financial markets. The Irish scheme is firmly aligned with the main themes of the Eurogroup plan endorsed by the European Council in October 2008.The purpose of the Irish bank guarantee is to maintain financial stability and the long-term sustainability of the Irish banking system in the best interests of the public and the economy of the State; and remedy a serious disturbance in the economy caused by the unprecedented turmoil in the international financial markets and the particular macro-economic conditions in Ireland. The guarantee is intended to assist the institutions covered by the guarantee in accessing their required funding, which had become extremely difficult in dislocated market conditions.The Credit Institutions (Financial Support) Act 2008 provides the legislative basis for this guarantee. The Credit Institutions (Financial Support) Scheme, which sets out the terms and conditions of the Government’s guarantee has also been approved by Parliament. The European Commission had approved the Scheme under EC Treaty state aid rules.The following liabilities are covered by the Scheme:

all retail and corporate deposits (to the extent not covered by existing deposit protection schemes in Ireland or any other jurisdiction);

interbank deposits; senior unsecured debt; covered bonds (including asset covered securities); and dated subordinated debt (Lower Tier 2).

The Scheme provides that a covered institution must pay a charge for its guarantee. The aggregate charge for the participating institutions is based on the estimated long-term cost to the Exchequer of providing the guarantee and this is distributed among the institutions covered by the Scheme on the basis of a charging model, based on a number of factors including their credit rating, asset quality and liquidity position.

1.4 Budget 2009The aims of Budget 20093 are to:

Bring order and stability to the public finances; Enhance our productive capacity; Ensure fairness and equity in public spending and raising revenue; Protect the most vulnerable in our society.

This Budget was framed against the background of the most challenging fiscal and economic situation for a generation. In particular, against the backdrop of international economic uncertainties, Ireland is confronted with severe budgetary pressures and negative economic growth. The Budget, which was brought forward so as to address matters in a decisive manner, seeks to restore order and stability to the public finances. With fairness in mind, the Budget seeks to increase productivity and competitiveness and to protect, to the greatest extent possible, the position of the most vulnerable in our country.

3 http://www.budget.gov.ie/

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Macroeconomic and fiscal policy continues to be set within the broad framework of the Stability and Growth Pact. The deterioration in the General Government Balance from a surplus of 0.2 % in 2007 to an estimated deficit of 5.5% in 2008 is mainly attributable to a fall-off in tax revenue due to the economic slowdown.Against this background, the Government has targeted a gradual reduction in the deficit from the Budget Day projection of 6.5% of GDP in 2009 to below 3% by 2011. The consolidation of the public finances is being pursued through substantial reductions in the rate of growth in public expenditure, with the annual growth in gross voted expenditure for the period 2009-2011 forecast to average 1.8% compared to 8.6% over the last three years.Tax measures are also being implemented to improve the fiscal position. The success of the budgetary strategy will also be significantly dependent on positive developments both in the international economic environment and in the performance of Ireland’s main trading partners.The Government is determined against the uncertain international and domestic economic background, to pursue prudent and sustainable policies that will help see Ireland through this extremely challenging period. Budget 2009 contains a number of measures designed to support enterprise and innovation, while improving competitiveness, including:

The current 20% rate of tax credit for a company on qualifying research and development (R&D) is being increased to 25%.

The tax incentive which provides for capital allowances of 100% of expenditure incurred by companies on certain categories of new energy-efficient equipment is being extended from three to seven categories.

New start-up companies which commence trading in 2009 will be exempt from tax in each of the first three years to the extent that their tax liability in the year does not exceed €40,000.

The Government has decided to proceed with rationalisation proposals that will reduce the number of state agencies and bodies by 41, streamline functions in three areas and rationalise the army barracks structure.

In addition, the Budget recognises that investment in Ireland’s infrastructure can improve competitiveness and productivity. Exchequer capital expenditure (gross) at over €8.2 billion will represent over 5% of GNP in 2009. Resources will be targeted on core economic infrastructure to ensure that Ireland is well-positioned to take advantage of a global economic upswing. Capital investment will be particularly focused on:

Upgrading our national roads infrastructure, particularly the Major Inter-Urban Routes between Dublin and the regional cities;

Improving and expanding our public transport infrastructure and networks; Enhancing and maintaining our Water Services Infrastructure; Supporting the provision of schools at both primary and second level; Supporting the Strategy for Science, Technology and Innovation; Attracting Foreign Direct Investment to Ireland and supporting indigenous

enterprise.

1.5 Spring European Council 2006-2008 Priority ActionsIt is clear that the more challenging economic environment that Ireland and Europe now face will require a renewed focus on the reforms and the investment necessary to sustain jobs and growth, having regard in particular to the four priority action areas agreed by the EU Heads of Government.

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1.5.1 Investing more in knowledge and innovationTo place innovation in a wider context, the Government published its Innovation Strategy Statement in June 2008, mapping progress across ten key policy areas and identifying opportunities where innovation will be further exploited, such as public procurement, services innovation and environmental goods and services. Our Strategy is geared towards providing an integrated national innovation system and ensuring maximum economic and social benefits are derived from the Government’s substantial commitment to this area under our National Development Plan.Expenditure on Science, Technology and Innovation is now over nine times the level of investment made in 2000. The fiscal environment for Research and Development is being significantly improved in 2009 in terms of increased tax credits for R&D. The first report on implementation of the Strategy for Science, Technology and Innovation, to be published shortly, indicates that this investment is on schedule and is demonstrating impacts in terms of our attractiveness for new enterprise investment and meeting the skills needs of high-tech sectors. The Government is determined to harvest the downstream benefits of the much-expanded expenditure on R&D for wealth creation and economic and social well-being. There will be much closer alignment between Science Foundation Ireland (SFI)-supported activity and that of the Higher Education Authority (HEA) and the work of the development agencies, IDA and Enterprise Ireland. Our objective now is to ensure the commercialisation of new products and services. The development agencies will work with services enterprises to ensure that our science and research and development strategies contribute to the growth of innovation in this highly important sector of our economy.We continue to make progress towards the Lisbon R&D target and despite tougher global conditions we expect Gross Expenditure on R&D (GERD) to reach 1.9% of GNP (1.6% of GDP) in 2010, up from 1.32% of GNP in 2000 and 1.56% of GNP in 2006. Our total R&D spending grew to an estimated €2.5 billion during 2007. The SSTI goal is that enhanced performance in business, higher education and public sector R&D should result in GERD increasing to 2.5% of GNP by 2013. A Services Strategy for Ireland (Catching the Wave) was published in September 2008. Today services are the main driver of the economy, and the most likely avenue to sustainable and balanced growth, continued prosperity and improved living standards in the years ahead. As a result of this report, we will look further at the areas of sectoral development, skills provision, innovation and productivity to develop the services side of the economy. The key thrust of this strategy identifies three strategic aims for future services policy in Ireland:

Realising the opportunities to further grow and diversify Irish services exports;

Encouraging internationalisation, where Irish service enterprises establish operations in overseas markets;

Recognising the important role of Irish service enterprises that trade locally on the domestic market, and ensuring that these are efficient and productive.

The total number of broadband subscriptions continues to rise and faster speeds are becoming increasingly available. Penetration rates were at 24.3% in the second quarter of this year which is equivalent to 60% of households. The Government will publish a new policy on Next Generation Broadband shortly that will address future investment needs and eliminate barriers to rollout. The Government is also moving to strengthen international connectivity, in conjunction with the authorities in Northern Ireland, and to address the digital divide by facilitating broadband in the more remote areas of the country.

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The Schools Broadband Programme will continue to ensure high-speed internet is provided to all primary and post-primary schools in Ireland. A 100mbps to post-primary schools pilot programme will trial the delivery of big bandwidth to post-primary schools.Government is preparing a new strategy on the knowledge society and will continue to prioritise investments associated with the deepening of capacity for the knowledge economy, especially in respect of research and development which is central to our Strategy for Science, Technology and Innovation.

1.5.2 Unlocking business potential, especially of SMEsIreland has developed a highly conducive environment for entrepreneurship, wealth creation and growth over the last decade. Ireland is ranked second for entrepreneurial activity in the EU in the most recent Global Entrepreneurship Monitor Report to the extent that 2,700 individuals were setting up new businesses each month and 1,000 of these were women. The establishment of new ventures with a high growth potential will be prioritised over the period 2008-2010 and a vigorous policy of better regulation as it applies to new and small companies is being implemented. A 25% target for reduction of administrative burdens arising from domestic legislation by 2010 has been agreed. Tax reliefs were also extended during the year in terms of VAT thresholds and preliminary tax obligations on foot of recommendations by the Small Business Forum. Additional tax relief measures will be introduced in 2009 for new start-up companies which will assist in growing small businesses and promoting an entrepreneurial culture, including an exemption from tax for new start-up companies for three years (up to €40,000).In addition, building on available and ongoing work, specifically that of the Small Business Forum and the Expert Group on Future Skills Needs, the enterprise development agencies together with the Management Development Council, will actively address gaps in available management and leadership development provision especially for SMEs. The High Level Group on Manufacturing was established as part of the social partnership process under Towards 2016. In the review of Towards 2016, the Government and the Social Partners agreed to establish a Manufacturing Forum which will progress implementation of the Group’s recommendations and act as an advocate for the manufacturing sector.Competition and consumer protection issues remain central to Government policy aimed at ensuring that competition thrives and costs are kept to a minimum. The pending merger of the Competition Authority and the National Consumer Agency will ensure improved co-ordination of these areas and deliver synergies in the interests of consumers and business alike.

1.5.3 Improved employability through flexicurityFlexicurity is about balancing flexibility with security and is designed to increase employability and provide people with the incentive to work. In Ireland flexicurity policies are embodied in our well developed Social Partnership process. These policies and objectives are set out in the most recent agreement Towards 2016, and are closely aligned to the aims of the Lisbon Agenda. Under successive agreements labour market policies have been successful in sustaining a high level of employment and ensuring an adequate supply of skilled labour to meet the needs of the economy.Tax and welfare payments together with employment and training initiatives have reduced inactivity and unemployment and facilitated the move to better quality jobs. In the last decade the income tax system has been made fairer, friendlier, more progressive and more rewarding for people returning to or remaining in work.

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The Government’s priority is to use tax credits and bands to keep low-income earners out of the standard rate band and average earners out of the higher band. For those who are out of work or on disability allowance, levels of income support have increased, with reforms aimed to encourage a move into employment. Labour law is developed in the context of achieving a balance between the security which employees require regarding conditions of employment/earnings levels and the flexibility required by employers in terms of organisation of work/work practices and cost containment. The establishment of the National Employment Rights Authority has brought about a greater awareness and a culture of compliance with statutory employment law requirements. Ireland is focused on improved employability specifically by increasing the skills levels of the unemployed and those in employment and reducing the number of low skilled in the workforce through the implementation of the National Skills Strategy and participation in Active Labour Market Programmes. A substantial increase in funding has been allocated to support training and skills development over the next number of years, amounting to investment of €7.7 billion over the period of the National Development Plan 2007-2013.

1.5.4 Moving towards an efficient and integrated EU energy policyIreland is committed through a range of measures to support environmental sustainability, reduce annual greenhouse gas emissions, improve energy efficiency and increase the use of renewable energy across all sectors of the economy. The National Climate Change Strategy 2007-2012 builds on the commitments to sustainable development set out in Towards 2016 and the National Development Plan 2007-2013, and is one of a number of interrelated Government initiatives that will address energy and climate change issues. The Energy Policy Framework 2007 – 2020 sets out a comprehensive range of actions underway and planned to deliver a sustainable competitive energy future. The Framework will be supplemented by the forthcoming National Energy Efficiency Action Plan and the Sustainable Travel and Transport Action Plan. Our National Allocation Plan 2009-2012 provides the framework for our participation in the current ‘Kyoto’ phase of the European Union Emission Trading Scheme. Over 100 installations are participating in the scheme.The development and production of environmental goods and services is supported through a range of financial and non-financial measures operated by the industrial development programmes of our State Agencies. We are focused on encouraging the further development of environmental technologies and services and on exploiting enterprise opportunities in the global Environmental Goods and Services sector.Progress continues to be made across a range of initiatives in the drive to increase the use of renewable energy and improve energy efficiency across all sectors of the economy. The National Development Plan provides €270 million for sustainable energy initiatives as well as €149 million for energy research underpin sustainability, competitiveness and security of supply. Key measures include the roll-out of energy efficiency incentive schemes, support for renewable energy programmes and research initiatives and investment in the national transmission grid and distribution networks. Improving competitiveness in the energy sector remains a central focus of Irish Energy Policy in the interests of business and consumers.The all-island Single Electricity Market, established in 2007, is creating a more attractive electricity market on the island for international investment. The current sale of certain generating facilities is a significant step towards introducing more market players in power generation and supply, and reducing the share of the all-island generation market by the State owned electricity utility.

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1.6 Points to Watch, 2007The following is the position in relation to the points to watch suggested by the Commission in its 2007 Annual Progress Report.

1.6.1 Measures to reform pension arrangementsIn accordance with Towards 2016, the Government published a Green Paper on Pensions in October 2007. The Green Paper is a discussion document which sets out the background to the demographic and sustainability challenges facing the pension system in Ireland; the wide and complex range of issues involved; and the options that we might consider for future pensions development. The Government’s objective is to put in place a pension system which is financially, economically and socially sustainable. To provide an opportunity to consider the issues involved in detail, a consultation process was launched following the publication of the Green Paper. The submission period on the Green Paper closed at the end of May 2008. The Government will respond by developing a framework for longer term pensions policy by the end of 2008.

1.6.2 Monitoring of housing market developments In recent years the output of new housing has been in excess of the sustainable level, which is considered to be in the region of 50,000 units per annum over the medium term. There is an expectation that output will undershoot that level this year and next, given that confidence in the wider economy has been affected by international economic developments. Over the medium term, however, we expect output to evolve in line with sustainable levels. We will continue to monitor developments closely.

1.6.3 Housing measures in Budget 2009The Government has invested significantly in housing in recent years. For 2009, the Government is allocating over €1.65 billion in Exchequer funding for a range of housing programmes. In view of the changed conditions in the housing market, these schemes are being reformed.The existing local authority mortgage scheme will be extended by increasing the maximum loan available to borrowers. This extension will assist purchasers who wish to become homeowners but who are at present unable to obtain loan finance. This will be a targeted and temporary initiative. Funding will be provided by the Housing Finance Agency and it will be operated by a small number of local authorities acting on a regional basis. The introduction of a single Government Equity Initiative will replace a range of existing schemes which have developed in recent years. Under this Initiative the Government will assist those seeking affordable housing by taking an equity share. This proposal will simplify the delivery of affordable homes.

1.6.4 Increasing labour market participationLabour market participation has increased steadily over the last ten years due to a buoyant labour market and the implementation of the Preventive Strategy. As a result the Lisbon employment rate target for 2010 has already been met in regard to females and older workers. A number of activation programmes have been developed particularly for older workers, lone parent groups and people with disabilities. In addition, an Activation and Family Support Programme and a Social and Economic Participation Programme commenced in 2008 to enhance employability and promote participation and social inclusion. The various measures/initiatives set out in Towards 2016 and the National Development Plan (NDP) 2007-2013 continue to be progressed. An OECD Review of Irish Activation Policies is due to be completed in November and future policy in this regard will be informed by the recommendations contained in this report.

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1.6.5 Establishing a comprehensive childcare infrastructureGovernment policy to provide an adequate childcare infrastructure to support labour market participation, particularly in the case of women, is progressing. The National Childcare Strategy aims to enhance co-ordination and integration of services among key players at both national and local level, with a number of childrens’ services committees being piloted to being this about. A target of 50,000 additional childcare places has been set for the NCIP, to include 5,000 places for school age childcare. It is anticipated that these targets will be achieved. Under the Equal Opportunities Childcare Programme (EOCP) 2000-2006, 131% of the target for new childcare places was met over the period. Under its successor, the National Childcare Investment Programme (NCIP) 2006- 2010, childcare provision has increased with over 10,300 new places created to mid 2008, including 2,369 school-age childcare places. In addition a Community Childcare Subvention Scheme was introduced in 2008 to provide quality childcare services at reduced rates to disadvantaged parents.

1.6.6 Policy for labour market and social integration of migrantsThe contribution of migrants to the growth of the economy and employment levels has made it necessary to put in place a flexible, responsive and managed economic migration policy, with a particular focus on meeting specific labour and skill shortages through migration. The Employment Permits Act is now in place and a greater protection of migrant workers’ rights will be promoted through the Employment Law Compliance Bill once enacted. With the establishment of the Office of the Minister for Integration, a policy document on Integration and Diversity Management was developed in 2008 which sets out a framework for achieving migrant integration across all sectors. The emphasis is on a partnership approach between Government and other interested bodies in order to deepen and enhance the opportunities for integration.

1.6.7 Support to older and lower skilled workersIn 2008 both FÁS and Skillnets in accordance with the commitments contained in Towards 2016 and the vision contained in the National Skills Strategy have increased their focus on the provision of training of the low skilled and those in vulnerable employment with a number of programmes being implemented in this area. Specifically the National Skills Strategy aims to increase the upskilling of 500,000 people in employment, with about two thirds of these being low skilled. The focus is to upskill people to the next level within the National Framework of Qualifications. Continued attention remains on early school leavers and adult literacy to help reduce the number of low skilled in the labour force.

1.6.8 Euro Area RecommendationsAn overview of the position in relation to the recommendations addressed to the euro area member states is set out at Annex 1.

1.7 Linkages with Cohesion PolicyCohesion policy for 2007 to 2013 is also explicitly linked to the National Reform Programme as an instrument for promoting sustainable and balanced growth across the European Union. Ireland’s National Strategic Reference Framework (NSRF) and Operational Programmes (OPs) reflect the overall goals of the Lisbon Agenda and Ireland’s National Reform Programme. The NSRF and OPs build on the aims of Towards 2016 and have a strong focus on competitiveness and supporting and enabling dynamic Regions. To this end, Ireland has earmarked 83% of its expenditure on actions that support and promote the Lisbon Agenda which is in excess of the 75% target set out in the regulations.

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Practically all reported co-funded expenditure in 2007 was on earmarked categories:

ERDF investment focussed on marine research, innovation and entrepreneurship in micro enterprises and public transport;

ESF investment focussed on upskilling the workforce (skills training, back-to-education initiative and undergraduate skills) and activation and participation of groups outside the workforce (disability, adult literacy, third level access, youthreach and Travellers).

These are all actions that contribute to the Lisbon Agenda. Ireland is continuing to work to increase the earmarking quotient for the EU Structural Funds Programmes, particularly for the Border, Midlands and Western Region (BMW) OP, and is satisfied that the earmarking target for the Regional Competitiveness Objective as a whole over the programming period will be met.

1.8 Linkages with Social PolicyThe National Action Plan for Social Inclusion 2007-2016, Building an Inclusive Society, (NAPinclusion), which was launched in February 2007, sets out a wide-ranging and comprehensive programme of action to address poverty and social exclusion. The plan, together with the social inclusion commitments in the national social partnership agreement, Towards 2016, and the National Development Plan 2007-2013, constitute Ireland’s strategic process for addressing social inclusion objectives. Through the social partnership process, close linkages have been developed between the NAPinclusion and NRP processes, recognising that economic growth and social development are inter-connected and mutually reinforcing policy goals. The overall goal of the NAPinclusion is: To reduce the number of those experiencing ‘consistent poverty’ to between 2% and 4% by 2012, with the aim of eliminating consistent poverty by 2016, under the revised definition. In order to achieve this overall goal, the plan has a strong focus on actions and targets with 12 high level goals and 153 targets and actions, spanning all stages of the lifecycle. These are designed to mobilise resources to address long-standing serious social deficits, and ensure that a decisive impact on poverty is made over the lifetime of the plan. The recently-submitted National Report for Ireland on Strategies for Social Protection and Social Inclusion 2008-2010 draws on the NAPinclusion in relation to social inclusion objectives. The National Report recognises that economic and social objectives are intertwined, and states (in section 1.2.16) that: “Access to quality employment opportunities is regarded as the best route out of poverty and social exclusion.” The report sets out the four high-level objectives for social inclusion, one of which is: Access to Quality Work and Learning Opportunities, with a particular focus on increasing employment participation among marginalised groups. The National Report also sets out the current debate in Ireland on pensions, reflecting the recurring theme in the Government Green Paper on Pensions, about how to align ambitions in relation to the coverage and adequacy of the pensions system with the economic and financial sustainability issues flowing from demographic changes.

1.9 North-South Cooperation on the island of IrelandThe restoration of devolved institutions in Northern Ireland in May 2007 provided the context for the Government to pursue a wide range of North/South initiatives and proposals. The Irish Government’s investment in North/South projects, as set

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out in the National Development Plan 2007-2013, is designed to deliver practical benefits to people on all parts of the island.The Government is committed to working closely with the Northern Ireland Executive to agree joint initiatives and to ensure they are implemented on a basis of sound economic principles and equality. It is further acknowledged that North/South economic cooperation on matters of mutual benefit can play a role in meeting the Lisbon objectives of delivering long-term sustainable growth, high employment, and a fair and inclusive society.The European Commission Task Force Report on Northern Ireland was launched in April 2008 and set out a range of suggestions on how Northern Ireland can reap maximum benefit from European policies, programmes and funds. The Report also recognised the strong economic potential of cross-border and all-island cooperation.A number of North/South infrastructural and other initiatives have commenced or have been completed over the last 12 months. These include:

Launch of a Single Electricity Market for the island in November 2007. The Single Electricity Market (SEM) provides for a competitive, sustainable and reliable wholesale market in electricity aimed at delivering long-term economic and social benefits that are mutually advantageous, North and South.

Agreement on the formation of management structures to oversee upgrading of the A5 road to Derry/Letterkenny to dual-carriageway status. The historic Government investment in the A5 route will stimulate increased economic activity, facilitate closer cross-border cooperation, and dramatically improve quality of life for people throughout the region.

Launch of a new North/South Innovation Fund to promote cross-border research and development over the next four years.

Joint planning of an inaugural All-Island Skills Conference, to be held in the North-West in October 2008, and preparation of an All-Island Statement of Skills Demand.

Joint announcement that financial firms based in the South are entitled to delegate support functions to Northern Ireland.

Appointment of new boards for North/South bodies, including Tourism Ireland, InterTradeIreland, Foras na Gaeilge, the Ulster-Scots Agency, and the Food Safety Promotion Board.

Agreement to examine on a North/South basis issues relating to the transfer of pension rights and cross-border banking.

Agreement on PEACE III and INTERREG IVA EU Programmes with respective budgets of €333 million and €256 million respectively over the period 2007-2013.

Increased health sector cooperation, including the provision of radiotherapy treatment at Belfast City Hospital for patients from County Donegal and envisaged cooperation on paediatric and congenital cardiac services between Royal Hospital Belfast and Our Lady’s Hospital for Sick Children, Dublin.

The Government and the Northern Ireland Executive face shared economic and social challenges in an increasingly globalised world. The development of all-island cooperation across policy sectors is increasingly recognised as a means of overcoming common difficulties and delivering enhanced services and efficiencies to people North and South.The Government is committed to pursuing collaborative actions over the period ahead to address challenges facing both parts of the island, including the border communities. Common challenges include the shared need to grow employment

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rates, to increase productivity, and to build world-class infrastructure. Enhancing skill levels, improving educational standards, and fostering research and innovation are additional targets of an increasingly all-island knowledge economy. And in areas like energy and the provision of health services, there is a growing awareness that more can be achieved – and better services provided to communities – when the Government and the Executive work in partnership.Peace and political stability throughout the island of Ireland offers an unprecedented opportunity to cooperate in the delivery of an improved quality of life for people from every community, North and South. The Government is determined to work constructively with the Northern Ireland Executive to agree development funding and new strategic projects to the mutual benefit of people on both sides of our border. Much has been achieved over the last twelve months in building on the success of peace and stability, and this sensible and practical cooperation is set to intensify further over the years ahead.

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2 Macroeconomic Policy Objectives2.1 OverviewAfter GDP growth of 6% during 2007, the economy is forecast to contract by -1.3% this year. These difficult economic conditions reflect a confluence of domestic and international factors which are impacting upon our economic performance. As signalled in the last progress report, the transition of the house building sector to more sustainable levels of output is having a significant dampening effect upon the economy. Compounding this situation are adverse developments in the international economy.The Budget forecast for the GGB in 2008 is now a deficit of 5.5% of GDP. This can be explained for the most part by a projected shortfall in taxes for 2008 of about €6.5 billion, a worsening in the accrual of tax (VAT and PAYE) receipts of €400 million, as well as a worsening in the surplus of the Social Insurance Fund of the order of €760 million and the buyout by the Government of the M50 Westlink toll bridge costing €550 million. The debt to GDP ratio for 2008 is forecast to be 36%.As measured by the Harmonised Index of Consumer Prices (HICP) inflation in Ireland was 3.2% in the twelve months to September 2008. Inflation in 2008 has largely been driven by external developments mainly increases in agricultural and energy commodity prices on global markets. Pressures have been similar elsewhere in the euro area where HICP inflation has been higher than in Ireland, at 3.6% in the twelve months to September. For Ireland, the outlook is for an easing of inflation towards the end of the year and into the next due to the overall slowdown in the economy and a range of technical factors. HICP inflation is expected to average 3½ % for 2008 as a whole and 2¼ % in 2009.As output in the housing sector moves towards sustainable levels and a pick-up in the global economy emerges it is expected that a return to trend GDP growth can be achieved over the medium term. Developments in the housing market will continue to be closely monitored. To safeguard our economic growth prospects, measures to improve competitiveness and productivity have been introduced.

2.2 Stability

Guideline 1: Guarantee the economic stability for sustainable growthFollowing strong GDP growth of 6% during 2007, this year has proven to be a more challenging one for the Irish economy. Reflecting a deteriorating international economic environment and lower levels of construction activity, GDP is now forecast to contract by 1.3% this year. Arising from the slowdown in the residential construction sector, the unemployment rate is expected to average 5.8% this year. The Irish Government is committed to ensuring that the economy is suitably competitive so that it will be well-positioned to benefit from the global recovery when it emerges. For instance, the Government is:

prioritising investment in productive infrastructure in order to eliminate bottlenecks and reduce costs;

investing in education at all levels in order to ensure we have the skills demanded by high-technology firms;

committed to maintaining a low burden of tax on capital and labour;

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maintaining a flexible, resilient economy; working with the social partners in order to ensure that all economic

agents have a shared understanding of short-term challenges.

2.3 Sustainability

Guideline 2: Safeguard economic and budgetary sustainability, a prerequisite for more jobs

The importance of ensuring that the economy will be in a position to meet anticipated long-run fiscal pressures has become a central part of the Irish policy-making process. Reflecting this, a range of initiatives designed to take account of these long-term spending trends, along with the welfare needs of older members of society, have been put in place.As pensions are expected to account for the bulk of the increase in age-related spending, a particular focus has been placed on initiatives in this area. The framework for longer-term pensions policy, which the Government is developing in response to the consultation process on the Green Paper, represents the next important step in this regard. It is also an important step in responding to the Commission’s ‘point to watch’ which urges Ireland to ‘speed up progress in formulating concrete measures to reform pension arrangements.’

An overview of new and ongoing developments is provided below.

Partial pre-funding of future social welfare and public service pension costs through the National Pensions Reserve Fund. The value of the Fund at end-September 2008 was €18.7billion.

In accordance with the social partnership agreement Towards 2016 the Government published a Green Paper on Pensions in October 2007. The Green Paper is a discussion document which sets out the background to the demographic and sustainability challenges facing the pension system in Ireland; the wide and complex range of issues involved; and the options that we might consider for future pensions development. The Government’s objective is to put in place a pension system which is financially, economically and socially sustainable. To provide an opportunity to consider the issues involved in detail, a consultation process was launched following the publication of the Green Paper. The submission period on the Green Paper closed at the end of May 2008. The Government will respond by developing a framework for longer term pensions policy.

The Commission on Taxation was established in February 2008 to consider the structure of the taxation system. Its terms of reference include considering how best the tax system can encourage long term savings to meet the needs of retirement, and how it can support economic activity and promote increased employment while providing the resources necessary to meet the cost of public services and other Government outlays in the medium and longer term. The Commission has invited submissions from interested parties and is set to report to the Minister for Finance no later than September 2009.

Work on public service pension reform continued into 2008, with the roll-out in June of more flexible arrangements for reflecting non-salary earnings (allowances) in pension benefits. Work is close to completion on additional reform options deriving from the Report of the Commission on Public Service Pensions (2000), while examination has begun on constituent parts of a possible new phase of reform identified in the Green Paper on Pensions.

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In line with the Government’s commitment to improving the adequacy of social welfare provision, the State old age pension rates now stand at €230.30 weekly for the State Pension (Contributory, maximum rate) and €219 for the State Pension (Non-Contributory).

The Social Insurance Fund is subject to five-yearly actuarial reviews to ensure that its contribution to long-term budgetary policy remains effective. The latest review – published in October 2007 – sets out the position of the Fund as at 31 December 2005 and provides projections of future contribution income to, and benefit outgoings from, the Fund up to 2061. The review will be used to inform the ongoing development of social insurance policy in Ireland and has fed into the Green Paper on Pensions.

In line with the principles agreed with the Social Partners under Towards 2016, the Government has published the Nursing Home Support Scheme Bill. This is commonly known as "A Fair Deal" and is a new scheme for financing long term care. The Fair Deal will put the financing of individuals long term care needs on a fair and equitable basis throughout the state. It is the intention that, following enactment of the legislation, the scheme would be implemented in mid-2009.

Additional steps to increase the share of the population at work and improve the productive capacity of the economy – so it is better-equipped to meet the challenges ahead – have also been taken. These include the National Development Plan (NDP) 2007-2013 which is now being implemented. The first annual report on the NDP was published in July 2008. Investment in economic infrastructure amounted to €6.27 billion in 2007 while the Science, Technology and Innovation Programme saw €635 million of investment in 2007 with the aim of bringing Ireland into line with R&D performance in leading countries. The recent Budget provided for Exchequer capital investment to be over 5% of GNP in 2009. The Government is prioritising those capital projects which will provide the best economic return and will continue to invest heavily in roads, public transport and science, technology and innovation.

2.4 Resource Allocation

Guideline 3: Promote an efficient allocation of resources, which is geared to growth and jobs

The Government reaffirms its commitment to promoting the efficient allocation of resources and to continue implementing and expanding the wide range of policies and initiatives already undertaken under the previous National Reform Programme. Every effort will be made to strengthen the growth potential of the economy and to ensure that mechanisms already in place to assess the relationship between public spending and the achievement of policy objectives are built upon and further enhanced. This commitment is fully in keeping with the sound management of the economy in order to ensure growth and job creation and is in line with the Broad Economic Policy Guidelines for 2008-2010.

Priority will be given over the programme period to delivering better and more effective public services, seeking value for money at all levels of public spending and continuing to invest heavily in public infrastructure that promotes and enhances economic capacity, consistent with levels of sustainable economic growth and broadly in line with revenue growth.

Government investment will be delivered in accordance with the provisions of the

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National Development Plan 2007-2013 (NDP)4. The plan, launched by the Government in January 2007, sets out a comprehensive framework for large-scale investment focussed on developing the national economic and social infrastructure. The NDP encompasses five sectoral Priorities – Economic Infrastructure, Enterprise Science & Innovation, Human Capital, Social Infrastructure and Social Capital - along with investment frameworks for regional development, environmental sustainability, development of the rural economy and all-island co-operation.

The first annual report on the National Development Plan was published in July 2008 and gives a comprehensive picture of what has been financed and delivered under the NDP in 2007 under the five priorities. The following table shows the financial outturn for each Priority.

All Priorities - Outturn€m

1. Economic Infrastructure Priority 6,2672. Enterprise, Science & Innovation Priority 2,3783. Human Capital Priority 3,2774. Social Infrastructure Priority 3,6995. Social Inclusion Priority 6,785Total All Priorities 22,406

The total outturn for 2007 was very close to that envisaged, at €22.4 billion of which €11.9 billion or 53% was invested in the Economic Infrastructure, Enterprise, Science and Innovation and Human Capital priorities which are strategically targeted to improve our economic infrastructure and improving economic competitiveness. This level of investment supported: visible improvements in Ireland’s road, public transport and airport infrastructure; continued enhancement of Ireland’s energy capacity; overhauling and upgrading of Ireland’s environmental infrastructure; the development of Ireland’s science and innovation sector; indigenous enterprise and foreign investment; the training of the Irish labour force and the enhancement of Ireland’s education sector.

The Government has indicated that, despite expenditure pressures arising this year, capital expenditure will remain a top priority and resources will continue to be targeted at investment in core economic infrastructure that adds to productive capacity which will enable Ireland to recover quickly when the present economic downturn is reversed. In Budget 2009, €8.2 billion was allocated to capital investment in 2009, 5.2% of GNP. This funding will support core capital investment priorities, including improvements in public transport such as the extension of the LUAS tram network, the completion of the Cork to Midleton

4 See Annex 2 to this guideline’s material for more detailed information on the NDP 2007-2013.

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commuter rail line and general capacity improvements; continuing work on the major inter city motorways which are scheduled for completion in 2010; ongoing work on the National Convention Centre in Dublin scheduled for completion in 2010 and ongoing significant investment in our water services. The Exchequer capital investment programme will be in addition to capital investment by the commercial semi state bodies such as Terminal Two in Dublin Airport and investment in energy infrastructure by state energy companies.

To ensure that expenditure by the public sector, including that under the NDP, is allocated efficiently the Central Expenditure Evaluation Unit (CEEU) was established in the Department of Finance. The purpose of the Unit is to promote best practice in the evaluation and implementation of programme and project expenditure across all Government Departments and Public Sector Agencies. Roll out of the CEEU’s work programme, including implementation of a programme of spot checks of capital projects to assess compliance with the Value for Money (VFM) frameworks for capital expenditure, is currently underway and will continue across the period covered by this programme.

The Value for Money and Policy Review Initiative was introduced in June 2006, building on the Expenditure Review Initiative introduced in 1997. Some 90 reviews are being carried out by Departments over the period 2006-2008, focussing on evaluations of significant areas of expenditure and major policy issues. The arrangements applying to this initiative require that the completed reviews are published and submitted to the relevant parliamentary select committee for consideration.

The reviews are an important part of the move towards a greater focus on performance management in the budgeting system by moving resource allocation policy away from a focus on financial inputs, on to a broader consideration of performance and the delivery of outputs and outcomes.

In light of the experience of the 2006-2008 round of reviews it is planned to further refine the process for the post-2008 round as part of the further integration of performance management into the budgeting system.

In addition to these measures the Government, in Budget 2008, announced an efficiency review of all administrative spending across the whole public service. The particular areas of interest included possible inefficiencies due to the multiplicity of Boards and Agencies, the need for better sharing of certain services and efficiencies in management, travel and consumables in general.

This exercise was undertaken to secure maximum value for money from expenditure on public services, to release administrative savings for front line service delivery and to contribute to overall budgetary sustainability. The outcomes of this Efficiency Review process will have a bearing upon the allocation of resources for the 2009-2011 Expenditure rounds and will contribute to the achievement of ongoing budgetary sustainability. Indeed, in July 2008, the Government announced a range of measures, including efficiency savings identified in the Review process, estimated to deliver savings of €440 million in 2008 and €1,000 million in 2009. The efficiency measures include a number of structural improvements, including a 3% reduction in public service payroll costs and an extensive programme of rationalising State agencies. These reforms were carried through and delivered upon in Budget 2009.On foot of the publication of the OECD Review, Towards an Integrated Public Service, in April 2008, a Task Force was established to prepare an Action Plan for the Public Service. The Task Force is due to report in November 2008. In Budget 2009 the Government made clear that efficiencies in public spending would be pursed and consolidated on an ongoing basis. 

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Over recent Budgets, the Government has implemented a number of key initiatives relating to the introduction of a more transparent and accountable Estimates and Budget Process. Further improvements will continue to be made to the process, where possible. The aim of the reform process in relation to overall resource allocation policy is similar to that of the VFM Policy Review Initiative, namely to move away from a narrow focus on financial inputs and incremental additions to annual budgets, on to a broader consideration of improving performance and the delivery of outputs and outcomes, as well as placing aggregate expenditure policy firmly within the context of sound and sustainable budgetary policy for the economy as a whole.

The annual output statements first announced in Budget 2006 form a major part of this strategy of focusing on performance in delivering public service outputs. The Statements link budgetary allocations to performance output targets by programme and impact indicators linked to the high level goals in Departments' strategy statements. From 2008 onwards, the Annual Output Statements (AOS) include a report on progress made in the previous year toward the achievement of these targets. The OECD Review of the Public Service, Towards an Integrated Public Service, which was published in April 2008, commented favourably on the Irish budgetary reform initiatives, including the new Annual Output Statements, and called for greater integration among the existing range of initiatives. The views of the OECD, including their specific recommendations regarding the improvement of the AOS framework, will be important guiding principles for future development in this area. The approach to public spending requires a systematic approach in the way we do business, which will be pursued and consolidated each year.New public procurement arrangements for construction contracts have been developed and introduced from the start of 2007. The new contracts apply to all public sector bodies. A centralised training programme for key public sector personnel was completed in February 2007 and a Framework Agreement for the training of other public sector personnel has been put in place. These measures are expected to lead to the following results:

The revised capital appraisal guidelines, together with the strengthened Value For Money measures and the capacity-building effect of the CEEU, are resulting in more rigorous selection of projects and more effective and efficient management of capital programmes and projects, ICT projects and consultancies generally.

The move to fixed price contracts will result in a shifting of risk, greater cost certainty, value for money and cost effective delivery of public capital projects.

The new VFM Policy Reviews will also strengthen the arrangements for securing better value for money and improve decision making in regard to the allocation and prioritisation of expenditure.

Reform of the Estimates and Budget Process will increase Departments’ and Agencies’ accountability to the Dáil (the lower of the two houses of parliament) and the taxpayer in regard to the prioritisation and allocation of public expenditure.

The National Development Plan sets out a strategy and objectives, along with planned investment, for the next seven years to promote sustainable growth, economic and social development and national competitiveness.

With respect to the structure of taxation, the objectives are to promote equity, employment, enterprise and efficiency. Over the past year, income tax policy has continued to focus on maintaining full employment and strengthening the competitive position of the economy by means of alleviating the tax pressure on labour. A particular emphasis has been placed on the low paid and the elderly. To

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this end, the entry point to taxation and Pay Related Social Insurance (PRSI) was increased in Budget 2008 to ensure that the annualised minimum wage remained outside the tax net. This position was maintained in Budget 2009 despite challenging economic circumstances. After Budget 2009 it is estimated that 851,475 income earners will remain outside the liability to income tax. Budget 2009 did, however, introduce a 1% income levy on all income except social welfare payments and State pensions and with a proposed threshold to exempt the minimum wage.

Looking ahead, Programme for Government priorities include ensuring that low earners remain outside the income tax net and that average earners are not liable to tax at the higher rate.

On the 14 February 2008 a new Commission on Taxation was established to review the efficiency and appropriateness of the Irish taxation system. The terms of reference of the Commission are broadly defined, far reaching and allow for consideration of all aspects of the Irish taxation system. The Commission is due to report not later than 30 September 2009 (see also Guideline 2).

2.5 Wage Developments

Guideline 4: Ensure that the development of salaries contribute to macroeconomic stability and growth

The Programme for Government commits to ensuring that pay improvements for public sector workers continue to be linked to delivery and verification of agreed improvements in public services. Employment growth has eased considerably with no expansion being forecast for 2008. Unemployment remains low but is forecast to increase to 5.8% from last year’s 4.5%. The Government and Social Partners recently reached a draft agreement on a successor to the first pay module of Towards 2016. It is agreed by the parties that the following basic pay terms shall apply in the Private Sector:

A Pay Pause of 3 months from the expiry of the last phase of the first pay agreement under Towards 2016.

An increase of 3.5% for the next 6 months of the Agreement as it applies in each particular employment or industry; and

An increase of 2.5% for the next 12 months of the Agreement – except for those employees on an hourly basic rate of €11 per hour or less on commencement of the second phase where a 3% increase will apply.

It is agreed by the parties that the following basic pay terms shall apply in the Public Sector:

A Pay Pause of 11 months from the expiry of the last phase of the first pay agreement under Towards 2016.

An increase of 3.5% for the next 9 months of the Agreement; and An increase of 2.5% for the remainder of the Agreement – except for those

earning up to and including €430.49 per week (€22,463 per annum) on commencement of the second phase where a 3% increase will apply.

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The draft Agreement reached between the parties also covers a range of initiatives including:

Setting up a process to develop a national framework on the employment and rights of temporary agency workers; while prohibiting their use in the case of official strikes or lock outs;

Optional recourse to voluntary arbitration on change at enterprise level; Setting up a time-bound process in which the issue of employee

representation and the appropriate legislative framework will be addressed;

The introduction of a statutory prohibition on the victimisation of employees based on their membership or non-membership or activity on behalf of a trade union, and on incentivising non-membership of trade unions;

Making provision for pensions under the Transfer of Undertakings Directive; and

Commitments in relation to public service modernisation, including responding to the OECD Report on the Public Service.

The terms of the draft Agreement will now be considered by the relevant representative bodies of the social partners with a view to ratification. The public service paybill remains the biggest single element in public expenditure accounting for around half of all current expenditure. Each 1% increase in the public service pay bill costs around €200 million. The development of public service pay costs must not cause a shortfall of resources for other key priorities. Government policy on public service pay can be summarised as follows: the public service should be in a position to attract its fair share of good quality staff at all levels. It should neither lead the market nor trail it. Under the current Programme for Government published in June 2007, the Government indicated its commitment to ensuring that pay improvements for public service workers continue to be linked to delivery and verification of agreed improvements in public services. As with the previous agreement, a performance verification process will apply under the new draft agreement and the payment of the phases of the increases provided for will be contingent on the satisfactory implementation of an agenda for modernisation set out in the draft agreement, maintenance of stable industrial relations and the absence of industrial action.The second report of the Public Service Benchmarking Body (December 2007) did not recommend any increase for the vast majority of public service grades. Increases were recommended for only 15 of the 109 grades examined by the Body. The cost of the increase is estimated at €50 million (an increase of 0.3% of the paybill of those covered by the report).The draft agreement provides that where increases were recommended in the second report of the Public Service Benchmarking Body they will be paid as follows: (a) 5% from 1 September 2008, or where the total increase is less than 5%,

the full increase from that date; and (b) The issue of the payment of any balances will be discussed between the

parties in the context of any successor to the agreement which might be agreed between the Social Partners, or whatever other arrangements may be in place on the expiry of the agreement.

Various indicators show that Ireland’s competitiveness has deteriorated relative to our trading partners in recent years. To facilitate a re-balancing of the economy towards more sustainable, export-led growth it will be important to improve our competitive position. While external factors such as exchange rate movements and oil prices have an impact on domestic costs, these are beyond our control. As

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such, we must seek to control those costs which we can influence including wages. The realistic approach to wage developments adopted in recent pay talks is an important step in this regard and will help provide the stability that the Irish economy needs in the current challenging environment.Labour productivity growth has been modest in the past few years due to a relatively high concentration of employment in labour productive sectors, particularly construction. The economy is, however, experiencing a shift of employment towards the services sector where more scope exists for productivity growth. A range of Government policies are focused on supporting the drivers of productivity:

Firstly, in terms of human capital, ongoing investment in education is expected to result in the proportion of the labour force with upper-second or third-level education increasing from just over half at the beginning of the 1990s to three-quarters by 2012.

Secondly, in terms of increasing the amount of capital per worker, considerable investment in the public capital stock is taking place. Over the period 2009-2013, public infrastructural spending will average 5.0% of GNP each year under the Government’s National Development Plan.

Finally, in relation to multi-factor productivity, some progress has been made in strengthening competition in various markets (examples being electricity supply and telecoms), and this can be expected to generate continuing productivity gains in the future.

2.6 Policy Coherence

Guideline 5: Strengthen the consistency of macroeconomic, structural and employment policies

IntroductionIreland’s success in sustaining relatively high growth and low unemployment rates in recent years has been accompanied by progress on structural reforms which are aimed at increasing the flexibility, mobility and adjustment capacity of the economy. The policies pursued in this respect range from the extension of existing measures to the introduction of new reforms across product, capital and labour markets and in relation to the public finances and the health sector.Ireland’s structural policies promote efficient markets through encouraging competition in network industries and capital markets and by increasing investment in knowledge and innovation through the provision of funding for R&D research under the National Development Plan 2007-2013.In 2009, over €300 million has been provided in the Vote of the Department of Enterprise, Trade and Employment, for the continued implementation of the Strategy for Science, Technology and Innovation to drive world-class research and in-company Research and Development with a view to commercialising new ideas and know-how for the longer term benefit of the economy. Of this total, €179 million has been allocated to Science Foundation Ireland in 2009, while Enterprise Science Technology Innovation will receive a 2.5% year on year increase, bringing it to €127 million in 2009. In product markets, the process of liberalisation has been accelerated. In particular, some markets that have traditionally been under direct control of government have undergone significant reform. Elsewhere, however, the pace of

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reform has been slower, with barriers to entry, in particular, remaining a feature of a number of markets, most notably in the services sector of the economy.

Promoting Market Competition In line with the product market recommendations of the Annual Report on Structural Reforms (EPC, 2004), emphasis has been placed on the need to increase competition in certain sectors such as retail distribution, insurance and the professions. In this context, the Competition Authority published a Report on the Non-Life Insurance Market in 2005 and a Report on Private Health Insurance in 2007. Many of the recommendations contained in both these Reports have either been implemented or are being progressed as part of a review on financial intermediaries being undertaken by the Financial Regulator.Over the past number of years the Competition Authority has been examining how competition works in eight different professions and identifying behaviour which, while not breaching competition law, restricts competition. Final reports have been published in the following professions: Engineers (December 2004), Architects (March 2006), Optometrists (June 2006), Solicitors & Barristers (December 2006), Dentists (October 2007) and Veterinary Practitioners (June 2008) while a preliminary report on medical practitioners is expected before the end of 2008. Some of the recommendations contained in these Reports have been implemented or are being progressed and the Authority continues to advocate for the implementation of outstanding recommendations. The Restrictive Practices (Groceries) Order 1987 was abolished with effect from March 2006 and, following its abolition the Minister for Enterprise, Trade and Employment asked the Competition Authority to “review and monitor the structure and operation of the grocery trade for the foreseeable future to see how it responds to the new legislative environment”.In April 2008, the Authority produced two Reports as part of its Grocery Monitor Project: A Description of the Structure and Operation of Grocery Retailing and Wholesaling in Ireland: 2001 to 2006 and Price Trends in the Irish Retail Grocery Sector: A Description of the Evolution of Retail Grocery Prices between 2001 and 2007, and in September 2008 it published the third report of the Project: The Retail Planning System as Applied to the Grocery Sector: 2001 to 2007.While the first two Reports are factual descriptions of the retail grocery sector in Ireland, in the third Report the Authority examined competition issues relating to the planning system through the planning experience of the seven largest grocery retailers in the State between 2001 and the year-end of 2007. The Authority found that the planning system has influenced the type of grocery retailers that trade in Ireland, where they locate, what they offer consumers and the prices that consumers pay. The Authority also found that, despite the growth in the number and size of grocery retail outlets in Ireland since 2001, the planning system acts as a barrier to competition in grocery retailing in three ways:

restrictions on the size of grocery retail outlets, restrictions on where grocery retail outlets can locate, and the uncertainty regarding planning permission can raise the cost and delay

the arrival of new retail outlets.

The Report contains seven recommendations aimed at promoting competition in grocery retailing in Ireland. The retail planning guidelines will be reviewed in 2009.

Public Service ReformThe implementation of the modernisation agenda has been, and continues to be, driven by the various partnership agreements across the Public Service. The

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current partnership agreement, Towards 2016, sets out a mechanism for the verification of progress at sectoral, organisational and grade level in the Public Service through the establishment of a Performance Verification Group for each of sectors.  Following the publication of the OECD Review of the Irish Public Service, Towards an Integrated Public Service, the Government announced the establishment of a Task Force to develop an Action Plan for the Public Service which will inform the next phase of the modernisation process.  The Task Force was asked to prepare a comprehensive framework for renewal of the Public Service which takes into account the analysis and conclusions of the OECD as well as the lessons to be drawn from the Strategic Management Initiative, the Organisational Review Programme and the Efficiency Review.  It includes external members and is due to be published before end-2008.

Promoting a More Effective Allocation of Government ResourcesPriority will continue to be given to delivering better and more effective public services, seeking value for money at all levels of public spending and continuing to invest heavily in public infrastructure that promotes and enhances economic capacity, consistent with levels of sustainable economic growth and broadly in line with revenue growth (see also 2.4 above).

Factor Market FlexibilityEnhanced flexibility has been a feature of factor markets in Ireland in recent years. In the labour market, for instance, income tax reforms have had important demand and supply-side effects. Also, it is generally acknowledged that the burden of labour market regulation in Ireland is somewhat lighter than elsewhere in the EU. Various OECD studies support this conclusion. At the same time, capital markets in Ireland are increasingly integrated with those in the EU, a process which is being enhanced through membership of the single currency.

ConclusionIn summary, it is anticipated that the coherent structural policies pursued to date, and those proposed for the future, will continue to serve the Irish macro-economy well in terms of promoting efficient markets and public interventions that will lead to sustainable long term growth and employment.

2.7 EMU

Guideline 6: Contribute to the dynamism and smooth operation of EMU

Stability and Growth Pact Under the Pact, member states undertake to respect a limit of 3% of GDP on the deficit on the public finances. This requirement is pursued through country specific medium-term objectives (MTOs) for budgetary positions that accommodate the economic cycle, allow for the needs of public investment and support long-term sustainability. A stable macroeconomic environment and sustainable public finances provide an enduring basis for jobs, growth and social inclusion.Ireland has been a consistently strong performer under the Pact with surpluses on the public finances in 2007 and in ten of the last eleven years. It has hitherto met its medium-term objective of a broad balance in the public finances, and was among the eight euro area member states to do so in 2007.However, there has been a sudden and exceptional fall-off in growth and tax revenues, reflective of deteriorating international and domestic conditions, in particular in the construction sector. It is against this background that the

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deterioration of the public finances to a deficit of 5.5% of GDP in the current year should be seen. As outlined in Budget 2009 it will be 2011 before the Ireland’s general government deficit will fall below the 3% of GDP limit, with deficits of 6.5% of GDP projected for 2009, 4.7% of GDP projected for 2010, and 2.9% of GDP projected for 2011. In common with all EU Member States, Ireland is now facing the obligations under the Pact against a hugely changed landscape.Notwithstanding challenging economic conditions, Ireland’s macroeconomic and fiscal policy continues to be set within the broad framework of the Stability and Growth Pact. At the same time, Ireland is maintaining a high level of public investment – of 5% of GNP and well in excess of the euro area average – to secure the future growth potential of the economy.As outlined in Budget 2009, the Government is committed to a programme of fiscal consolidation designed to reduce the deficit sustainably below 3% of GDP and return to the MTO as soon as possible. The Government plans to do this on a phased basis through an appropriate combination of revenue and expenditure measures so as to avoid damage to the drivers of jobs and growth in the economy.

Euro area recommendationsIn March 2008, the European Council agreed euro area recommendations on foot of the Commission’s 2007 Annual Report on the Lisbon Strategy. In the area of macroeconomic policy, the recommendations are supportive of the preventive arm of the Stability and Growth Pact. For 2009, Eurogroup Ministers have agreed to prudently designing fiscal policy plans “so as to ensure progress towards the MTO in line with the benchmark of 0.5% of GDP improvement of the structural balance for Member States that have not reached it; and maintaining sound structural fiscal positions in Member States that have achieved it.” More generally, the intention has been that all euro area members would be at their medium-term objectives by 2010 at the latest. However, it is accepted that this ambition has been made extremely difficult by the prevailing unfavourable economic conditions.

For Ireland, it is clear that over the period of the new National Reform Programme and notwithstanding a supportive policy framework, the ongoing management of the public finances in line with the Pact will prove to be particularly challenging. The necessary consolidation of the public finances is being pursued through substantial reductions in the rate of growth of public expenditure, with the annual growth in gross voted expenditure for the period 2009-2011 forecast to average 1.8% compared with 8.6% over the last 3 years. Tax measures are also being implemented to improve the fiscal position. It is planned to improve the structural balance of the public finances by about 3% of GDP over the programme period.

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3 Microeconomic Policy Objectives

Guideline 7: Increase and improve investments in research and development, in particular in the private sector, with a view to establishing a European area of knowledge.Guideline 8: Facilitate all forms of innovation.Guideline 9: Facilitate the spread and effective use of ICT and build a fully inclusive information society.Guideline 10: Strengthen the competitive advantages of its industrial base.Guideline 11: Encourage the sustainable use of resources and strengthen the synergies between environmental protection and growth.Guideline 12: Extend and deepen the Internal Market.Guideline 13: Ensure open and competitive markets inside and outside Europe, reap the benefits of globalisation.Guideline 14: Create a more competitive business environment and encourage private initiative through better regulation.Guideline 15: Promote a more entrepreneurial culture and create a supportive environment for SMEs.Guideline 16: Expand, improve and link up European infrastructure and complete priority cross-border projects.

3.1 Overview

Across Government, micro-economic and structural reforms are designed towards maintaining and enhancing Ireland’s competitiveness as a constituent part of European competitiveness. Ireland’s enterprise base has gone through a period of significant structural change over the last decade and we are developing a range of strengths that are driving the internationalisation process and building competence in R&D and innovation. The competitiveness of exporting sectors, both goods and services, is a critical focus of policy in driving Ireland’s long-term growth. Ireland’s services sector, which is dominated by software, financial services and business services, is expected to overtake merchandise exports in the medium term. Within the framework of the renewed micro-economic Guidelines, we describe below areas of significant reform in business and entrepreneurship, R&D and innovation, competition and markets, sustainability and energy as well as investments in our transport and broadband infrastructures. These investments and policies are the foundations for our national vision for an innovation economy and, together with our EU partners, achieving global competitiveness.

3.2 Investing More in Knowledge and InnovationThe education system has played a critical role in Ireland’s economic development by equipping the Irish workforce with the skills and qualifications that have supported the development of the internationally traded manufacturing and services sector. Increasing globalisation and technological advancement are continuously changing the business environment. The imperative to match these

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demands is clear. Skills, training and education will remain a key factor in our economic performance and we will continue to make the necessary investments to keep pace with our competitors.

3.2.1 National Strategy for Higher Education Work will commence shortly on the development of a new national strategy for higher education. The strategy will aim to provide a vision for the future development of the sector to support it, through the many roles it plays, in contributing to Ireland’s economic and social development in the 21st century. This will take account of the role of higher education in the development and empowerment of individual students as well as its role in the achievement of national policy goals for protecting and growing Ireland’s prosperity and ensuring greater social inclusion. The process will also provide for consideration of the development of our third level institutions as world leaders in R&D and increasing third level participation rates. An examination of the use of current resources in the sector will be an important element of the terms of reference. In identifying future development objectives for the sector, to ensure that it can contribute effectively to a range of wider societal and economic goals, it is appropriate to establish the effectiveness of the use of current resources as a precursor to any assessment of future investment needs.

3.2.2 Broad-based innovation PolicyThe Government published its Innovation Policy Statement5, Innovation in Ireland on 30 June 2008. This Statement maps our progress across 10 key policy areas and also identifies opportunities where innovation can be better exploited. The Policy Statement provides a wider context for implementation of the Strategy for Science, Technology and Innovation 2006-2013 and charts the main components of our national innovation system. Substantial progress has already been made, as outlined below, in implementing the Strategy for Science, Technology and Innovation. Emerging sectors where innovation can be better exploited include services and public procurement and these two areas will be given additional focus during the year as further described below.

3.2.3 Strategy for Science, Technology and InnovationThe Strategy for Science, Technology and Innovation (SSTI) 2006-2013 is geared towards providing an integrated national innovation system and ensuring maximum economic and social benefits are derived from the Government’s substantial commitment to this area under our National Development Plan. The Strategy gives breadth and depth to a vision for a knowledge economy and society in Ireland backed by real investments by Departments and agencies, with clear targets and clear outcomes to be achieved. Our objective now is to ensure that science and technology work for enterprise and Ireland, using innovation and R&D capabilities to enhance productivity and to commercialise new products and bring them to market.Ireland has made progress toward the Lisbon R&D target in recent years. Total R&D performance (GERD) has risen from 1.32% of GNP in 2000 to 1.56% of GNP in 2006. We expect these improvements to continue in future years despite tougher global economic conditions. We expect GERD to reach 1.9% of GNP (1.6% of GDP) in 2010. This forecast is underpinned by continued strong increases in business sector performed R&D (BERD) in the period 2007-2010. In parallel to this, further rises in Higher Education sector performed R&D (HERD) as confirmed in Ireland’s recent Science Strategy will contribute to the interim GERD target. If the R&D spending growth rates of the past decade are maintained, alongside an 5 http://www.entemp.ie/publications/science/2008/innovationpolicystatement.pdf http://www.entemp.ie/publications/science/2008/frameworkdocument.pdf

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easing in economic growth, then the overall intensity ratio could rise strongly over the coming years. The SSTI goal is that enhanced performance in business, higher education and public sector R&D should result in gross expenditure on R&D increasing to 2.5% of GNP by 2013. The first report on the implementation of the SSTI will be published shortly6. The report covers the period from inception of the SSTI in June 2006 until now. It confirms that substantial progress has been made in realising the Strategy’s objectives. Highlights from the report include:

Total R&D spending grew to an estimated €2.5 billion during 2007 from the confirmed €2.3 billion spent on R&D activities in 2006.

Ireland’s total R&D intensity ratio is estimated to be 1.56% of GNP in 2007. Higher Education R&D spending has almost quadrupled in current terms

over 10 years and is now at the EU and OECD average levels. This investment is having a significant impact in terms of human capital development, attraction of foreign direct investment and commercialisation;

The SSTI target to double the output of PhDs by 2013 is advancing significantly;

The number of Principal Investigator Research teams funded by Science Foundation Ireland (SFI) has been increased from a baseline of 200 in 2005 to 284 by end 2007- this exceeds the target set for SFI;

The fourth cycle of the Programme for Research in Third Level Institutions (PRTLI), which was announced in August 2007 with an allocation of €230 million, is set to deliver 819 spaces and approximately 600 highly qualified research personnel to our Higher Education institutions;

R&D performed in the business sector (BERD) rose by 17.3% to an estimated €1.56 billion in 2006, almost double the level recorded in 2000. Enterprise Ireland and IDA continue to work closely with companies to strengthen the research and technological base of the enterprise sector to underpin future competitiveness and quality employment and thereby drive forward the target of growing BERD to €2.5 billion by 2013;

Solid progress is being made by all Government Departments having a significant research capacity, primarily the Departments of Enterprise, Trade and Employment and Education and Science. Other Departments concerned are Health and Children; Agriculture, Fisheries and Food; Communications, Energy and Natural Resources and Environment, Heritage and Local Government;

The SSTI is being taken forward in an all-island context.

3.2.4 ResearchBuilding up the required number of researchers in the form of Principal Investigators and their teams to realise the investment in the SSTI will not be achieved by organic growth alone. Researchers will need to be attracted to Ireland in greater numbers than before. To that end, we have moved speedily to implement the EU Directive and accompanying proposals concerning the mobility of researchers from Third countries and their family members. The Strategic Innovation Fund (SIF) was introduced in 2006 and in excess of €140 million of funding has been allocated to date. Through an internationally peer-reviewed competitive tender, the SIF will support Universities in increasing their capacity to produce high quality 3rd and 4th level outputs. 6 Copies will be available at www.entemp.ie/publications/science/2008

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In addition, in fulfilment of the Government’s commitment to develop environmental technologies, the remit of Science Foundation Ireland has been broadened to include sustainable energy and energy efficient technologies. Significant funding can now be made available for world class research and development in these areas.

3.2.5 Contribution to the European Research AreaPolicies and programmes at national level are contributing directly and indirectly to the development of the European Research Area (ERA). All of the actions outlined above, including the attraction of researchers to Ireland and the strengthening of research capacity within the Irish enterprise base, are framed within the context of a broader ERA agenda. Details on some of the specific actions and initiatives that are directly linked to the ERA agenda are identified in Annex 3.

3.2.6 Science and EducationIreland continues to make a number of important changes to science education at both primary and secondary level. The SSTI sets out a range of measures to further strengthen science teaching and learning and improve the uptake of senior cycle Physics and Chemistry. A review of the implementation of science at primary level will be completed shortly and a report will be published in 2009. In regard to senior cycle, the advice of the National Council for Curriculum and Assessment on reform of science is expected later this year. The measures will continue to be supported by the Government’s integrated awareness programme Discover Science and Engineering (DSE) whose budget has tripled from 2004, its first full year of operation to €5 million in 2007. The programme provides comprehensive supports to encourage greater interest and take up of science in schools.Reform in second level technology and mathematics subjects is also being implemented. The reform of mathematics is designed to provide for better understanding of mathematics, ensuring a continuum from the changes at primary level, a greater emphasis on context, applications and problem solving, and encouraging more students to take up higher level mathematics.

3.2.7 Innovation and Public ProcurementAs a follow-up to the publication of the Government’s Innovation Policy Statement Innovation in Ireland, an Innovation Procurement Group has been established comprising representatives from the business community and public sector to explore ways to stimulate innovation through public procurement. The Group will:

raise awareness of the benefits of re-orienting public procurement towards stimulating research and innovation; and

create an environment in which the potential of innovation for public procurement can be realised.

The group will identify and publicise best practice examples of public procurement using innovative solutions and encourage the wider adoption of similar practices among public sector organisations. From the experiences gained in this process, the Group will work towards developing a step by step Guide to using Public Procurement to stimulate Innovation. A longer term aim of the group will be to explore how Pre-Commercial procurement, which has been identified as the “missing link” in the EU innovation cycle, might be implemented.

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3.2.8 Services Strategy ReportBoth worldwide and in Ireland, services are rapidly increasing in importance, and are increasingly traded internationally. In Ireland today, Services contribute about 63% of the value added in the economy and 43% of our exports. The Services sector employs two thirds of the workforce. Ireland is currently the 10th highest exporter of services in the world, with a 2.7% share of world services exports. Between 2000 and 2007, the contribution of services to total Irish exports doubled, from 21% to 43%. However, we want to further grow the services export base and identify and exploit new opportunities. Recognising this, in July 2007 Forfás set up a Services Strategy Group (SSG), made up of representatives of industry, academia, government departments and state agencies, to develop a comprehensive, forward-looking assessment of how to maximise the returns to Ireland from services. The Group’s vision was to examine how to position Irish enterprise within the context of globalised services, and how to achieve sustainability and continuing competitive advantage.The Report, called Catching the Wave –A Services Strategy for Ireland7, which contains over twenty recommendations, was launched in September and identifies three strategic aims for future services policy in Ireland:

1. Realising the opportunities to further grow and diversify Irish services exports;

2. Encouraging internationalisation, where Irish service enterprises establish operations in overseas markets;

3. Recognising the important role of Irish service enterprises that trade locally on the domestic market, and ensuring that these are efficient and productive.

The Services Strategy recognises the growing importance of services to the Irish economy and the potential for our services sector to diversify and grow considerably over the coming years.The report also deals with innovation specifically as it relates to services and looks at ways in which it can be fostered. The Services Strategy sets out how Government can pave the way by ensuring that barriers are removed and conditions optimised, and makes a number of recommendations. Examples of these recommendations include:

Actions that will encourage students to take up higher level Leaving Certificate Mathematics;

Actions that will enhance the professionalism of teaching mathematics; Establish Industry-led Competence Centres for services to stimulate

research in services and collaboration between service companies and the research community;

Ask the Enterprise Development Agencies to carry out an in-depth sectoral analysis to identify areas with most potential for services exports.

The recommendations in the report are wide ranging across a number of Government Departments and work has commenced to develop an implementation framework.

3.2.9 Next Generation Broadband (NGB) A policy paper on next generation broadband will be published shortly on foot of a public consultation process completed on 7 October 2008, considering the challenges in positioning Ireland as a leading country in the provision of

7 http://www.forfas.ie/publications/show/pub307.html

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broadband infrastructure and in the development of new digital applications.   This will set out:

a vision and framework within which the communications industry can invest in Next Generation broadband networks;

the role that Government will play to facilitate private sector investment in broadband;

the circumstances in which Government will consider direct investment in broadband; and

the role Government will play in advancing the digital revolution.

The Government sees that the private sector investment will play a key role in network roll out but that some Government intervention may be needed to bridge the digital divide.

In summary, the key Government proposals are: Government will target capital investment of €435 million to address the

digital divide; Universal broadband coverage in Ireland by 2010; 100 Mbps broadband connectivity to be introduced to second level schools

on a phased basis; Any future Government investment will be determined in accordance with

value for money review of the Metropolitan Area Networks (MANs); Ensure Ireland’s continued high level of international connectivity; Major public infrastructure projects will have to install ducting at the

construction phase. Government will establish a one stop shop to provide service providers with flexible and open access to existing and future ducting infrastructure;

New premises will be required to install open access fibre connections where practicable;

Maintenance of the regulatory framework necessary for fair and transparent competition across a range of platforms. Allocation of spectrum to encourage trialling and development of flexible new mobile technologies;

Use of Government purchasing power in order to stimulate demand, create economies of scale and better public services;

Establishment of a specialised research programme to monitor developments.

The total number of broadband subscriptions in Ireland for Q2 2008 was 1,054,920. This was a 6.35% increase since Q1 2008. The broadband penetration rate in Q2 2008 was 24.3%. Without mobile broadband, the penetration rate was 19.2%. Since the end of 2006 Broadband subscriptions have doubled in Ireland.

3.2.10 ICT in SchoolsBroadband connectivity is being provided to primary and post-primary schools under the Schools Broadband Access Programme. A new ICT Strategy for Schools, which aims to develop an e-Learning culture in schools that will ensure that ICT

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usage, is embedded in teaching and learning across the curriculum will be pursued.

New Strategy for ICT in Schools ProgrammeThe National Development Plan envisaged a provision of €252 million for ICT in Schools, the essential purpose of which is to advance the embedding of an e-Learning culture in teaching and learning in schools. The Report of the Strategy Group, appointed to advise on the prioritisation of measures, was published in July 2008. This makes recommendations across a range of interrelated areas, including the upgrading and renewal of hardware, the provision of software and digital content for learning, teacher professional development, curriculum development and the maintenance of the national broadband network for school and technical maintenance and support requirements. The recommendations will be pursued within available resources and the role of the individual school ICT co-ordinator will be prioritised along with support for school principals. The National Centre for Technology in Education will collaborate with the various school support agencies to integrate ICT into the delivery of all support services and into all curriculum development activities.

BroadbandBroadband connectivity has been successfully rolled-out to 99% of schools under the Schools Broadband Access Programme, which is being undertaken in partnership with industry, in the context of the joint Government /IBEC - TIF (Telecommunications and Internet Federation) three year Agreement to fund local connectivity at school level. The overall costs of the Schools Broadband Access Programme, including the initial set-up and ongoing costs over the three years, exceed €30 million. A public procurement process will commence shortly for the next phase of the Schools Broadband Access Programme and the range of services available to schools will be expanded.  A free website hosting service will be provided to schools, which will provide a unique 'www.scoilnet.ie' website address to schools. 

Other DevelopmentsThe new Technology syllabus and the revised Design and Communication Graphics syllabus at Leaving Certificate level, which involve the use of Computer Aided Design, were introduced with effect from September 2007. With direct relevance to the revised Leaving Certificate Geography curriculum, Scoilnet Maps has been made available to second-level schools, via the Schools Broadband Network, to provide access to detailed Ordnance Survey Ireland maps and aerial photographs.

3.2.11 Accelerating the Development of Ireland as a Knowledge EconomyThe Government is preparing a new action plan on the knowledge society. The proposed approach will be whole-of-government with strong enterprise involvement. Working groups with strong industry involvement will be established in Enterprise, Environment, and Education. The groups will identify priority knowledge intense areas where Ireland can become a global leader. The groups will propose clear targets and agree the impact of the key actions proposed. They will also address barriers and how to overcome them. These priorities will be directly addressed by research funders and development agencies to ensure that world class research leaders and adequate research capacity are put in place to directly support the priorities.

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The working groups will be led by an acknowledged expert in their field and will draw on the many national and international studies already in existence. The development of an explicit National Knowledge Society Strategy, focused on the development of our knowledge economy, will help accelerate the development of knowledge-intense areas such as: digital traded services; e-learning products and services; and clinical trial infrastructure. More generally the Strategy will bring together the various actions and supports which will result in Ireland having the ability to develop, produce, licence and export products and services based on knowledge-intense ideas. The publication of a clear decisive strategy focused on knowledge-intense goods and services and also including opportunities in green ICT, renewable energy sources, and energy efficient products and services will concentrate attention of inward mobile investors and others on Ireland as a smart location for their knowledge intense investments.

3.2.12 SFI Third Pillar Energy ResearchThe remit of Science Foundation Ireland (SFI) was amended during 2008 to add a third research pillar on sustainable energy and energy-efficient technologies to its existing strategic areas of scientific endeavour in the areas of ICT and biotech. This targets a world-class research capacity investment through SFI of €90 million in sustainable energy and energy-efficient technologies over the period to 2013. SFI has been very successful in building Ireland’s research capacity in the fields of information and communications technology and biotechnology. This development will allow SFI to build a world-class research capacity in sustainable energy and efficient-energy technologies and will provide a solid basis to address Ireland’s challenges in the sustainable energy field.Under the new arrangements, SFI will take over responsibility for the administration for the Charles Parsons Awards. This Scheme was initially established in 2006 with funding from the Department of Communications, Energy and Natural Resources to build energy research capacity on the island. Seven energy research centres in six third level institutions are funded by the scheme8.These developments will further enhance Ireland’s energy research capacity, and ultimately also more generally contribute to climate change and sustainability research and development. Such capacity should also provide Ireland with the necessary energy research resources, in terms of researchers, research centres and research output, to tackle our sustainable energy challenges, develop innovation in sustainable energy and participate in the global sustainable energy technologies market.

3.2.13 Energy Research StrategyThe Irish Energy Research Council’s (IERC) An Energy Research Strategy for Ireland was produced in 2008, providing a basis for a consultation process on the nature of Ireland’s energy research strategy to 2020. That process seeks to canvass views on the shape, content, and structures of Irish energy research policy, its programmes and on related matters. The Strategy submitted to the Minister by the Council, while final, has facilitated and informed the consultation process and ultimately will be of considerable assistance in finalising policy decisions in this area.9

8 http://www.dcenr.gov.ie//Press+Releases/Science+Foundation+Ireland+to+take+on+energy.htm9http://www.dcenr.gov.ie/Energy/Office+of+the+Chief+Technical+Advisor/ Irish+Energy+Research+Council.htm

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3.3 Unlocking Business Potential, Especially of SMEs

3.3.1 Better Regulation

A range of Better Regulation initiatives continue to result in significant improvements in the regulatory environment for business and other stakeholders.

Review of the Economic Regulatory Environment Further to a commitment in the Programme for Government, a Review of the Economic Regulatory Environment was commissioned in April 2008 to address the need for stronger international data and benchmarks in relation to the comparative efficiency, effectiveness and accountability of Irish Regulators. The Review, which is being conducted by the Economist Intelligence Unit, in partnership with Compecon Ltd., is expected to be completed by the end of the year and will compare key economic Regulators with their counterparts in the EU and OECD.

Regulatory Impact AnalysisAn independent Review of the Operation of Regulatory Impact Analysis (RIA) was published earlier this year. Overall, good progress has been made across Departments with some 74 RIAs produced in the period between June 2005 and February 2008. However, further progress needs to be made on issues such as quantification and publication. The Report also finds that the supports available to officials are well regarded and contains a series of specific and practical recommendations designed to build on the progress already made in relation to RIA.

Reduction of Administrative Burdens

25% targetIn response to the European Council invitation, Ireland has set a 25% target for the reduction of administrative burdens arising from domestic legislation, to be achieved by 2012. The Department of Enterprise, Trade and Employment has been charged with coordinating this process. Initially, the administrative cost to business deriving from legislation under that Department’s responsibility is being measured with a view to identifying simplification options.In parallel, the Department of Enterprise, Trade and Employment is leading the cross-Government project to measure the administrative burden arising from all domestic legislation. The Department will devise the approach and methodology to be used, coordinate the work across Government Departments and Agencies, and will report on progress annually.Participants from each Government Department and Agency will be provided with training in the methodology to be used and the process to be followed. As elsewhere, the initial stages will focus on identification and measurement of the biggest burdens for business. Subsequently, the focus will move to simplification and reporting of the progress made against the target.The Department will provide support and advice throughout, ensuring that a consistent approach is adopted and followed across the system.

The High Level Group on Business Regulation

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The High Level Group was set up in 2007 to act as a clearing-house for specific regulatory burden issues brought to its attention by its business representative members. The Group is focussing on the five main areas of regulation believed to be the source of most of the burdens on business: taxation, statistical returns, environmental regulation, health & safety regulation, and employment and company law.The first report of the High Level Group on Business Regulation was published in August 2008, and describes the work of the Group in its first year.10 A number of individual administrative burdens were measured, identifying over €20 million of savings for business. Furthermore, the Group is working across Government to support co-operation between Departments and Agencies with a view to simplifying procedures and reducing duplication. This work will continue to result in the reduction of costs for business as well as identify opportunities for meaningful efficiency improvements in the public sector.The twin processes outlined above provide for a methodological approach to administrative burdens measurement and reduction through the cross-Government target-driven process, while at the same time allowing a forum for specific issues to be tabled and dealt with as they are identified by the business community.

Future RegulationIn setting the 25% target for administrative burden reduction, the Government also decided that in relation to future regulations, and the conduct of regulatory impact analysis on such proposals, that all Departments should (a) assess the proportionality of the burden imposed to the risk foreseen, (b) measure the administrative cost on business, (c) examine the impact on small business and (d) consider what education and advice requirements are necessary to improve compliance. Specific guidance and training on the measurement of administrative burdens relating to future regulation is being developed in the context of the implementation of the recommendations of the Review of the Operation of Regulatory Impact Analysis. This will supplement the processes above, which are focussed on existing regulations, by ensuring that new regulations are introduced in the most efficient manner and at the minimum administrative cost to business.

Modernisation of the Statute Book Work to increase the transparency and accessibility of the Statute Book is ongoing. 3,225 obsolete pre-1922 Acts have already been removed as part of the Statute Law Revision Project. The current phase of the Project, focusing on Local, Personal and Private Acts, aims to complete the analysis of all pre-1922 primary legislation and the availability of a complete list of such legislation which remains in force.The Irish Law Reform Commission is also undertaking a programme of Statute Law Restatement over the period July 2008 to December 2009. A restatement is an administrative consolidation of an Act, as amended subsequently, which is made available in printed electronic form in a single text and is certified by the Attorney General as an up-to-date statement of the Act in question as amended. The Programme will allow for the restatement of 45 Acts.

10 http://www.entemp.ie/publications/commerce/2008/HLGReport.pdf

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3.3.2 Implementing and Promoting SME PoliciesThe SME sector makes an important contribution to our economic prosperity. Over 250,000 small businesses operate in our economy employing approximately 839,000 people. Therefore, the implementation of the outstanding recommendations of the Small Business Forum Report remains a priority.11 Progress on the implementation is monitored through the Forum at twice yearly meetings.

Access to FinanceAccess to finance plays a critical role in ensuring the future development of indigenous industry. Enterprise Ireland (EI) introduced a revised and refined funding offer for the development of enterprise in 2008, namely the R&D Fund, Growth Fund and Innovative High Potential Start-Up (HPSU) Fund. EI’s 2008-2010 Strategy set a target of supporting the development of 200 new High Potential Start-Up companies.Innovating to improve competitiveness has become a national priority in the face of increased globalisation. EI’s €60 million Growth Fund is designed to increase competitiveness and encourage new exports, supporting Irish SME’s through investment in staff, equipment and technology. This will help ensure Irish SME’s can compete on global markets and grow to scale, thus securing existing jobs and creating new jobs in these companies. The Growth Fund provides for investment in capital; technology acquisition and management development and staff training to assist with the implementation of Growth Fund proposals. The Workplace Innovation Fund (WIF) forms a key component of the Growth Fund.  This WIF is a joint initiative between EI and the National Centre for Partnership and Performance (NCPP). The aim of WIF is to support SMEs that are committed to workplace innovation, and to developing the role of employee participation as an enabler of change and productivity improvement in their companies.2008 saw the launch of a revised and simplified Research and Development Grant Scheme. The new scheme will see Enterprise Ireland and IDA Ireland invest more than €500 million to support R&D and continue to secure jobs in all parts of the country. The funding will be made available over the remainder of the Government's Strategy for Science, Technology and Innovation (2008-2013).Facilitating access to finance, particularly with regard to SMEs is a priority for EI. To this end, the proactive use of state aid instruments to promote such finance, through interventions such as the Business Expansion Scheme, Seed Capital Scheme, R&D credits and the seeding of the Venture Capital industry in Ireland are key responses. EI also supports Business Angel structures in conjunction with other relevant agencies in Ireland, and has a certification role in relation to eligibility for Business Expansion Scheme Support. A number of taxation based instruments (BES, Seed Capital, R&D credits) are available in Ireland to underpin investments in enterprise. In respect of fiscal measures to support SMEs, the VAT Registration Turnover Thresholds have been further increased for the second successive year from 1 May 2008 to €37,500 for services and to €75,000 for goods respectively. This measure will take approximately 2,700 businesses out of the VAT system. In addition, the Finance Act 2007 confirmed changes to the preliminary tax obligations of certain companies as recommended previously by the Small Business Forum.In addition, the Government recently announced that new start-up companies which commence trading in 2009 will be exempt from tax, including capital gains tax, in each of their first three years to the extent that their tax liability does not exceed €40,000.

11 Third Progress Report on Implementation of the Recommendations of the Report of the Small Business Forum (PDF)

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Venture CapitalA dynamic and healthy venture capital market is a prerequisite for the growth and development of high potential start-up companies in Ireland. Venture capital is an essential element of the eco-system for Irish indigenous industry providing risk capital for companies that would have difficulty raising capital through traditional sources of finance. EI has focused on stimulating venture capital funds in order to promote the availability of this important source of funding. To date, EI has made commitments of €148.5 million to eight Funds and is in the process of allocating the remaining €26.25 million sanctioned under the Venture Capital Scheme.

EntrepreneurshipEI has established an Entrepreneurship and Regional Development Business Unit which has responsibility for driving the conditions (in partnership with other relevant agencies such as City and County Enterprise Boards) for entrepreneurship throughout Ireland. A City and County Enterprise Boards (CEB) Coordination Unit has also been established within Enterprise Ireland to facilitate greater cohesion of strategic and operational activities in the enterprise development support offered to companies.EI encourages entrepreneurship at grass roots level through financial assistance for Community Enterprise Centres (CECs). CECs provide the space in a supportive environment for entrepreneurs and serve to help the development of locally based employment. In 2008, the capital allocation for the 35 CEBs is over €20 million. This funding will enable the Boards to continue to be actively involved in the area of economic development and ensure that available funds are targeted to maximise entrepreneurial development. A recent survey shows that in 105 centres there are 955 tenants with an occupancy rate of 86%, providing employment for almost 5,000. Assistance may be provided on a competitive basis for the development of a centre in which micro enterprises can establish. Assistance towards the employment of a Business Development Manager is also available.

ICT The Tech-Check programme, launched in April 2007, promotes awareness of the productivity benefits of greater strategic utilisation of ICTs by Irish SMEs. The programme is run by the County and City Enterprise Boards with funding of €2 million a year. The Programme offers a highly subsidised technology check-up to small business and helps them to identify ways to boost their productivity and profitability through the better use of technology.

Management Development CouncilThe Management Development Council, which benchmarks Ireland’s current management development provision, is currently conducting a detailed census of all the management development programmes, courses, schemes and services available to SMEs. In addition, they are also undertaking a study to identify and understand the management development demands and needs of SMEs, and the barriers which inhibit SME participation in management development. The Council is due to produce an Action Plan in late 2008. It will contain practical recommendation on supporting the development of world-class management skills within Irish SMEs.

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3.3.3 Female EntrepreneurshipConferences and networking have proven to be invaluable in examination of the role female entrepreneurs play, and could potentially play, in economic development. Allied to this, there has been a move for more action oriented support mechanisms for women in business, to develop sustainable businesses.The Going for Growth initiative, which was rolled out in October 2007, was designed to complement the role of the development agencies. The Going for Growth initiative has provided a support mechanism for female entrepreneurs with business growth aspirations. The programme offers peer support and the leadership direction of a more experienced lead entrepreneur. A series of roundtables were recently set up to provide support to female entrepreneurs, offering peer support under the direction of a 'lead entrepreneur' -who has established and is running their own business. The objective was to create a forum to support ambitious women entrepreneurs to realise their growth ambitions. In April 2008 the sessions were concluded with a National Forum regarding supports for female entrepreneurs.

3.3.4 Enterprise and Business Cross Border InitiativesCompanies throughout the island share challenges and issues faced by enterprise and business. Specifically in R&D, there is scope to further encourage and facilitate the development of deeper company and research institute links to develop new products/services. EI works strategically with Invest Northern Ireland (INI) and InterTrade Ireland (ITI) and co-operation is ongoing with the objective of sharing best practice, increasing the complementarity of their respective services and supports to client companies. There are ongoing discussions between agencies North and South and the Special EU Programmes Body (SEUPB) on the new EU Territorial Co-operation Programme (INTERREG IV) and potential future initiatives under these programmes.

Innovation VouchersThe Government has committed a total of €60 million over four years to the North South Innovation Fund. £89 million has been made available from the UK Treasury over the period 2008-2011 for innovation projects within Northern Ireland and between North and South. Of this £89 million, some £33 million has been specifically earmarked for the North/South Innovation Fund. The Innovation Fund will focus on promoting North South collaborative research. In May 2008, an all-island Innovation Voucher initiative was jointly launched by EI and Invest NI. This development will provide Irish SMEs with access to a further 10 knowledge providers based in the North, and will allow Northern Ireland based SMEs to use Invest NI innovation vouchers (£4,000) to access expertise in research institutions based in the South. This is the first initiative to be launched under the North South Innovation Fund.

The Transform Programme - Cross Border Enterprise Incubation ProgrammeIn 2007, EI and Invest NI jointly launched the Transform Ideas into Business Programme supported by funding from the EU Programme for Peace and Reconciliation. The project comprised 42 entrepreneurs and was formally completed in June 2008. Many of these entrepreneurs are now working closely with the development agencies North and South in pursuing their development

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strategies. Discussions are underway between EI and Invest NI to build on the experience of this initiative in 2008.InterTrade Ireland continues to develop key business networks and it implements a range of Programmes covering business networks, science technology and innovation, micro enterprise support, supply chain management and private equity awareness. FUSION12 and ACUMEN13 are two of its main ongoing programmes.

3.3.5 Intellectual Property Support and Outreach EI continues to provide Intellectual Property advice on the protection, development and commercialisation of patentable technology.  The Intellectual Property Assistance Scheme provides guidance and information on the protection, technical and commercial development of inventions. In appropriate cases financial assistance can be provided with the cost of patenting. Currently the scheme is providing support to 45 companies. A Higher Education Sector Patent Fund is also operated and provides funding to protect research results obtained by third level colleges. Presently 300 patent applications from third level colleges across the Higher Education Sector are availing of support from this fund.During 2008 the Patents Office will, in co-operation with a number of County Enterprise Boards, continue the roll-out of a programme which seeks to promote awareness of intellectual property (with an emphasis on trade marks) amongst SME’s and persons wishing to start their own business.

3.3.6 TourismIn implementing its Human Resource Development Strategy the National Tourism Development Authority (Fáilte Ireland) will continue to invest in training of staff and increasing business capability in the tourism industry14. Fáilte Ireland works in strategic partnership with tourism interests to support the industry in its efforts to be more competitive and it provides a broad range of supports to tourism enterprises, large and small, to help them to be more profitable and to enhance the performance of individual enterprises and so improve the competitiveness in the industry. The tourism development strategy, New Horizons for Irish Tourism: An Agenda for Action 2003-2012, emphasises the need to develop the capability of Irish Tourism in information and communications technology. Fáilte Ireland has developed the Tourism Content System, Ireland’s Destination Management System, which is unique in its scale and sophistication. E-Marketing has also become a strong focus. Tourism Ireland organised eSymposia, to give industry a clear understanding of how eMarketing strategies and technology can help to access more customers and grow business. Tourism Ireland has continued to invest directly in e-marketing, with a commitment to invest 24% of total budget on digital marketing in 2008. Co-operative networks and best practice models have been incorporated into the www.irelandhotels.com website by the Irish Hotels Federation. Fáilte Ireland run a range of IT training programmes for industry and are developing capability in this area, with a particular emphasis on small providers.

12 http://www.intertradeireland.com/index.cfm/area/information/page/FUSION13 http://www.intertradeireland.com/index.cfm/area/information/page/acumen14 http://www.failteireland.ie/ http://www.optimus.ie/opt/index.php http://www.performanceplus.ireland.ie/

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3.3.7 Implementation of EU DirectivesHaving intensified its efforts to ensure timely transposition of EU Directives, Ireland achieved a 1% deficit in the Internal Market Scoreboard published in July 2008. This was the lowest deficit ever recorded by Ireland, well below the current 1.5% target and already in line with the new target of 1% for 2009. Since February, 2008, the Internal Market Information (IMI) system15 has been operating on a pilot basis covering a number of the regulated professions (doctors, pharmacists, physiotherapists and accountants). IMI, along with SOLVIT16, is among an increasing number of administrative co-operation mechanisms that have been created to improve the functioning of the single market. When fully operational, the system will make a significant addition to the administrative cooperation machinery of Member States.Ireland shares the Commission’s view that the future success of the internal market lies in proper implementation of EU rules on the ground, and is actively participating in the governance exercise being undertaken under the auspices of the Internal Market Advisory Committee (IMAC). In this context, a presentation was made in February 2008 to IMAC’s Governance Working Group on the findings of a Forfás Study on the impact of the Single Market on Ireland. The Study had been commissioned by Ireland in the context of the Commission’s 2007 Review of the Single Market.

3.3.8 Internal Market Services DirectiveTimely and proper transposition of the Services Directive is a key priority for Department of Enterprise, Trade and Employment (DETE), with considerable benefits expected to accrue to Irish consumers and service providers, in terms of consumer choice and export opportunities, from its implementation.All Government Departments are engaged in the transposition process under the direction of DETE. While significant issues remain to be resolved in respect of Article 8 (a provision that describes how relevant procedures must be available remotely and solely by electronic means, and with implications for the use of e-signatures), Ireland is committed to working with the Commission and the other Member States to resolve these problems ahead of the transposition deadline. The Department expects to publish a discussion document on the proposed method of transposition early in 2009 as part of the consultation process with stakeholders.

3.3.9 High Level Group on ManufacturingThe High Level Group on Manufacturing established under Towards 2016 brought together representatives from Government, company representatives from the manufacturing industry and from the unions to consider the challenges facing the manufacturing sector. Its Report was launched in April 200817.

15 An electronic system of communication and information flows linking competent authorities in the 27 EU Member States in relation to internal market issues and administrative cooperation arrangements laid down in EU legislation.16 A network of 27 EU Member States and 3 EEA State contact points aimed at resolving problems experienced by citizens or businesses who believe that they are being denied their internal market rights by a Member State.17http://www.entemp.ie/publications/enterprise/2008/ Reportofthehighlevelgrouponmanufacturing.pdf

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The Report identifies the focused actions needed by employers, employees and Government to respond to challenges and take advantage of opportunities to further develop the sector in Ireland. It sets out a vision for manufacturing based on innovation (both technological and non-technological) and advanced manufacturing. Manufacturing and the manufacturing model has changed fundamentally in recent years. Manufacturing today encompasses a broad range of activities from R&D through design, production, logistics and distribution to marketing and after sales service.The report contains 26 recommendations directed at key areas of:

innovation and productivity leading to transformational change, re-skilling and management development for the innovative firm, increasing awareness and take-up of existing supports, the restoration of cost competitiveness which is of critical importance, the establishment of a Manufacturing Forum to progress the

implementation of the recommendations outlined in the report and to act as a strong advocate and champion for the manufacturing sector and to ensure that manufacturing remains central to current and,

future industrial policy.In the Review of Towards 2016, the Government and social partners have agreed to establish a Manufacturing Forum on the lines recommended in the Report.

3.3.10 Competition PolicyIn recognition of the fact that competition and consumer protection policies are fundamental to a vibrant economy, the Irish Government remains determined to ensure that competition thrives and that costs to the consumer are kept to a minimum.Competition and consumer policies are highly complementary and share a common goal of enhancing consumer welfare. In October 2008, as part of Budget 2009, the Government has provided for the merger of the Competition Authority and the National Consumer Agency (see also para 3.3.12 below). This will ensure improved co-ordination of these two policy areas and realise synergies in the interests of consumers and business alike.This merger coincides with the review underway of our competition law code. This review will endeavour to ensure that Irish competition law continues to be applied pragmatically and continues to protect competition within relevant markets. As part of the review submissions have been received from a number of interested parties. A report on the submissions is expected to be submitted to the Minister for Enterprise, Trade and Employment by the end of 2008.The Tánaiste and Minister for Enterprise, Trade and Employment has indicated that reports to Government by the new body will receive a published response addressing findings and recommendations within a set period of time. How this can be best achieved will be examined during the course of the review and the establishment of the new body.As part of its statutory function, the Competition Authority has carried out a number of studies in a variety of sectors of the economy and has made recommendations aimed at improving competition in these sectors. Competition Authority recommendations implemented during the period from January 2007 to August 2008 are set out in Annex 4.

Future Activity 2008 - 2010Medical Profession

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During the course of this National Reform Programme, the Competition Authority will complete its studies of competition in professional services in Ireland with the publication of its report on medical practitioners.18 The Authority expects to make a number of recommendations aimed at ensuring the better functioning of the market for GP services. A Preliminary Report is expected by end-2008 and a Final Report by mid-2009. The main purpose of these Reports is to identify regulations and practices that may restrict competition, to evaluate any consumer benefits claimed to exist from any such restrictions, to consider whether the restrictions are proportionate to any benefits, and to make recommendations for the removal or amendment of any laws or other practices where this is not the case.

Enforcement of Competition LawBuilding on the success of previous investigations and resulting criminal prosecutions, a number of prosecutions relating to cartels will come before the Courts in the period 2008-2010. There are currently thirteen individuals (persons and companies) awaiting trial before the Courts and it is anticipated that further prosecutions will be filed over that period.Cartels are a conspiracy against the public interest in the competitive process. In slower economic times, the formation of cartels is more attractive to competitors. The Competition Authority will continue to be vigilant in seeking out evidence of collusive behaviour. It will vigorously investigate complaints of anti-competitive behaviour in any sector of the Irish economy.

Co-operation arrangements with other competition authoritiesThe ability of enforcement authorities to freely seek and exchange information has clear benefits stretching beyond specific cases. The knowledge by cartelists that such authorities have the power and motivation to share information creates an additional risk to existing and prospective cartelists. With this in mind, the Competition Authority intends to enter into negotiations with enforcement bodies in a number of other countries. The proposed co-operation arrangements, which it is envisaged will allow for the exchange of information in cartels, abuse of dominant position and merger cases, will act as an investigative tool for and as a deterrent to anti-competitive behaviour. The proposed co-operation arrangements would complement the provisions of Commission Regulation 1 of 2003 (the Modernisation Regulation) for co-operation across all European competition authorities in the application of European law. A key objective of the proposed co-operation arrangements is to permit the Authority to co-operate with enforcement bodies in a number of other countries in the enforcement of domestic competition law.The Authority will also continue its close working relationship with An Garda Síochána and sectoral regulators in Ireland, e.g. ComReg.

Competition Advocacy and AwarenessThe Authority will also advise Government Departments and other public bodies, where it is invited to do so, in relation to competition issues in any sector of the economy, with a view to making markets work better. The Authority will continue to pursue the implementation of outstanding recommendations contained in earlier Reports published by it.The Authority will also pursue its mandate of raising public awareness of competition in the economy.

18 This series of studies has resulted in recommendations, to Government and other bodies, in relation to the professions of Engineer (2004), Architect (2006), Optometrist (2006), Solicitor and Barrister (2006), Dentist (2007) and Veterinary Practitioner (2008).

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T16 Monitoring of grocery sectorFollowing the abolition of the Restrictive Practices (Groceries) Order 1987 by way of the Competition (Amendment) Act 2006, the Competition Authority was asked to “review and monitor the structure and operation of the grocery trade for the foreseeable future to see how it responds to the new legislative environment”.

The Authority has produced the following Reports as part of the Grocery Monitor Project:

A Description of the Structure and Operation of Grocery Retailing and Wholesaling in Ireland: 2001 to 2006, published in April 2008, provides a description of the market structure at the wholesale and retail levels of the Irish grocery sector,

Price Trends in the Irish Retail Grocery Sector: A Description of the Evolution of Retail Grocery Prices between 2001 and 2007, also published in April 2008, considers the impact of the removal of the Groceries Order by examining the evolution of the aggregate retail grocery price trends since 2001, and

A Report on the Retail Planning System as Applied to the Grocery Sector: 2001 to 2007, published in September 2008, contains seven recommendations aimed at promoting competition in grocery retailing in Ireland. These recommendations require action by the Department of the Environment, Heritage and Local Government. The Authority considers that these recommendations do not require a sea change in Irish planning policy but rather a refocusing of the system to better accommodate competition and consumer issues.

The Authority will advocate for the implementation of these recommendations and will keep the grocery section under review.

3.3.11 Consumer PolicyFollowing the enactment of the Consumer Protection Act, 2007 the National Consumer Agency (NCA) was established on a statutory basis. The Act gave the NCA a significantly expanded remit with specific functions in areas such as consumer advocacy, research, information, education and awareness and enforcement.In the 14 months since its establishment, the NCA has been very active in the exercise of its expanded remit. Among its various activities were:

raising consumer awareness in relation to food prices; establishing a stakeholder forum on Multi Unit developments; research on the home construction industry.

As outlined above, the Tánaiste and Minister for Enterprise, Trade and Employment recently announced plans to merge the National Consumer Agency and the Competition Authority. This merger will allow a more consistent approach to policy implementation and improve services to the public.

Food pricesNotwithstanding the global rise in food prices, national policy in so far as the price of food to Irish consumers is concerned, is focused on promoting a competitive

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grocery market and raising consumer awareness in relation to the need to get the best value for money when doing the grocery shopping. The NCA undertakes frequent surveys comparing the cost of groceries from the main retailers and also do comparisons with cross-border outlets in the sterling area. Recent studies highlight the tardiness of retailers to pass on the benefits of a strong euro against the pound sterling and the dollar and the NCA’s publicity has brought pressure on retailers to lower the cost of food.

Home construction industryLast October the NCA called on consumers and organisations to submit their views for a study it commissioned entitled The Home Construction Industry and the Consumer in Ireland. As part of the research, the NCA invited comments and submissions on aspects of purchasing a home, home construction, maintenance and renovation. The study will assess consumer welfare in relation to these aspects of the home construction industry. The results will be published before the end of 2008.

Better Regulation and Review of Consumer Sales LawThe enactment of the Consumer Protection Act 2007 was a significant work of legislative modernisation and consolidation. The Act repealed and replaced thirteen statutes, some of which dated back to the late nineteenth century. It is now proposed to continue this programme of legislative reform by commencing a comprehensive review of the legislation governing the sale of goods and the supply of services. This legislation provides the framework for the contractual rights and obligations of the parties to business-to-business and business-to-consumer contracts for goods and services and is a cornerstone of both commercial and consumer law. The general statutory framework governing sales law has gone largely unchanged since the late nineteenth century and an updated legislative code appropriate to modern conditions is required. The review of consumer sales law will have close regard to the proposal for a framework Directive on Consumer Contractual Rights expected to be published by the end of 2008.

3.3.12 Postal Liberalisation Ireland has commenced the process of completing liberalisation of the postal market in line with the adoption of the 3rd Postal Directive (2008/6/EC). The entire process will be completed in time for full market opening on 1 January 2011. A key objective of process will be the facilitation of new high quality services to assist in the development of e-business.

3.4 Towards an Integrated and Efficient Energy Policy

3.4.1 Energy SectorThere were a number of initiatives and developments during the year in both the electricity and gas markets which flow from domestic energy policy goals. The relevant goals are set out in the competitiveness pillar of Ireland’s Energy Policy Framework published in 2007 and in the Programme for Government and are in line with the direction of the EU internal energy market and with reiteration of the need to widen and deepen the internal market in the EU’s new integrated guidelines.

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3.4.2 Competition/liberalisation in Electricity and Gas MarketsIn July 2008, it was announced that Endesa will purchase over 1,000 MW of Electricity Supply Board (ESB) Power Generation plant plus key “generation-ready” sites, on foot of the Commission for Energy Regulation (CER) – ESB asset divestment agreement. This development will help to deliver the Government’s commitment in the energy policy framework to reduce the ESB’s share of the all-island generation market to 40% by 2010. Regulations were signed providing for a new, wholly separate and legally independent subsidiary of ESB to carry out the functions of the Distribution System Operator. Once established, this company will provide for the operation, maintenance and development of the electricity distribution system in an independent, transparent and non-discriminatory manner. This completes Ireland’s transposition of the internal energy market Directive 2003/54/EC and represents a new milestone in the liberalisation of Ireland’s electricity market.Government policy remains committed to transferring ownership of the electricity transmission system from ESB to EirGrid, a move that will underpin the independence and transparency of the system and remove any potential barrier to market entry.  In March 2008, the Minister announced that an independent analysis would be commissioned, in the context of EU developments and the all-island Single Electricity Market, where all key stakeholders would be invited to submit their views.  The Minister will appoint a senior independent figure to chair the process, including the commissioning of independent consultants to carry out the technical and economic analysis. On 4 July 2008, Gaslink was formally established as the independent transmission and distribution system operator for gas. The establishment of the company, which is now fully operational, completes the legal unbundling of Bord Gais Eireann’s (BGE) transmission and distribution operations from its supply operations in line with the internal energy market Directive 2003/55/EC. Work continued to dismantle barriers to cross-border trade in the context of the ERGEG Regional Energy Market Initiatives. In negotiations on the 3rd Internal Energy Market legislative package Ireland also supported the provision of formalised mechanisms and new institutions to deliver the Regional Market Initiative. This work builds on the successful delivery, along with our NI counterparts, of the all-island Single Electricity Market in November 2007 and the current work on Common Arrangements for Gas. It is further supported by the development of additional electricity interconnection (detailed below) which will link the island of Ireland to the wider European market, bringing benefits in terms of enhanced competition, increased security of supply and the facilitation of additional wind generation on the Irish electricity system. The SEM, together with interconnection, are relevant in this context as they will support investor confidence and create a more attractive market in terms of scale. The section below on cross border energy infrastructure (3.4.5) provides more detail on developments in these particular areas during the period but both should lead ultimately to a greater number of participants becoming involved in the market.

3.4.3 Renewable Energy The Programme for Government sets out ambitious targets for increasing the use of renewable energy and dramatically improving energy efficiency right across all sectors of the economy and wider society. There was progress on a number of sustainable energy fronts in the past twelve months. These policy developments will underpin movement towards achieving our long term energy sustainable energy targets, which are compatible with the aims of the EU’s new integrated guidelines to increase sustainability and to strengthen the synergies between environmental protection and growth. Seeking to enhance energy efficiency and

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to increase the role of renewables in the energy system also contributes to improved alignment between climate change and energy policies.

Renewable ElectricityElectricity consumed from all renewable energy sources has increased year-on-year from 5.2% in 2004 to an estimated 9.5% in 2007. There are now about 75 projects accepted into the renewable electricity REFIT support programme with a combined capacity exceeding 1500 MWs. This will almost treble the amount of existing wind capacity connected to the system. Each of these projects has secured planning permissions and a connection offer which meet the requirements of REFIT and on this basis a high build rate is expected. Even allowing for the reinforcement and connection timescales involved, this capacity is capable of meeting and exceeding our 2010 targets of 15%.

Ocean EnergyOcean energy has the potential to deliver sustainable energy globally, but at this development stage the related technology requires major applied research and innovation to contribute significantly to the electricity system. Ireland is in a position, to become a leader in this field not least from a resource position. A major programme of activity, grants and supports to develop ocean energy in Ireland was announced in January 2008, intended to support the development, piloting, demonstration and testing phases.

In 2008, the initiative includes: €1 million towards a world class, state-of-the-art National Ocean Energy

facility in UCC. The Facility will now have an advanced wave basin for the development and testing of early ocean energy devices.

€2 million to support to develop a grid-connected wave energy test site at Annagh/French Point near Belmullet, Co. Mayo.

€2 million in grants this year under the Ocean Energy Prototype Fund. This will help developers to make their devices commercial.

The introduction, of a new feed-in-tariff under the REFIT scheme for wave energy of €220 per MegaWatt Hour.

€500,000 this year to establish an Ocean Energy Development Unit as part of Sustainable Energy Ireland (SEI). Operating with the support and assistance of the Marine Institute, this unit will oversee the implementation of the initiative.

Greener HomesGreener Homes is a domestic grant system for renewable heat technologies which is administered by Sustainable Energy Ireland (SEI) on behalf of the Department. The Greener Homes Scheme was launched in March 2006, with a five year budget envelope of €27 million. It was anticipated at that time that over 10,000 homes would be fitted with renewable heat installations, over the five years of the programme. By August 2007, 16,000 grants had been awarded under the scheme, surpassing its initial targets and creating a dramatic increase in renewable technology suppliers and a ten-fold expansion in the number of renewable energy products available on the market.A new phase was introduced in September 2007 with revised terms and conditions which allows (SEI) to fund similar energy grants for lower-income

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housing, school and community schemes and the roll-out of other innovative heating technologies.

ReHeat and CHPWhile the Greener Homes scheme focuses on domestic dwellings, SEI operate two schemes which are targeted at renewable heating technologies for the commercial, voluntary, community and education sectors. The €26 million ReHeat programme is targeted at biomass boilers, solar heating and heat pump technologies or combined technology deployment across these sectors.The €11 million Combined Heat and Power (CHP) programme will assist the commercial and voluntary sectors switch to more efficient heat and power generation by increasing the deployment of small scale high efficiency gas fired and biomass CHP units.

Energy Efficiency - National Energy Efficiency Action PlanThe Irish Government has committed to achieving 20% energy savings across the economy by 2020 and set a higher indicative target of 30% in the Energy Policy Framework 2007-2020. As part of this energy efficiency drive, the Government has also committed to achieving a 33% energy saving across our public sector institutions by 2020. The Government is expected to publish the National Energy Efficiency Action Plan by end year, setting out the path to achievement of the above targets.

3.4.4 Energy Efficiency ProgrammesThe following are the main energy efficiency programmes currently being implemented in Ireland.

Home Energy Saving Scheme: A new grant scheme was launched in 2008 to encourage owners of older homes to improve their energy efficiency. The Scheme provides grant aid of up to 30%. Typical works supported are wall and roof insulation, heating controls and highly efficient glazing.

Low Carbon Homes Programme: In order to drive further improvement in the energy performance of new housing, and to move towards zero carbon homes, the Government launched a new grants programme in 2008. The Programme provides grants of up to 40% of eligible expenditure to developers to build homes with an energy performance coefficient less than 0.25 and a carbon dioxide performance coefficient less than 0.30. The Programme aims to build an evidence base to support a future policy decision by Government to amend the residential Building Regulations to make this higher standard mandatory.

Warmer Homes Scheme: The Warmer Homes Scheme was established in 2002 to address one of the root causes of fuel poverty, the poor insulation standards of many older houses owned

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by those on low incomes. The Scheme covers the full cost of installation of wall insulation, roof insulation, boiler lagging jackets, CFLs and draught proofing measures and also provides advice to householders on minimising energy use.

Industry Support Programmes: A range of support programmes is offered to assist businesses, large and small, in being more energy efficient. The Energy Agreements Programme assists the largest energy users in working towards compliance with the Irish Energy Management Standard, IS393, and is reporting deep step change savings not previously identified, even among firms already very active on energy efficiency. The SME Programme assists small and medium sized enterprises that are keen to take action to save energy but are unsure where to start.

Accelerated Capital Allowances for Energy Efficient Equipment: This Scheme of tax incentives was introduced in 2008 and allows companies to claim 100% of the capital cost of certain energy efficient plant and machinery against corporation tax in year of purchase. The Scheme currently covers 5 classes of technology and the Minister for Finance announced in the 2009 Budget that he would be extending the range of qualifying energy efficient equipment under the scheme.

National Energy Efficiency Awareness Campaign: The multi-media energy efficiency awareness campaign “Power of One”, launched in 2006, continued in 2007. The campaign is designed to raise awareness of energy efficiency and the behavioural changes that can reduce energy usage, without impacting on modern lifestyles. Dedicated websites www.powerofone.ie, www.powerofonestreet.ie and www.powerofoneatwork.ie and significant online presence through social networking websites, are key features of the campaign19.

Study on demand side management and energy efficiency potential20

This study, commissioned by the SEI to consider the demand side management and energy efficiency potential in the residential, commercial and industrial sectors in respect of oil, gas and electricity, was published in 2008. It offers important information as to where the greatest and most cost-effective opportunities for energy usage and demand reduction lie in the Irish economy. It also assesses the likely costs of capturing this potential, as well as the environmental and financial benefits of doing so. The report estimates that economic energy savings totalling 25,640 GWh PEE or 26% of the reference base usage of these fuels are available in the three sectors examined. The Report recommends a number of programmes for implementation here, many of which have since been implemented. Others are expected to be implemented from 2009, subject to budgetary approval.21

Consumer Initiatives - Smart MeteringThe rollout of a national smart meter programme is progressing in line with the commitment in the Government’s Energy Policy Framework and in the Programme for Government. The Smart Meter programme is a central component 19 http://www.dcenr.gov.ie/Energy/Energy+Efficiency/20 Demand Side management in Ireland – Evaluating the Energy Efficiency Opportunities (Sustainable Energy Ireland 2008)21 http://www.sei.ie/ index.asp?locID=74&docID=-1

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of the strategy to significantly enhance management of demand for electricity and to achieve greater energy efficiency through the use of cutting-edge technology. Work is now well advanced on preparations for the pilot phase due to start in December.

3.4.5 Cross Border Energy Initiatives

Single Electricity MarketThe All –Island Single Wholesale Electricity Market (SEM) was introduced in November 2007. The SEM provides for a competitive, sustainable and reliable wholesale market in electricity aimed at delivering long-term economic benefits North and South.Delivering structural change in the electricity market North and South is in the interests of consumers, and competition is a commitment shared with the Northern Ireland administration. By addressing the structural and market issues in both our electricity sectors we will ensure that the SEM delivers in an optimal way for competition and consumer choice. The SEM, together with interconnection and structural change North and South, will support investor confidence and create a more attractive market in terms of scale.

Common Gas ArrangementsThe two Regulatory Authorities, North and South, are working with industry with a view to agreeing common arrangements for natural gas to be applied on an all-island basis.A preliminary cost benefit analysis has been undertaken by the two Regulators. The Commission for Energy Regulation (CER), working with the Northern Ireland Utility Regulator (NIAUR), have commenced work on a number of work streams and to date have published consultation documents on a Transmission Tariff Methodology, Gas Operational Regime and Single Approach to Gas Quality in an All Island context.

All-island Electricity Grid StudyIn January 2008, the two Governments, North and South, jointly published the All-Island Electricity Grid Study. The study is the first comprehensive assessment of the ability of the electrical power system to absorb large amounts of electricity produced from renewable sources.

North-South Electricity Electricity Transmission Projects The enhancement of electricity interconnection with Northern Ireland is being developed through the north-south and Meath/Cavan electricity transmission lines projects. During the period, Eirgrid undertook extensive pre-planning consultation on these projects, which will enhance competition, increase security of supply, and reinforce the Single Electricity Market.  The link, which will double the existing cross-border electricity transfer capacity to over 600 MW, is expected to be operational by 2012. Progress on the project is being monitored closely through the North South Joint Steering Group and the project has several critical and measurable milestones such as planning applications, permissions and authorizations, construction times etc.

East West Electricity Interconnector

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The Government is committed to the development of the East West electricity interconnector between Ireland and Wales. This is a designated Project of European Interest under the EU Priority Interconnection Plan. In 2007 the project secured additional funding under the Trans-European Networks Energy programme.Significant progress has been made on this interconnector, which will be owned and operated by EirGrid under the regulatory oversight of the Commission for Energy Regulation. EirGrid has secured connection points for the interconnector on both the Irish and UK transmission systems. EirGrid has also finalised a seabed survey to determine the most suitable route for the undersea cable. Detailed preparations are ongoing in relation to formal applications for planning and other consents.The selection of a developer for the project is now at an advanced stage, with EirGrid currently reviewing tenders. EirGrid is targeting the end of 2008 to announce the successful tenderer for the design and construction of the interconnector. 2011 is targeted for the completion of works with 2012 targeted for the start of commercial operations.

3.4.6 Climate changeIreland is committed, for the purposes of European Community compliance with the Kyoto Protocol, to limit average annual greenhouse gas emissions to no more than 13% above 1990 levels over the five-year period 2008-2012. The National Climate Change Strategy 2007-2012, which was published in April 2007, sets out a range of measures to reduce greenhouse gas emissions for the purposes of Kyoto Protocol compliance and to prepare Ireland for more challenging emission reduction targets post-2012. The 2007-2012 Strategy builds on the commitments to sustainable development set out in Towards 2016 and the National Development Plan 2007-2013, and is one of a number of interrelated Government initiatives that will address energy and climate change issues. These include the 2007 White Paper on Energy and the 2007 Bio-Energy Action Plan, as well as the forthcoming Sustainable Travel and Transport Action Plan. Taken together, these measures will support environmental sustainability, underpin competitiveness and enable Ireland to meet its global commitments.Total national greenhouse gas emissions in 2006 were 25.5% above 1990 levels, almost 1% lower than 2005. Transport continued to dominate those sectors in which emissions increased, with a 5.2% increase on 2005 levels and an overall increase of 165% on 1990 levels. This can be attributed to general economic prosperity, an increasing population and consequent increasing vehicle numbers, as well as a trend towards larger vehicles, and rapidly increasing road freight transport. However, the significant growth in transport emissions is sector specific and at variance with an overall decoupling of greenhouse gas emissions from economic growth. While national emissions were 25.5% above 1990 values in 2006, the Irish economy grew by some 180% in that 16 year period. Based on total greenhouse gas emissions in 2006, agriculture was the largest sector at 27.7%, followed by energy 22.3%, transport 19.7%, industrial and commercial 17.2%, residential 10.4% and waste 2.6%. The National Climate Change Strategy presents a cross-cutting approach to reducing emissions in the 2007-2012 period and includes targets in all sectors.A key element of the policy response to Ireland's emission limitation target for the purposes of the Kyoto Protocol is participation by over 100 installations in the European Union Emissions Trading Scheme. Following successfully participated in the 2005-2007 pilot phase of the scheme, Ireland's National Allocation Plan 2008-2012 provides the framework for participation in the current of 'Kyoto' phase of

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the scheme. In Ireland, the scheme is administered by the Environmental Protection Agency and a copy of the National Allocation Plan is available on the Agency's website www.epa.ie .The ongoing international negotiations under the United Nations Framework Convention on Climate Change on the global agenda beyond 2012, and the proposed energy and climate change package published by the European Commission in January 2008 have brought 2020 into focus as the next milestone on a path to achieve the ultimate objective of stabilising greenhouse gas emissions in the atmosphere at a safe level. The need for all developed countries to collectively reduce their greenhouse gas emissions by 60% to 80% by 2050 provides the context for future policy development in Ireland and the EU. As part of an integrated climate and energy policy, EU Member States have committed to transforming Europe into a highly energy-efficient and low greenhouse-gas-emitting economy and agreed to reduce the EU’s greenhouse gas emissions by at least 20% by 2020 compared to 1990. The emission reduction target anticipated for the period 2013-2020, whether founded in a unilateral EU initiative on climate change or a successor treaty to the Kyoto Protocol, will represent a major step for Ireland in the transition to a low-carbon future.

3.4.7 Sustainable EnterpriseThe current Programme for Government includes a commitment to support the development of environmental technologies in Ireland in order to achieve a win/win situation of improved competitiveness and environmental performance.The development and production of environmental goods and services is supported by the mainstream industrial development programmes of the State Agencies, notably Enterprise Ireland, IDA Ireland and Science Foundation Ireland (SFI). Enterprise Ireland and Science Foundation Ireland also oversee programmes which are specific to sustainable enterprise. In response to the challenge, Enterprise Ireland works closely with individual companies and sectoral groups, offering a range of financial and non-financial supports. EI aims to assist companies to increase profitability, competitiveness and export growth through, among other things, improved environmental performance and the development of products or services related to the environment or environmental protection. The Enterprise Ireland Environment Unit administers direct financial support schemes that help Irish SMEs to increase awareness of and promote eco-efficiency in their operations. These are the Environmental Management System (EMS) Support Scheme and the Environmentally Superior Products (ESP) Support Scheme.As well as financial support schemes, EI provides a range of “soft” supports to those companies it is mandated to assist including:

the Envirocentre website (www.envirocentre.ie) which provides up to date information on a range of environmental issues relevant to industry;

Regional Industrial Environmental Fora aimed at the SME sector; and technical advice to client companies from a range of in-house experts in

various environmental fields.The remit of SFI was extended in May 2008 to include the broad thematic area of sustainable energy and energy efficient technologies.The IDA is working closely with Sustainable Energy Ireland (SEI), on a number of fronts to help FDI clients identify ways to improve their energy efficiency and explore the possibilities of adopting a growing range of renewable energy technologies.

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The IDA has recently launched a study to examine the options to increase the energy efficiency and sustainability of industrial estates and business parks. IDA has established an internal team to identify FDI opportunities for Ireland in the newly emerging clean /green sectors. A consultancy study was published in October 2008, which identifies further enterprise opportunities in the global Environmental Goods and Services (EGS) sector. An implementation group will be established to recommend decisions on what additional measures the development agencies IDA and EI might take to develop the sector, as well as what further research might be useful. The EU’s Ecodesign for Energy Using Products Directive was implemented in Ireland (SI No 557 of 2007) on 11 August 2007. The Department of Enterprise, Trade and Employment is now representing Ireland in the EU process which is developing ecodesign requirements for a list of 19 Energy Using Products and addressing the EU Commission proposal to broaden the scope of the Directive, to include other Energy-related products, which was published at the end of July, 2008.

3.5 Transport 21

Transport 21 is the capital investment framework through which the transport system in Ireland will be developed, over the period 2006 to 2015. This framework will address the twin challenges of past investment backlogs and continuing growth in transport demand.The projects and programmes that make up Transport 21 will aim to:

increase accessibility; ensure sustainability; expand capacity; increase use; and enhance quality.

The unprecedented level of capital investment to transform Ireland’s transport system will, in particular, provide funding to:

complete the development of the inter-urban motorway network by 2010; bring about improvements in the rest of the national road network,

focusing particularly on the balanced regional development objectives of the National Development Plan 2007 – 2013;

complete the safety programme on the national rail network; bring about a radical improvement in the level and quality of rail services,

based on the policy framework provided by the Strategic Rail Review; transform the public transport system in the Greater Dublin Area; develop the public transport system in the provincial cities; improve regional and rural public transport services; fund essential capital works at the six existing regional airports; address accessibility for people with mobility, sensory and cognitive

impairments by implementing the commitments in the Department of Transport’s sectoral plan under the Disability Act 2005;

deliver a sustainable transport system that balances social, economic and environmental considerations.

Key Transport 21 developments since January, 2008 are set out in Annex 5.

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Sustainable Travel and TransportThe Government is committed to adopting a Sustainable Travel and Transport Action Plan in 2008. In February, the Department of Transport commenced public consultation on how to achieve sustainable travel and transport in the period to 2020. The Department received almost 500 responses to the consultation document.The emerging Action Plan will encourage smart travel and efficient travel through a range of demand management measures, including regulatory, fiscal incentives and mobility management programmes. It also requires that spatial planning for future population growth is aligned to sustainable travel patterns. Reducing travel demand also requires less reliance on the private car and the provision of alternative modes of travel will also be addressed in the Action Plan. These include walking and cycling as well as significant improvements to public transport. The Sustainable Travel and Transport Action Plan will also be a key element of the Government’s National Climate Change Strategy.22

State Airports To cater for growth in passenger traffic at Dublin Airport new infrastructure capacity and facilities, both airside and landside, are needed. The Dublin Airport Authority (DAA) will be investing €2 billion in new facilities over the next decade. These facilities include a new terminal to be operational by April 2010, an extension of the existing terminal and a second runway.

Regional airport capital investment programmeThe six regional airports are making progress on the implementation of the grant-aided multi-annual capital investment programme for the sector for approved by the Government in February 2007.

Cross-border initiativesWork has begun on the runway safety project at City of Derry Airport with Exchequer support of almost €11 million in a joint funding arrangement with the UK Government which recognises the airport’s importance for communities on both sides of the border.The project, which aims to maximise the capacity of the existing runway, is expected to be completed in the first half of 2009.

22 http://www.sustainabletravel.ie/index.html

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4 Employment Objectives

Guideline 17: Implement employment policies aiming at achieving full employment, improving quality and productivity at work, and strengthening social and territorial cohesion.Guideline 18: Promote a lifecycle approach to work.Guideline 19: Ensure inclusive labour markets, enhance work attractiveness, and make work pay for job-seekers, including disadvantaged people and the inactive.Guideline 20: Improve matching of labour market needs.Guideline 21: Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of social partners.Guideline 22: Ensure employment-friendly labour costs developments and wage-setting mechanisms.Guideline 23: Expand and improve investment in human capital.Guideline 24: Adapt education and training systems in response to new skill requirements.

4.1 Labour Market Priorities 2008-2010

The labour market priorities for the period 2008-2010 will remain largely unchanged from the previous cycle of the Lisbon Agenda and are as follows:

Sustaining a high level of employment and low unemployment Ensuring an adequate supply of skilled labour to meet the needs of the

economy Enhancing educational/qualification levels at all stages of the lifecycle to

ensure the availability of a high skilled, adaptable workforce.While these priorities remain mainly unchanged, the economic environment in which we operate has deteriorated and this presents us with new challenges in the context of rising unemployment. In order to meet these challenges there will be a greater policy emphasis on activation and training for the unemployed, while at the same time ensuring that there will be an adequate supply of skilled labour to meet the needs of the economy.This chapter reports on progress in relation to these priorities and reflects the conclusions of the Spring European Council 2008 and the assessment in the European Commission’s Strategic Progress Report for 2007.

4.2 Labour Market Performance23

Labour ForceThere were 2,223,900 persons in the labour force by mid 2008, showing an annual increase of 22,000 (+1%). All of the growth arose from the changing 23 All labour market data from Central Statistics Office, Quarterly National Household Survey, Q2, 2008 unless otherwise indicated.

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population structure, accounting for over 35,000 joining the labour force. Net inward migration accounted for over 70% of the increase. Almost 50% of the increase can be attributed to those aged 25-34. A decrease of over 13,000 arose from changes in participation in the labour force. The largest decrease in participation was among the 15-19 age group (-2.7%).

EmploymentBy mid 2008 there were 2,108,500 persons in employment, an annual increase of 6,900 (0.3%). The employment rate was 68.1%, a decrease of 0.9% in the year. Part-time employment grew by 11,100 to 389,600, partly offset by a decrease in full-time employment (-4,300). The decrease in full-time employment was made up of a decrease of 19,500 for males, partly offset by an increase of 15,200 for females.

FemaleThe number of women in employment is currently at 921,600, an increase of 21,500 (+2.4%) in the year. The employment rate for women is 60.5%, having passed the Lisbon target for 2010 of 60%. The number of women in part-time employment has increased by 6,200 to reach 299,400. This represents a third of all women in employment. The number of married women in employment is 455,600, an increase of 25,200 in the year. The female unemployment rate is 3.9%, a decrease of 0.4% in the year and 1.3% less than the rate for all unemployed persons.

Older WorkersThe current employment rate for older workers (55-64) is 53.9% (EU27 (2007) – 44.7%), which compares favourably with the Lisbon employment target for 2010 of 50%. The employment rate for older men is 66%, while that for older women is 41.6%. The overall employment rate (15-64 years) of 68.1% drops to 60.6% for the 55-59 age category and to 46.1% for the 60-64 age group. An annual increase of 1.5% in the employment rate for women in the 55-59 age cohort and 2.4% for 60-64 age group is experienced.The current Eurostat24 data (2006) shows that the average exit age from the labour force in Ireland is 64.1 years, (EU27 – 61.2 years). The average exit age in Ireland, broken down by gender is 64.7 years for women and 63.5 years for men.

YouthThe number of persons aged 15-24 in the labour force decreased by 20,000 to 318,800, with employment decreasing by 24,400 to 285,000. Unemployment increased by 4,200 to 33,600. Eurostat25 data for 2007 shows that the youth unemployment rate in Ireland is 9.2%, well below the EU27 average of 15.3%.

People with disabilitiesThe employment rate of people with disabilities26 is 37% and the long-term target is to raise it to 45% by 2016. The aim is to increase the overall participation rate in education, training and employment to 50% by 2016.

24 Eurostat: Labour Market Database 200625 Eurostat: Labour Market Database 200726 CSO, Q1 2004 – Disability Module

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SectorsThe sectors which showed the strongest growth were Wholesale and Retail Trade (+16,200), Health (+10,700) and Financial and Other Business Services (+10,400). Sectors which showed a decline were Construction (-26,800), Other Production Industries (-8,000), Hotels and Restaurant (-3,700) and Transport, Storage and Communications (-3,000). The occupational categories with the largest increases were in the Associate Professional and Technical (+10,200) and Managers and Administrators (+10,000) occupational groups. The most notable decreases were in the Craft and Related (-20,600) and Other (-11,300) occupational categories.

RegionsIn the year to mid 2008, employment at NUTS 2 level grew by 1,900 (+0.4%) in the Border, Midland and Western (BMW) region and by 4,900 (+0.3%) in the Southern and Eastern (S&E) region. The unemployment rate for the S&E and BMW regions stood at 4.9% and 6% respectively. At NUTS 3 level employment grew in the West (+3%), Mid-East (+2.4%) and South-East (+1.5%) regions.

NationalityThere were an estimated 484,000 non-Irish nationals aged 15+ in the State by mid 2008. Of these, 337,800 were in employment (16% of all employed), while a further 24,800 were unemployed. EU12 nationals accounted for 167,200 (8%) of those in employment, reflecting an increase of 14,400 in the year. Among the sectors of the economy which most relied on employing migrant workers were the hotels and restaurants (38%) and other production industries (19%).

UnemploymentThere were 115,500 unemployed by mid year. The unemployment rate was 5.2%, and increase of 0.6% on the same period last year. The male and female unemployment rate was 6.2% and 3.9% respectively. The long-term unemployment rate has increased by 0.2% to 1.5%. There were 32,700 persons in long-term unemployment, an increase of 4,300.

Labour ProductivityIn 2006, the productivity of the Irish workforce, as measured by GDP in PPS per person employed, was 34.9% higher than the EU27 average, with Ireland having the second highest productivity rate among EU27 States, according to the CSO27 data published in April, 2008. In terms of GDP, productivity per hour worked in Ireland has been progressively higher than the EU15 average since 2002 (6.9% higher in 2006).

VacanciesIn 2007, a total of 142,000 job vacancies nationwide were notified to FÁS28 – an increase of 12% over the comparable figure for 2006. Surveys of jobseekers and employers illustrated that 83% of vacancies were filled within two months of notification. However, in the first nine months of 2008, the number of vacancies notified to FÁS showed a year-on-year fall of 24%, an indication that labour demand is weakening considerably.27 CSO Measuring Ireland’s Progress 200728 FÁS Annual Report 2007

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4.3 Labour Market OutlookThe short-term outlook for the economy has changed substantially since last year, due mainly to the slowdown in new house building and the current global credit crisis. This has resulted in the increase in unemployment, however, this increase must be seen in the context of the substantial increase in employment over the past number of years. Since 2005, employment has grown by 176,900 with unemployment increasing by only 29,000 in the same period. The recent easing of employment growth comes after many years of extraordinary growth in the labour force and employment, which could not have lasted indefinitely. The ongoing rise in unemployment will depend on a number of factors, including a possible decrease in participation and the response of migrants to the slowdown. In regard to the latter the ESRI expects net migration to fall to 31,000 in 2008 (from 67,300 in 2007). Concerning participation, the number of people defined as not in the labour force grew by 32,800 in Quarter 2, 2008. The view on the level of employment growth occurring in 2008 and how quickly the economy will pick up again varies between forecasters. According to the Stability Programme no growth in employment is expected in 2008 and the rate of unemployment is expected to be 5.8% for the year. Budget 2009 has provided for targeting of resources to assist those who have become unemployed. The Department of Finance mid year revised forecast indicates that construction activity is expected to remain relatively weak next year, however, it is expected that output in the housing area will return towards more sustainable levels in the medium-term.

4.4 Flexicurity

BackgroundThe term flexicurity refers to the combination of labour market flexibility and security of workers/employment.There is no “one-size-fits all” approach to flexicurity and it is up to each country to develop a pathway, which is best suited to its own situation and traditions. The four pillars of flexicurity are as follows:

Flexible and reliable contractual arrangements; Comprehensive lifelong learning (LLL) strategies; Effective active labour market policies (ALMPs); Modern social security systems.

The emphasis in Ireland is to achieve a balanced mix of policies in relation to employment rights, welfare benefits, income tax and training/upskilling. This is designed to increase employability and provide people with the incentive to work. It is also designed to help people to make the necessary transitions from unemployment to employment and from one job to another or to another level within the same employment.Ireland has achieved a great deal by means of flexicurity over the past number of years and the positive developments in the economy and in employment growth are due to the particular way it has been applied. The social partnership process in Ireland has provided a good mechanism for balancing flexibility and security and the current partnership agreement Towards 2016 has been cited by the Commission as an example of how flexicurity policies can work in an integrated way.

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The main aim of flexicurity in Ireland is to create an environment conducive to the creation of more jobs while at the same time promoting active inclusion in the labour market by helping individuals adapt to and take advantage of new opportunities. While seeking to increase employment levels, the focus is also on creating better quality jobs so that people can move up the value chain in terms of job satisfaction, skills level, work-life balance, living standards, mobility etc.

4.4.1 Modern taxation and social welfare systemsThe combination of lower taxes and retention of secondary benefits leading to higher entry level wages and take-home pay has had a positive impact in moving persons from welfare dependency to employment. Successive budgets have contained measures to ensure all persons on the minimum wage are removed from the tax net. This is designed to encourage those on low incomes and in particular, the minimum wage to enter and remain in employment. In the current circumstances, the Government has decided in Budget 2009 to introduce a 1% levy on incomes up to 100,000 per year, with the exception of minimum wage earners, and at a rate of 2% on all income above that level. This levy will allow all income earners to contribute in a proportionate manner to the restoration of order and stability to the public finances. As a result of Budget 2009 the total number of earners who are outside the tax net in 2008 will be over 850,000. The increases in credits and bands over a number of years mean that about four out of every five income earners will continue to pay tax at no more than the standard rate of income tax, and that about two out of every five income earners remain outside the tax net. In addition, the average industrial wage for 2009 (estimated at about €34,700) is placed well outside liability to the higher rate of tax for 2009.In international terms, the latest OECD data relating to the year 2007 indicate that for a single worker, married one-earner couple with two children or a married two-earner couple with two children on average earnings, Ireland has the lowest tax wedge in the EU in all categories and the lowest in the OECD for the married categories. A number of measures have been introduced over the past few years to social security schemes such as means disregards and tapered withdrawal of benefits as earnings increase to make them more employment friendly. Budget 2008 saw levels of income support again increasing for welfare recipients. This was continued in the recent Budget (effective January 2009). The levels of Family Income Supplement (a cash payment for low-income workers with children) were also increased, to ensure that the social welfare increases did not diminish work incentives.A social welfare reform, effective from Autumn 2007, has enabled Jobseeker’s Allowance recipients as well as their spouses/partners to retain more of their social welfare payment if either or both engage in employment. The overall aim of the reform is to encourage spouses and partners to move into employment and beyond long-term part-time employment. The new measure is designed to be progressive, particularly for women, as they are currently the majority of ‘qualified adults’ in the social welfare system, e.g. the partner of the person receiving the household’s main social welfare payment. The 2009 Budget removed an anomaly whereby some people, who were previously working part time, could receive a higher welfare payment than they were actually earning whilst at work. To address this, from January 2009, the earnings thresholds for reduced or graduated rates of certain contributory benefits (including Jobseekers Benefit) will be increased.

4.4.2 Flexible and Reliable contractual arrangementsA balance has been sought in preparing employment legislation between, on the one hand, maintaining workers security in terms of their conditions of employment while, on the other, due regard being taken of the flexibility required

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by employers in terms of organising work and/or work patterns and seeking to ensure that job creation is not inhibited through overly rigid regulation. It respects the voluntarist tradition and nature of our industrial relations system in which labour law is formulated and agreed following consultation with the social partners.Flexible working arrangements are playing an increasingly important part in the relations between employers and employees, resulting in an increase in employment levels. The Workplace Innovation Fund was established to encourage the development of new ways of working, through partnership, aimed at increasing flexibility and improving performance in the workplace. There is a strong body of employment rights legislation in Ireland to ensure that workers rights are fully protected under various contracts of employment. New legislation has been introduced in recent years to protect employees who are engaged in more flexible forms of work such as part-time employment and fixed-term contracts. Further provisions are proposed in the recent transitional agreement under Towards 2016.The National Employment Rights Authority (NERA) was established in 2007 and by the end of the year it had in place a substantially increased labour inspectorate. NERA, in addition to enhanced enforcement, has made substantial efforts in areas of dissemination of information on employment rights and responsibilities. This latter aspect together with substantially increased resources will drive enhanced employment rights compliance.

4.4.3 Active Labour Market ProgrammesActive labour market programmes are tailored to contribute to the employment prospects of the unemployed/inactive, thereby increasing participation, and facilitate greater mobility between jobs. They include training and employment supports to help improve skill levels and build up work experience with a view to increasing employability. Many of the supports are aimed specifically at the low-skilled and those more marginalised from the labour market. In the context of activation, the extension of the preventive process to older workers (55-64 year olds), together with the elimination of the Pre-Retirement Allowance (PRETA) is an example of the interaction of ALMPs with social security systems to facilitate increased participation in the labour market.

4.4.4 Comprehensive Lifelong Learning StrategiesThe preferred pathway, and the one most relevant to our current labour market needs, is by upskilling the labourforce through the implementation of the National Skills Strategy. Increased emphasis is now being placed on training for those seeking employment and those in employment,, particularly those with low skill levels, to gain new skills and qualifications through the new National Framework of Qualifications. The aim is to create a more flexible and accessible career ladder for everyone wishing to improve their skills and qualifications. Further progress in developing national pathways will take place in the context of social partnership, taking account of changes in the economy at both national and international level. The lifecycle framework, as set out in Towards 2016, includes transitions between non-employment (unemployed/inactive), employment and within employment, with training/upskilling acting as the catalyst for such transitions. A substantial increase in funding has been allocated to support training and skills development over the next number of years (€7.7billion in the NDP 2007-2013). Towards 2016 contains a commitment to put in place a targetted scheme to alleviate the fees in public institutions for part-time courses at third level for those at work who have not previously pursued a third level qualification. The Higher Education Authority has developed proposals for a Modular Accreditation Programme (MAP) that could be delivered on a flexible part-time basis through a

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number of third level institutions, with substantial fee subsidy. A pilot MAP commenced in Autumn 2007.

4.5 Commission Strategic Progress Report, 2007The Commission Strategic Progress Report for 2007 on the Lisbon Agenda was generally positive in its comments in relation to the progress made by Ireland. The Report, however, noted that it would be important for Ireland to focus on the following challenges for the future: (i) accelerating progress in increasing labour market participation, (ii) including by establishing a comprehensive childcare infrastructure; (iii) further developing the policy framework for the labour market and social integration of migrants and (iv) placing a particular emphasis on support to older and low-skilled workers.

4.5.1 Increase Labour Market Participation

BackgroundIncreased participation in the labour market over the past number of years due to the buoyant economy has been marked particularly among female and older workers, with both groups having already passed the Lisbon employment targets set for 2010. The inflow of migrants has also contributed significantly to meeting labour demands in the economy. The focus on activation policies has become more acute in recent years with the need to increase labour market participation and to ensure that the social welfare system is not unduly passive towards the unemployed. Budget 2009 continued the process of ensuring that the social welfare system continues to avoid dependency traps as far as possible. These activation policies also seek to address issues facing those who are furthest from the labour market. A High Level Action Group, comprising representatives from Government Departments/Agencies and the social partners continues to progress the activation of groups such as lone parents and people with disabilities.

In light of increasing unemployment, greater focus will be given to activation and participation through an integrated approach across relevant programmes including the National and Local Employment Services, the Preventive Process and the Social and Family Support Service. These processes and programmes will increasingly focus on the long-term unemployed, the unemployed who are 16-24 years old, people who have completed the Preventive Process but who remain unemployed and those furthest from the labour market, including lone parents and people with disabilities.

Prevention and Activation29

The Preventive Process, now in its tenth year, involves a systematic engagement with the unemployed to assist progress towards employment, training or active labour market programmes. This now occurs for all age groups at 3 months on the live register. Overall in 2007, 51,452 persons were referred to FÁS with 32,124 attending for interview. Of those interviewed, 18,224 left the live register with 7,621 placed in jobs, programmes, training and education. Persons unable to progress to training or employment, i.e. ‘not progression ready’, accounted for 2%. By year end 32,359 (63%) had left the Live Register, an improvement on recent years when the figure averaged between 58-60%.

29 National indicators to measure performance against certain aspects of the European Employment Strategy are outlined in Annex 6

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Work is ongoing to extend the Preventive Process to other groups such as lone parents and those with disabilities, with due regard to the special needs of those groups. The OECD is finalising a study into Activation policies in Ireland and a report is due to be completed in the Autumn.

Redundant WorkersDue to company restructuring or closures, redundant workers are supported through early engagement by FÁS, resulting in tailored interventions at individual or enterprise level, with a view to obtaining alternative suitable employment. FÁS liaises with other relevant agencies and, where necessary, may set up an inter-agency Task Force to mobilise all the supports available through the relevant agencies. FÁS also works closely with the agencies to identify and support individuals who wish to start their own business. Opportunities are opening up in the area of green jobs for redundant construction workers in emerging areas within the sector, such as retraining in (i) the installation of sustainable technologies, (ii) environmental activity and (iii) compliance and regulatory work.

Employment Support Services (ESS)The overall aim of the Department of Social and Family Affairs’ ESS is to assist unemployed people, particularly the long-term unemployed, lone parents, and sickness related welfare recipients to return to the active labour market either by taking up employment or becoming self-employed. This is done through the operation of the Back to Education and Back to Work Allowance Schemes, the Technical Assistance and Training Grants and the PRSI Exemption Scheme. The Activation and Family Support Programme (AFSP) was set up in January 2008 to provide funding for programmes to assist individuals and families to enhance their employability through education, training and personal development opportunities and to improve their quality of life. It is an amalgamation of the Family Services Project and Special Projects funds in operation up to December 2007, with about 300 projects assisted in the year. There is €6 million available under the new Programme in 2008. A review of the programme is currently being undertaken. Recommendations for the future administration of the programme will be available by January, 2009.The NDP 2007-13 provides for a Social and Economic Participation Programme aimed at promoting participation and social inclusion through activation measures for all people of working age including people on illness related payments and lone parents. The programme will build on the existing experience and income maintenance relationship with the people concerned, in co-operation with other relevant service providers such as FÁS, VEC, HSE and other local agencies. The programme commenced in September 2008, with the appointment of 10 facilitators. Some €13 million has been provided for the first 3 years of the programme.

Active Labour Market ProgrammesFÁS continues to deliver an extensive range of training through its network of Training Centres and contracted training providers to its clients who comprise jobseekers, job changers, redundant persons, school leavers and disadvantaged persons with an emphasis on training for the unemployed. It also provides a range of services in co-operation with different community groups that focus on the integration/re-integration into the labour market of long-term unemployed and other marginalised people. A total of 58,926 persons participated in active labour market programmes in 2007, of which 22,292 were on Community Employment

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(CE) schemes and 1,429 on Job Initiative. Expenditure details for the principal supports are outlined in Annex 7.

Lone Parents Voluntary InitiativesFour Lone Parents voluntary activation initiatives were implemented by FÁS to test approaches and to identify barriers in activating individuals in receipt of the One Parent Family Payment. The findings of a follow-up survey of those who did not engage in the process were finalised in April 2008. The following themes have now formed the basis for a proposed draft social inclusion model for this target group: communications; FÁS staff product knowledge; flexible delivery; childcare; individual client-centred support; support for those seeking employment; and support for those in employment.

Expanding the Workforce (ETW)The ETW is aimed at women returnees who need support and assistance to make the transition back into the workplace. Women, who receive One Parent Family Payment (OPFP), are a particular cohort of this client group. It is a support process providing needs-based, multi-step support and sets out a pathway for women back into employment. A review of the process was completed in 2007. The review examined the delivery of training, the level of participation in training, and good practice in providing a service to women returnees. Barriers hindering the return of women to training and employment included issues around information, access, self-confidence, childcare and other financial barriers, lack of flexibility in employment and course provision, and the absence of progression opportunities.

People with DisabilitiesEmployment StrategyThe development of a comprehensive employment strategy for people with disabilities, up to 2010, is a key component of the employment aspect of the Sectoral Plan 2006-2010 under the Disability Act, 2005 and the National Disability Strategy. A Consultative Forum on the Employment Strategy was established in 2007 in accordance with a commitment under the Sectoral Plan. The development of the comprehensive employment strategy is now nearing completion in consultation with the Consultative Forum. A key focus of the Consultative Forum is the need to conduct a systematic review of current job retention and return to work practice following a disability acquired in the workplace. Research proposed by the Consultative Forum is nearing completion.

Employment TargetsUnder the Sectoral Plan the objective is to raise, by 7,000, the employment level of people with disabilities who do not have difficulty holding down a job. The Disability Act 2005 also provides for a statutory target, currently set at 3%, for the recruitment and employment of people with disabilities in the public sector. The first report on compliance with this target (2006 data), published in January 2008, showed 36% of public bodies meet the 3% employment target.

FÁS Programmes and SchemesFÁS offers a number of schemes and programmes aimed at assisting people with disabilities. While FÁS encourages people with disabilities to consider mainstream training options wherever possible, Specialist Training Programmes are also available for people with disabilities should they require a greater level of support

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than might be available in a mainstream setting. These programmes have similar FETAC certification as mainstream training programmes. The budget for FÁS programmes and schemes for people with disabilities in 2008 amounts to €77 million, representing an increase of €3 million over the 2007 expenditure. A consultancy review of the Wage Subsidy Scheme and the Supported Employment Programme took place in 2007. The various recommendations of this review are currently being considered with regard to achieving the maximum level of efficiency under these programmes.

Vocational TrainingA bridging programme between the Health Service Executive Rehabilitative Training and FÁS mainstream training is currently being developed by the HSE FÁS Working Group on Disability with a view to facilitating people with disabilities with access to vocational training.

4.5.2 Childcare Infrastructure

Policy on ChildcareThe importance of childcare provision is viewed as significant in safeguarding economic sustainability by helping parents to take up full time employment, avail of opportunities for education and training and in addressing the gender pay gap. Adequate childcare provision is also seen as playing an important role in increasing female participation in the labour market. The commitment that every family should be able to access childcare services, which are appropriate to the circumstances and needs of their children is set out the most recent social partnership agreement Towards 2016. Commitments are given to act in a number of key areas including early childhood development and care. The Government and social partners have undertaken to develop an infrastructure, which provides quality affordable childcare and increases the supply of childcare places (of all types) by 100,000 over the ten year timeframe. A National Childcare Training Strategy will be developed in conjunction with providers to support the delivery of quality early education.

National Childcare Strategy 2006-2010The National Childcare Strategy, which is broad-ranging and ambitious in its targets, has now reached mid point. It includes the National Childcare Investment Programme (NCIP) and the National Childcare Training Strategy. Prior to this, the Equal Opportunities Childcare Programme (EOCP) was in place, with expenditure on it coming to a close at the end of 2007. The Strategy seeks to improve co-ordination and integration at national and local level between key players, including Local Planning Authorities and County Development Boards. Currently, four childrens’ services committees are being piloted which bring together all relevant statutory parties to co-ordinate an integrated service delivery at local level.

National Childcare Training Strategy 2006-2010The National Childcare Training Strategy is being developed as part of the National Childcare Strategy 2006-2010.  A comprehensive audit of qualifications held in the sector and of training needs and current training provision have been undertaken. It is considered essential to ensure that future policy and investment in childcare training and standards are developed on the basis of clear data and

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identified outcomes and objectives.  The initial work in this regard has been completed and a consultation paper will be circulated to all stakeholders in the sector very shortly. Following consultation with the sector, policy proposals to underpin the further development of a quality childcare infrastructure will be proposed.

Equal Opportunities Childcare Programme (EOCP) 2000-2006The EOCP has acted as the principal vehicle for the delivery of childcare policy since 2000. Total allocated expenditure under the Programme (including EU funds) amounted to €504 million. Capital grants are available to both private and community sector childcare providers, with €232.5m expended by end 2007 (including over €125 million in ERDF funding). Current (staffing) grants are limited to the community and voluntary sector, with €271.5 million expended by end 2007 (including €146 million in ESF funding). Over 81% of the Programmes beneficiaries, accounting for 78% of expenditure, have been community/voluntary groups with a strong focus on disadvantage.In the same period, over 40,997 new childcare places were delivered by grant beneficiaries representing 131% of the target set for the Programme. The overall total of childcare places, including new places, receiving grant aid under the Programme now stands at almost 68,181 places and over 3000 childcare staff received support under the staffing grant scheme.The Programme moved towards more school age services in its final years. This coincided with a less urgent need for additional full-day care services and less babies requiring outside care as maternity leave improved significantly in 2006 and 2007. Between 2002 and 2006 (when last reported) the proportion of services offering full day care had increased from 30.7% to 41.9% and the average opening hours for services had increased from 29.6 hours per week to 35.2 hours per week with 39.3% offering 40 hours or more of care per week. As would be expected, the proportion of parents using the services and engaged in employment, education or training has increased from 77.1% to 79.5% reflecting the benefits to them of increased access and choice of childcare services. The types of services offered by grant beneficiaries include Preschool/Playgroup (61%), After School (42%), Creche/Nursery (40%), Montessori (29%) and Naíonra (Irish language Pre-School) (6%). The Programme has also fostered the development of a childcare infrastructure to support the delivery of services at local level in response to unmet local childcare needs and to improve the quality of childcare services in line with overall objectives. A network of 33 City and County Childcare Committees (CCCs) are active in raising awareness of quality issues and in delivering training, with 337 accredited training courses delivered in 2007.

National Childcare Investment Programme (NCIP) 2006-2010The NCIP aims to provide a proactive response to the development of quality childcare supports and services which are grounded in an understanding of local needs. It aims to support families, help break the cycle of disadvantage and support a coordinated approach to the delivery of childcare which is centred on the needs of the child. A target of 50,000 additional childcare places has been set for the NCIP.The NCIP makes large scale capital grants available to childcare providers in both the private and community sectors, from a budget allocation of €575 million over five years. Due to the time lapse in funding being granted and a building actually opening, the Programme outputs are inevitably low in the first couple of years. Approximately €220 million has been allocated in capital funding by mid 2008 and this is expected to result in the creation of c. 30,000 additional childcare places. To mid 2008, 10,304 childcare places have been created, which included 2,369

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school-age childcare places. It is anticipated that the NCIP targets are well on the way to being achieved. A Community Childcare Subvention Scheme (CCSS) 2008-2010, introduced in January 2008 for community childcare providers to replace EOCP staffing grant assistance, is being allocated funding in excess of €154.2 million over 3 years. The Scheme will subvent community-based not-for-profit childcare services to enable them to provide quality childcare services at reduced rates to disadvantaged parents.Subventions are only available in respect of parents who satisfy specific NCIP criteria. Following a review of the Scheme, key changes have been made to the initial provisions and now include significant increases in direct subvention rates, a new band of funding targeted at low income working parents and a minimum grant of €20,000 for services which will particularly benefit small rural providers. The tiered fee structure now created is the most effective way of ensuring that the considerable and ongoing Government support for the community childcare sector will be targeted at those who need it most. All parents or guardians using these services will continue to benefit from quality childcare at a price which is below the economic cost of the service, due to the subsidisation of childcare costs in the community not-for-profit sector through capital grant aid and other State supports. The operation of the scheme and the subventions provided will be subject to on-going monitoring and review to ensure optimum outcomes for parents. School age childcare has been developing at a far greater pace since 2006 and the NCIP target of at least 5,000 additional places by 2010 is expected to be exceeded. In addition, the CCSS accepts after-school programmes and homework clubs and this is particularly supportive of disadvantaged children as well as assisting working parents with after-school care.The commitments/targets in the NCIP and any appropriate successor programmes are identified as agents for delivering on childcare by Government, including educational initiatives targeted at disadvantaged children and measures to improve regulation and inspection of childcare services. These commitments will ensure substantial progress towards meeting the Barcelona targets of making childcare available to 90% of children aged between 3 and the mandatory school age and 33% of children aged under 3 years by 2010. The long-term implementation of these high level goals is provided for in the commitment given to review the NCIP to assess progress at what will be the mid-point of the partnership agreement and to develop new policy responses and successor programme(s) appropriate to emerging needs in childcare.

Child Support The Government has significantly increased financial support for children in recent years. In 2008 Child Benefit has increased by €6 for the first and second child to €166 per month and by €8 for the third and subsequent children bringing it to €203 per month. Early Childcare Supplement, payable in respect of all children under 6 (reduced to 5 years, 6 months in Budget 2009), has increased by €100 – bringing the payment to €1100 per annum. These increases mean that families with two children under six will receive a tax free payment of €6,148 in 2008.

4.5.3 Labour Market and Social Integration of Migrants

Background

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The changes in migration flows relating to Ireland over a relatively short period have been dramatic. High levels of economic growth led to a situation where nearly 12% of our population are immigrants. The contribution of migrants, particularly in terms of labour and skills, to the economic and social fabric of Irish society has been significant over the past number of years and will continue to be so into the future. The key challenge now facing both Government and Irish Society is the imperative to integrate people of much different culture, ethnicity, language and religion so that they become the new Irish citizens of the 21st century.To address this challenge, a Minister of State with specific responsibility for the development of integration policy was appointed in June 2007. The Minister is based in the Department of Community, Rural and Gaeltacht Affairs and has links to the Department of Justice, Equality and Law Reform and the Department of Education and Science. The Office is involved in setting up new funding lines to address integration priorities; developing “principles” of integration; bringing Departments together to coordinate integration activities and helping all parties (local communities/local authorities/trade unions/religious groups etc.,) to play their part in building an integrated Irish society.

Economic Migration Labour Market NeedsIrish employers meet the majority of their labour needs from within the labour market of the European Economic Area (EEA). Following on from Accession in 2004, nationals of the EU12 now make up 50% of all non-Irish nationals employed in the State. These workers have contributed significantly to the development of the sectors in which they have been concentrated, namely in construction, hotels and catering, retail, financial and manufacturing services. However, with the economic downturn and the slacker labour market in Ireland in the first half of 2008, the number of EU10 workers seeking work in Ireland fell by 37% year-on-year. This indicates that migration inflows are quickly adjusting to changing labour market conditions. Current trends in migration flows, particularly in the outflow of Central and East European nationals returning to improved conditions in their own countries, are estimated to lead to the number of emigrants exceeding the number of immigrants by some 27,000 in 2009. 30

Skills NeedsAn ongoing challenge for the Irish labour market is the ability to source highly skilled workers needed to contribute to Ireland’s continuing transformation into a knowledge-based and innovation-driven economy. To that end, the Employment Permits Act, 2006, which became operational in February 2007, gave expression to a new, flexible, responsive and managed economic migration policy. It provides for a Green Card permit scheme for designated occupations where there are strategic skills shortages; a revised Work Permit scheme for listed occupations where there were skills/labour shortages; a new Intra-company Transfer scheme; a Spousal/Dependants Work permit scheme; and a non-EEA Graduate scheme. In addition there was an extensive listing of labour categories deemed ineligible to qualify for work permits. Approximately 3,000 Green Cards issued in 2007, compared to 17,000 work permits and 3,000 spousal/dependent work permits.The new permit system is strongly linked to industrial development, with the Green Card scheme in particular enabling employers to attract and retain the highly skilled people needed to underpin investment in knowledge-rich and high value added enterprises, particularly by multinational companies.

30 FÁS Quarterly Labour Market Commentary – Q3, 2008

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The list of Green Card occupations in which it is considered there are strategic skills shortages and the list of labour categories deemed ineligible to qualify for work permits will be kept under review to reflect changing supply and demand in the labour market and outcomes of upskilling initiatives.

Employment RightsA particular focus of the schemes introduced under the Employment Permits Act, 2006 was on increasing protection of migrant workers' rights. The Employment Law Compliance Bill, 2008 provides for the National Employment Rights Authority (NERA) to promote, encourage and secure compliance with the provisions of the Employment Permits Acts as well as other employment legislation. It is intended, through the cooperation of NERA and the Garda National Immigration Bureau (GNIB) in enforcement of provisions under the Permits Acts, to increase compliance and to act as a deterrent to illegal work as a pull for illegal immigration to Ireland.

StudentsDuring 2008, it is planned to introduce a scheme to issue work permits to non-EEA students to ensure adequate tracking of the jobs in which they work and a protection of the employment rights of these students in the workplace.

Access to the Labour Market by Bulgarian and Romanian Nationals The Government announced in October 2006 that it would continue to restrict access to the labour market for nationals of Bulgaria and Romania following their accession to the EU on 1 January 2007. The decision is to be reviewed by Government and the outcome notified to the European Commission before the end of December 2008.

European Union Economic Migration PolicyIreland is actively participating in the negotiations to draw up EU Directives that will provide a legal basis for policies concerned with efficiently managing economic migration to the European Union. These Directives are intended to set down common, EU-wide admission conditions for specific categories of migrants from outside the European Economic Area (highly qualified workers, seasonal workers, remunerated trainees and intra-corporate transferees), secure the legal and social status of third-country nationals already in the EU, and to simplify application procedures for would-be entrants from outside the EEA.

Social IntegrationSignificant progress has been made regarding the social integration of migrant communities. The commitments in Towards 2016 included the development of a framework and a comprehensive strategy for integration, the establishment of co-ordination mechanisms to implement the strategy, the development of a role for civil society and the implementation of the strategies contained in the National Action Plan Against Racism (NPAR).

Strategy

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The Office of the Minister for Integration (OMI), established in June 2007, has a cross-Departmental mandate to develop, drive and co-ordinate integration policy across other Government Departments, agencies and services. A major priority for the Office has been the development of a policy document on Integration and Diversity Management and this Statement, called Migration Nation, was published in May 2008. The document sets out a framework for achieving migrant integration and outlines the key principles, which will inform and underpin State policy as follows:

A partnership approach between the Government and non-Governmental organisations, as well as civil society bodies, to deepen and enhance the opportunities for integration;

A strong link between integration policy and wider state social inclusion measures, strategies and initiatives;

A clear public policy focus that avoids the creation of parallel societies, communities and urban ghettoes, i.e. a mainstream approach to service delivery to migrants;

A commitment to effective local delivery mechanisms that align services to migrants with those for indigenous communities.

The new integration policy also focuses on the role of local communities, authorities, sporting bodies, faith-based groups and political parties in building integrated communities. Funding will be targeted in these areas in order to mobilise participation by migrants in the cultural, sporting and political aspects of Irish society. New consultation structures will be established to discuss integration issues. Due to the wide range of Departments involved in dealing with integration issues, a cross-Departmental Group has also been set up to ensure a ‘whole-of-government’ approach to integration issues. This group is chaired by the Minister for Integration. A range of strategic studies geared to informing policy development in the integration area have been completed or are ongoing in areas such as interpretation and translation, information provision and funding.

English Language TrainingThere are currently almost 2,000 English Language Support Teachers working in primary and post primary schools at an annual cost of some €120 million. The ceiling of two on the number of language support teachers per school is being re-imposed, with some alleviation for the position of those schools where there is a significant concentration of newcomer pupils as a proportion of the overall pupil enrolment.The National Council for Curriculum and Assessment has published "English as an Additional Language in Irish Primary Schools – Guidelines for Teachers" to assist classroom teachers in meeting the language and learning needs of the child for whom English is an additional language in the primary school so that he/she can access all areas of the primary school curriculum.Primary School Assessment Kits were circulated to all primary schools in 2008 to enable teachers to carry out initial and on-going assessments of the language proficiency of newcomer children. It is proposed to have an assessment kit for post-primary schools available later in the year. The Inspectorate of the Department of Education and Science will conduct an evaluation of the provision of English as an Additional Language (EAL) in a number of primary and post-primary schools in 2008 and 2009.

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The Department of Education and Science provides for English language training for adult immigrants (English for Speakers of Other Languages, ESOL) with its adult literacy budget. There were 44,000 students in the adult literacy programme in 2007, of whom 13,000 (c. 30%) were ESOL students.The Government has commissioned an independent review to assist in the development of a national English language training policy and framework for legally-resident adult immigrants based on extensive stakeholder consultation. This review has been completed and the recommendations are under consideration. National Action Plan Against RacismThe National Action Plan Against Racism (NPAR) continues to be actively implemented. A range of initiatives has been supported including research on housing policy, research into the development of an intercultural strategy within the arts and the development of Intercultural Plans at local city/council level. Funding was also made available for the development of a National Intercultural Health Strategy and this was launched in February 2008. The strategy provides a comprehensive framework, which addresses how the health sector can support the needs of people from diverse backgrounds.

EPIC ProgrammeAn initiative in the area of employment for migrants is the EPIC Programme (Employment for People from Immigrant Communities). A pilot project was run during 2006/2007 to promote access to employment to single-headed households that had been granted leave to remain under the 2005 IBC (Irish Born Child) Scheme. The present EPIC scheme was launched in May 2008 and extends the scope beyond just lone parents and will cater for migrant communities in the Dublin area. The Programme is run by Business in the Community and is targeted at vulnerable migrant adults to assist them with finding employment, training and education. It provides training modules focusing on professional English for employment; interview, life and work skills, computer skills and curriculum vitae preparation and is followed by individual assistance by Training and Employment Officers. The Programme is funded by the OMI and the European Social Fund.

FÁSIn response to the demand for services from Ireland’s growing immigrant population, FÁS continued to provide a telephone interpretation service (Language Line). This service is available in over 150 languages. It is supplemented by the availability of a range of information and advice in a number of other EU languages (in DVD and leaflet format) as part of the ‘Know Before You Go’ campaign. Originally launched successfully in five of the EU10 States (Czech Republic, Latvia, Lithuania, Poland and Slovakia), this material is now available in 11 EU languages.

EQUAL Community InitiativeEQUAL was a Community Initiative that was co-financed by the ESF for the 2000-2006 Structural Funds programming period and expenditure under the programme continued until March of this year, with a total of €34 million of ESF funding being allocated to 43 projects. EQUAL explored many issues of a policy and practical nature around the challenges facing the Irish labour market and its key objective was to support innovative and pilot projects aimed at tackling discrimination and inequality in the labour market.

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Supporting the integration of those who have difficulty in accessing and being integrated into the labour market was a key priority of the EQUAL initiative and one of the target groups within this priority was the migrant community. The EMERGE project developed methodologies for the creation and expansion of Ethnic Minority Enterprises and received €680,000 in ESF funding, (€260,000 in 2007) to train and provide mentoring services to over 200 participants. EMERGE has successfully secured €360,000 of funding under the Skillnets programme to continue its work and the EMERGE approach has been mainstreamed by the Fingal County Enterprise Board and by the Institute for Minority Entrepreneurship.

4.5.4 Support to Older/Low Skilled Workers

Priorities for Older PeopleIn the context of changing demographic patterns, a key objective for the Government and social partners is to maximise the opportunities for older people to participate in education, employment and other aspects of economic and social life. Older people will be further encouraged and supported to access further and higher education and appropriate targets will be set in the context of proposals on life-long learning and access to further and higher education.The continued participation of older people in the labour market will be encouraged and facilitated to meet the challenge of an ageing society. A cultural mindset change will be promoted among both employers and employees to encourage and support older workers to remain in employment. Promotion of training and upskilling of employees, particularly for low-skilled/older workers, will take place to enhance employability in the context of the impact of globalisation. The preventive process has been extended to those aged 55-64 to facilitate unemployed older workers remaining attached to the labour market. This has taken place in tandem with the phasing out of the Pre-Retirement Allowance (PRETA).

Investment in Human CapitalOver the course of the National Development Plan, the Government will invest approximately €7.7 billion in public funds to support training and skills development. €2.8 billion is provided for upskilling the workforce, to improve training for people in employment and help upskill those affected by industrial restructuring. €4.9 billion is available to provide targeted training and services to groups outside the workforce as well as encouraging increased participation of women, older workers and migrants in the workforce. Resources will be redeployed within the FÁS budget allocation to assist those who have recently become unemployed.

Lifelong Learning - National Skills Strategy to 2020The National Skills Strategy (NSS), launched in March 2007, sets out clear long-term objectives for the lifelong learning of those in employment and for developing Ireland’s human capital through upskilling, training and education for the period to 2020. The Strategy aims to achieve a significantly improved educational profile for the labour force such as:

Upskill an additional 500,000 people by at least one level on the National Framework of Qualifications by 2020. The National Skills Strategy has a key focus on targeting the lower skilled as of the additional half a million people to be upskilled. 330,000 of these do not have a leaving certificate or an equivalent qualification.

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Participation rates in upper secondary level to increase to 90% and progression rate to third level to increase to 70%.

Address the skills needs of the immigrant population and those re-entering employment.

An Inter-Departmental Committee has been established with responsibility for drafting and implementing a plan to realise the targets and objectives contained in the NSS. The Expert Group on Future Skills Needs has conducted additional research on possible suitable initiatives in an Irish context to incentivise employers and employees to fully engage in training and education. The Inter-Departmental Committee in the context of preparing the implementation plan will consider the results of this research.It is envisaged that the implementation plan will examine the existing provision of education and training, and determine the key areas and initiatives that will require additional focus, in order to achieve the objectives of the NSS. It is expected that the plan will be completed by early 2009.In the context of the NSS, skill and labour shortages are constantly under review. FÁS produced a National Skills Bulletin in 2007 providing details on skills and occupational trends in Ireland. The objective of the Bulletin is to outline key labour market statistics in order to assist policy formulation in the areas of employment, education and training, and immigration. Also, the Expert Group on Future Skills Needs published two reports in 2008 regarding future skill requirements in both ICT and Medical Devices sectors. The aim of these reports is to ensure that the sectors are equipped with the right level of skills and expertise to ensure continued success. The Group also collaborated in producing an All-Island Skills Study, which provides, for the first time, a comprehensive all-island analysis of skill demand.FÁS and the ESRI have commenced an occupational employment forecasting project up to 2010. The report is due to be completed by mid 2009.

The two key programmes implementing the NSS are the FÁS One Step Up and Skillnets:

Training in employment - FÁS One Step Up InitiativeAll FÁS programmes and initiatives are aligned to the One Step Up Initiative that training and development programmes assist individuals to build on their competency levels and obtain a recognised qualification within the National Framework of Qualifications. The Initiative also promotes an ethos of lifelong learning in the workplace so as to enable employees to cope with frequent and ongoing changes in work practices. It is subsidised through two primary funding mechanisms: Competency Development Programme (CDP)Programmes are intended to provide participants with portable and transferable skills and priority is given to programmes aimed at the up skilling of low-skilled workers, which in the main, will be at or below level 5 (or equivalent) on the National Framework of Qualifications. The 2008 budget is €43 million.

Workplace Basic Education FundThe Workplace Basic Education Programme provides literacy/numeracy programmes for people in employment. Modules including communications,

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computer and interpersonal skills were also available to participants under this programme. The 2008 budget is €3.1 million.

SkillnetsTraining Networks ProgrammeThe Training Networks Programme budget is €26 million in 2008 (double last year’s allocation). Networks of employers working in consort determine training programmes. By end-year it is expected that about 45,000 workers will have been trained in cooperation with 123 active networks. Training provision in 2008 for those with lower skills profiles has seen a significant increase on previous years (30% of total training). In relation to Recognition of Prior Learning (RPL) and certification/accreditation generally, Skillnets are piloting new approaches via a specific RPL Forum and Certification Focus Group.

The Accel Programme 2006-08The Skillnets managed Accel programme developed and supported in-company training schemes with the aim of enhancing employee productivity and furthering company competitiveness. 9,093 companies and 29,310 trainees engaged in Accel funded training, which is now complete.

Educational disadvantage - Lifelong LearningIn the overall context of progressing the Lifelong Learning Agenda, which is part of the National Skills Strategy, priorities include tackling disadvantage in terms of literacy and numeracy, early school leaving and providing second chance education. Eurostat31 data for 2007 shows that 7.6% of all persons in Ireland aged 25-64 participated in lifelong learning (EU27 9.7%).

Early School LeaversThe EU 2010 targets for education are that at least 85% of 22 year olds in the EU should have completed upper secondary education and that the average rate for early school leavers should be no more than 10%. Eurostat32 data for 2007 shows that 86.7% of the Irish population aged 20-24 have completed at least upper secondary level education (EU27 78.1%). The rate of early school leaving for 2007, as indicated by Eurostat33, was 11.5% (EU27 14.8%), showing a drop on the last few years. Actions being undertaken to increase participation in education reflect the policies outlined in the European Youth Pact on the need to provide education and training to address the labour market challenges facing young people.

ProgrammesThe School Completion Programme (SCP) encompasses both primary and post-primary levels focussing on young people between the ages of 4 and 18 years. It is designed to deal with issues of both concentrated and regionally dispersed disadvantage and discriminates positively in favour of children and young people who are at risk of early school leaving. The programme is funded on a multi-annual basis under the National Development Plan (NDP) and was assisted from the European Social Fund (ESF) up to 2007. In total 124 SCP project sites, comprising 222 post-primary and 466 primary schools participate in the Project

31 Eurostat: Labour Market Database 200732 Eurostat: Labour Market Database 200733 Eurostat: Labour Market Database 2007

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strand of the School Completion Programme, targeting approx. 36,000 young people of school going age, both in and out-of-school. The School Completion Programme aims to develop local strategies to ensure maximum participation levels in the education process in arranging supports to address inequalities in education access, participation and outcomes.

Progression A series of interventions are available to meet the needs of early school leavers, such as foundation-training places, bridging training programmes for access to higher skills training, advisory supports to assist progression and flexible part-time and work-based options. Increased investment has expanded the number of places in further education courses in the past five years by 5,000 to a current level of 49,000. Progression to employment, further education or training from various programmes in 2007 included - 72% of Youthreach participants (3,692 places available), 40% of trainees on traveller training courses (1,088 places available), 71% of Vocational Training Opportunities Scheme (VTOS) participants (5,000 places available) and 90% of PLC students (30,188 places available).

Adult LiteracyThe acquisition of adequate literacy skills is necessary for adults to derive benefit from any education or training course they want or need to engage in and to enhance their employment prospects in a changing economy. Adult literacy, in addition to reading and writing, now extends to such basic education as numeracy, social and personal development, learning to learn and IT skills. In 2007, 44,000 participants availed of adult literacy tuition at a cost of €30 million.

National Framework of Qualifications (NFQ)The national framework of qualifications provides the framework to benchmark the NSS implementation. The NFQ was established and is overseen by the National Qualifications Authority of Ireland (NQAI). The aim of the national framework of qualifications is to provide a unified framework for all awards in the State, from basic education and literacy to post doctoral level, across the education and training sector. This will enhance recognition of qualifications, improve access, progression and mobility for learners and employees, and support flexible high quality education and training. The developments will also ensure that Ireland is well placed to have its qualifications included in the European Qualifications Framework as it emerges. Key developments in 2007 included:

A successful review of the effectiveness of NQAI in meeting its statutory functions and in complying with the Standards and Guidelines for Quality Assurance in the European Higher Education Area was concluded in October 2007. A HETAC review was completed in 2006 and a review of FETAC was completed in February 2008. In all cases, the findings reaffirm that the organisations are complying with international quality assurance standards for higher education and vocational education and training respectively.

In December 2007 the NQAI established terms of reference for a study on the implementation and impact of the National Framework for Qualifications and the associated policies for access, transfer and progression for learners. The study involves all stakeholders and will run until summer 2009.

Awards at Level 1 and 2 of the framework were implemented for the first time, providing skills in basic education, literacy, numeracy and technology for those who left school early, and enhanced independent living skills for

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students with disabilities. Awards at all 10 levels of the framework are now in operation.

The NQAI continues to expand the database of international qualifications showing how qualifications in different countries compare with awards in the Irish framework. This provides important information for migrants, employers, learners, and providers of education and training on the comparability of international qualifications.

As a result of Budget 2009, the National Qualifications Authority of Ireland, the Higher Education and Training Awards Council and the Further Education and Training Awards Council will be amalgamated.

Older Workers - PensionsSocial Welfare PensionsThe Government is committed to making changes to social welfare pensions to encourage and support longer working. The Programme for Government features a number of commitments including an increase in the earnings disregard associated with the non-contributory pensions and the introduction of actuarially enhanced payments for those who postpone claiming State pensions. The implementation of these commitments is being considered in the context of the Green Paper on Pensions and the issues facing older workers continuing in employment. Green Paper on PensionsThe Green Paper on Pensions was published in October 2007. It put forward the following options in relation to facilitating the employment of older workers:

Providing for flexibility in the retirement age; Creating incentives for workers who want to remain in the labour force

after the age of 65; Facilitating a gradual move to retirement through changed working

arrangements; Increasing the contributions required for full pensions and/or the

qualification period for benefits; Tightening the conditions for early retirement.

A public consultation process was undertaken on the Green Paper, closing in May 2008 and a report of the consultation process was published in October 2008. The Government is to develop a framework for long-term pension policy and it is expected that this will be finalised by the end of 2008.

4.6 Gender Equality

Government PrioritiesThe Government is committed to promoting gender equality across all stage of the lifecycle through a range of measures including the National Women’s Strategy 2007-2016. It will build upon the achievements of the NDP Equality for Women Measure. It will further explore the causes of the gender pay gap in order to reduce it more.The National Women’s Strategy, the National Development Plan 2007 – 2013 and the Equality for Women Measure 2008 - 2013 are all focused, inter alia, on the

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increased participation of women in the labour market, on enhanced social inclusion for women and their families and on broader gender matters.

National Women’s Strategy 2007 - 2016The National Women’s Strategy was launched in April 2007 and addresses the issues still outstanding regarding equality between women and men in Ireland over the period 2007 to 2016 under three themes – (i) Equalising Socio-Economic Opportunity for Women, (ii) Ensuring the Wellbeing of Women and (iii) Engaging Women as Equal and Active Citizens. The Strategy contains over 200 key actions. An Inter–Departmental Committee, representing all Government Departments, has been constituted to implement the Strategy, which is being overseen by a Monitoring Committee bringing together Government Departments, Agencies and social partners. A Report on Progress during 2007 on the implementation of the National Women’s Strategy is expected to be published in Autumn 2008 and it shows that significant progress has been made across the Key Objectives.

4.6.1 Equality for Women Measure 2008 - 2013The new Equality for Women Measure follows the successful 2000 – 2007 NDP/ESF Measure that directly benefited 41,000 women, including over 5,500 who received certified training. The new Measure, which is co-funded under ESF, has four strands, to be launched sequentially:Strand IPreparing for Work: Providing women who are currently outside the labour market with the social skills, and/or education/ and/or training to enable them to enter or return to the labour marketStrand IICareer Development: Supporting the provision of training and education to enable women who are in employment to advance their careersStrand IIIDeveloping Female Entrepreneurship: Supporting the efforts of women who want to become entrepreneursStrand IVWomen as Decision Makers in Civil Society: Fostering the efforts of women who have the capacity to become decision makers at all levels of civil society The "Preparing for Work" strand was launched in May 2008, with a budget of €18 million over a three year period. Funding applications have now closed under this first strand and it is oversubscribed having attracted more than 150 project proposals (to the value of over €81 million). Work is underway on preparations for the launch of the remaining strands.

4.6.2 Gender MainstreamingGender mainstreaming is to be implemented as the principal instrument for the achievement of gender equality in Ireland. Discussions are continuing in regard to the establishment of formal Gender Mainstreaming supports in Government Departments and the establishment of a central Gender Mainstreaming Unit to provide training and support to other Departments.

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4.6.3 Gender Pay GapThe gender pay gap has fallen consistently in Ireland and is now below the EU27 average of 15%. The most recent official figures from Eurostat34 (2006) put the gender pay gap in Ireland at 9% for the second year running. The reasons for the gender pay gap are varied. Significant steps have already been taken through the Equal Opportunities Childcare Programme 2000-2006 and its successor the National Childcare Investment Programme 2006 – 2010 to increase the availability of childcare places to support working mothers, which had been cited as a key issue affecting female employment in Ireland. The introduction of the National Minimum Wage has impacted very positively on women. While the narrowing of the gender pay gap cannot be attributed solely to the introduction of the National Minimum Wage, it has contributed significantly to it.The Economic and Social Research Institute (ESRI), on behalf of the Equality Authority, is currently concluding a study on the Gender Wage Gap in Ireland, based on evidence from the National Employment Survey (NES) 2003, which will contribute to the debate on this issue.

34 Eurostat: Labour Market Database 2006

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Annex 1: Euro Area RecommendationsThe following sets out the position in relation to the 2007 recommendations addressed to the Euro Area Member States.

Budgetary consolidation

The recent deterioration in the economic situation and budgetary position reflecting the worsening international situation has resulted in Ireland’s public finances moving away from the medium-term budgetary objective (MTO) – of an underlying position of close to balance – due to a sudden and unprecedented contraction in growth in 2008 from the previous year’s growth of 6% of GDP, as outlined in the overview of the macroeconomic position.As outlined in Budget 2009, the government is committed to a programme of fiscal consolidation designed to reduce the nominal deficit sustainably below 3% of GDP and return to the MTO as soon as possible in line with the provisions of the Stability and Growth Pact. However, care is required in making the necessary structural adjustments to the public finances. Due to the extent and the pace of the downturn it is clear that the consolidation effort should proceed on a phased basis in the light of the evolving budgetary and economic position so as to avoid damage to the economy.The necessary consolidation of the public finances is being pursued through substantial reductions in the rate of growth of public expenditure, with the annual growth in gross voted expenditure for the period 2009-2011 forecast to average 1.8% compared with 8.6% over the last 3 years. Tax measures are also being implemented to improve the fiscal position. It is planned to improve the structural balance of the public finances by about 3% of GDP over the programme period, with further measures spread across current expenditure and taxation being outlined in subsequent Budgets in the light of later information and the performance of the economy.

Quality of the public financesWhile implementing the National Reform Programme, the Government reaffirms its commitment to ensuring that the mechanisms already in place to assess the relationship between public spending and the achievement of policy objectives are built upon and further enhanced. Government investment will be delivered in accordance with the provisions of the National Development Plan 2007-2013 (NDP), a comprehensive framework for large-scale investment focussed on developing the national economic and social infrastructure. The NDP encompasses five sectoral Priorities – Economic Infrastructure, Enterprise Science & Innovation, Human Capital, Social Infrastructure and Social Capital - along with investment frameworks for regional development, environmental sustainability, development of the rural economy and all-island co-operation.The Annual Output Statements (AOSs), introduced in 2007, are designed to make explicit the public service outputs expected to be delivered with the public funds being allocated by the Dáil each year. The AOS framework has been further developed in 2008, with closer alignment between AOS Programmes and the High-Level Goals set out in the Departmental Statements of Strategy. The 2008 round of AOSs now includes information on performance against output targets for the previous year, as well as establishing new output targets for the year ahead. The AOS framework has also been formally integrated into the procedures of parliamentary scrutiny, and the Minister for Finance has engaged with the Dáil

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Select Committees, the primary users of the AOSs, with a view to obtaining their feedback on how the framework can be further refined and made more effective. Value for Money and Policy Reviews are a system of programme evaluations of areas of significant expenditure and are a key element in moving resource allocation policy away from a narrow focus on financial inputs, on to a consideration of performance and the delivery of outputs and outcomes. The process will be further refined in light of the experience of the 2006-2008 round to create greater integration of performance management into the budgetary system.

Measures to improve competitionBudget 2009 provides for the merger of the National Consumer Agency and the Competition Authority to bring about improved co-ordination and synergies in the interests of consumer and business alike. The merger of both bodies also coincides with the review already underway of our competition law code which will ensure that Irish competition law, in so far as is possible, continues to be, capable of being applied in a pragmatic way, reflecting the realities facing both the consumer and business, while protecting competition within relevant markets. The Tánaiste and Minister for Enterprise, Trade and Employment has indicated that reports to Government by the new body will receive a published response addressing findings and recommendations within a set period of time. It is the intention that this will bring more transparency to decision-making, certainty to business, and support a healthier and more competitive business environment. How this can be best achieved will be examined during the course of the review and the establishment of the new body. Integration of financial marketsThe success of Ireland as an international financial services centre supports the view that financial integration across the EU and globally can be a positive factor in national development and economic growth. The Irish financial services industry is also supported by a strong and credible regulatory system, largely based on an EU template and agenda for financial integration.While Ireland has become a major international funds jurisdiction, with links into the funds industry worldwide, openness is a two-way process. Ireland’s market has always been an open one. Evidence of foreign acquisition of Irish institutions, including former State banks, is clear. Some of the main non-Irish players in our banking sector are institutions with home bases in the UK, Denmark and the Netherlands. Ireland welcomes competition in the market place.

Stability arrangements and supervisory convergenceIreland’s principles-led regulatory system maintains the highest standards and recognises the importance of being responsive and accessible to initiatives supporting the development and integration of the sector. Recent assessments by reputable international bodies such as the IMF and the OECD have confirmed that the Irish system of financial regulation complies with best international practice and is well placed to continue to attract financial services to Ireland. Ireland has consistently transposed EU legislation within required time-frames. Recently transposed legislation includes the Markets in Financial Instruments and the Capital Requirements Directives. The Payment Services and the Acquisitions in the Financial Sector Directives are currently being transposed and it is expected that these will come into effect by the required dates. The timely

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transposition of EU legislation demonstrates our commitment to the financial integration agenda of the EU. Ireland also supports current moves to increase the effectiveness of supervision of the financial sector in Europe through, inter alia, the convergence of supervisory practices. Ireland supports, and is engaged in, ensuring that the proposals brought forward under the Roadmaps identified at the ECOFIN meetings of October and December 2007 are successfully and timely implemented. Most recently, against a backdrop of international economic and financial crisis, Ireland, along with all other Member States, adopted the European Council Conclusions of 15 and 16 October 2008, which expressed a resolve to act in a concerted and comprehensive manner to protect the European financial system and depositors.

Labour market flexibility and securitySocial partnership in Ireland over many years has provided the framework for developing flexicurity strategies. The emphasis is to have a balanced mix of policies in relation to pay and tax/welfare, employment conditions, training and activation measures which are negotiated by all the parties involved with agreed commitments put in place for a period of time. Progress under the four elements of flexicurity include: the latest data from the OECD has cited Ireland as having the lowest tax wedge in the EU; the National Employment Rights Authority (NERA) has increased the dissemination of information/awareness on employment rights and fosters a greater culture of compliance with statutory employment rights; upskilling of the workforce will take place through the implementation of the National Skills Strategy with recognition of qualifications available by means of the National Framework of Qualifications; and the range of ALMPs are being tailored in an ongoing way to meet the needs of the low-skilled and more marginalised in particular.

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Annex 2: National Development Plan 2009-2011OverviewThe Government is determined to proceed with extensive programme of capital investment to address this country's infrastructure requirements. The National Development Plan sets out a comprehensive and ambitious strategy to transform this country. NDP capital investment is greater than the public capital investment of many EU states. This Government is determined to deliver those key NDP capital projects which will support and sustain this country's economic future. The Government will press ahead with projects which are crucial to our future economic competitiveness and productivity.

Regional DevelopmentThe NDP sets out a strong framework for the continued rollout and implementation of the National Spatial Strategy, of which a key component is the development of the nine NSS gateways which will help economic and social development of their surrounding regions.

All-Island Co-OperationThe Irish Government has agreed to make a contribution under the National Development Plan towards investment in roads infrastructure in Northern Ireland. The priority project from the Irish Government’s perspective is the upgrade of the Border to Derry route. The Northwest of the island, on both sides of the border, has suffered from problems of peripherality and accessibility and this joint approach and investment will ensure that the Northwest can more fully take advantage of the economic opportunities that the political settlement makes possible.

Environmental SustainabilityThe NDP encompasses substantial allocations to invest in programmes which will have a direct impact on promoting environmental sustainability, including public transport, initiatives to promote sustainable energy, enhancing our water services infrastructure and investment in waste management and environmental research.

Rural EconomyThe rural economy has undergone rapid change and ongoing demographic and economic changes have had a significant impact on the rural economy. Investment will continue under the NDP in the coming years in the regional and local road network, the commencement of the Western Rail Corridor, water services and a range of measures to support the physical, economic and social infrastructure in rural areas including the CLAR, Community Development, Local Development Social Inclusion, Rural Social Programmes and various Gaeltacht and Island schemes.

Economic InfrastructureImproving our economic infrastructure is critical to Ireland’s economic future and improving the quality of life in this country. Investment in the coming years will include areas such as roads, visible public transport improvements with new trains, Luas tram and line extensions and replacement buses for Dublin Bus as well as improved Quality Bus Corridors. The commencement of Terminal 2 at

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Dublin Airport will significantly improve the capacity of the Airport. Investment will continue on the completion of the M50 upgrade works and the. Major Inter-Urban Routes (MIUs) by 2010 providing a world class motorway network that will connect Dublin with the border, Galway, Limerick, Cork and Waterford.

Enterprise, Science and InnovationThe NDP will fund investment in, indigenous and foreign direct enterprise in Ireland, Science, Technology and Innovation, the tourism sector, the development of the agriculture and food sector, the marine sector, the development of the rural economy and the viability of the island and Gaeltacht communities. The Science, Technology and Innovation Programme (SSTI) covers all research areas from basic research in the World Class Research Sub-Programme to specialised research in areas like enterprise, agri-food, marine, the environment, health and geo-science.

Human CapitalEducation and Training is vital to Ireland’s objective of ensuring its workforce are among the best in the world and investment under this Priority will continue to support the ongoing National Skills Strategy and on-going assistance for the up-schilling of the workforce and supported the participation of those currently outside the workforce as well as enhancing the quality of education provided in our schools.

Social InfrastructureThis priority will fund a wide range of infrastructure to improve the quality of life, enhance vital social services, promote social inclusion and enhance the administration of justice. Further investment will be made under the Housing Programme in the years ahead and in areas such as the Remedial Works Scheme and the Central Heating Scheme. Further investment is projected in a range of health infrastructure, prison accommodation, courts projects and new and improved Garda stations.

Social InclusionThe NDP will fund further investment in promoting social inclusion including Programmes for Children, Older People, People with Disabilities and Local and Community Development.

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Annex 3: European Research Area (ERA)

Specific Actions and Initiatives linked to the ERA agenda

Implementation of the Third Country Directive for Admission of Researchers

Ireland has fully implemented the directive for the admission of “third country” researchers to Ireland and announced arrangements in October 2007 to give effect to this directive. The scheme offers a fast and administratively light procedure to accredited research organisations in Ireland (public and private) that will allow them to recruit researchers from outside Europe for specific research contracts and will allow researchers to bring direct family members to Ireland for the duration of the research contract.

Initiatives to foster joint approaches to research programmes

Ireland continues to actively engage in the initiatives coordinated and facilitated by the European Commission to encourage greater coordination of national research programmes and to encourage joint approaches to the implementation of research programmes targeting specific technological and/or societal objectives.

In addition to participation in the long-standing Article 169 initiative for clinical trials relating to diseases in developing countries (EDCTP), Ireland has recently become associated with the Article 169 initiatives on Ambient Assisted Living (AAL) and the EUROSTARS initiative for research within SMEs.

Ireland has also become a founding member of the Joint Technology Initiatives on Nanoelectronics (ENIAC) and Embedded Systems (ARTEMIS). Irish researchers and enterprises are also becoming involved in the other JTIs (that do not involve formal member state participation) such as the Innovative Medicines Initiative and Aeronautics & Air Transport (Clean Sky).

Most of these initiatives are currently at the stage of processing their first calls for proposals and there are no comprehensive measures relating to Irish participation in these initiatives available at this point.

Outside of the formal JTIs and Article 169 initiatives, Irish research funding organisations and other actors continue to participate actively in ERA-NETs and Technology Platforms. In total, twelve government departments and agencies are involved in 24 ERA-NETs and many of these are involved in joint calls. For example, in the social sciences and humanities area, Ireland is participating actively in HERA (Humanities in the European Research Area) and NORFACE (New Opportunities for Research Funding Agency Co-operation in Europe) through the Irish Research Council for Humanities and Social Sciences (IRCHSS). Both HERA and NORFACE are operating joint calls for proposals in which IRCHSS is participating.

Development of Pan-European Research Infrastructures

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Ireland is also participating in a number of projects linked to the ESFRI roadmap for European research infrastructures. Research groups in Ireland are associated with the preparatory actions for seven of the ESFRI projects including:

BBMRI Network of existing and new biobanksECRIN Network of clinical research centresEMSO Multidisciplinary seafloor observatoryEURO ARGO Ocean observing buoy systemDARIAH Digital infrastructure for cultural heritage institutionsSHARE Data infrastructure for research of population ageingKM3NET Underwater Neutrino Observatory.

Ireland has recently become a member of PRACE (Integrated European High Power Computing Service) and, therefore, will also be associated with this pan-European endeavour. National planning for the provision of research infrastructures is undertaken with direct reference to the ESFRI roadmap and Ireland will make decisions regarding its formal membership status of the different pan-European infrastructure projects (including but not limited to the list above) as and when they move towards the actual construction/implementation phase.

ERA Vision and Governance

Ireland has participated actively in the CREST and Competitiveness Council discussions on both the renewed vision and governance of the European Research Area (ERA). Drawing on the national response to the ERA Green Paper, Ireland highlighted some key principles for the development of the ERA including:

The need for CREST to play an active role in advising on the added value of new initiatives being proposed under ERA;

The need for stronger evaluation and monitoring at all stages of the policy lifecycle (design, political approval, implementation, ex-post review etc.);

The need for practical effect to be given to the so-called “knowledge triangle” of research, innovation and education through tighter integration of ERA within the Lisbon Strategy;

The need to continue the voluntary approach through, for example, pushing the boundaries of the OMC process further and avoiding a legislative approach unless absolutely necessary;

The need to use existing governance structures where possible in preference to setting up new groups to drive the ERA initiatives.

Many of the ideas in the Ljubljana Process and in the latest discussion document can be linked to points raised by Ireland and others in earlier discussions.

CREST WG on R&D in ServicesIreland participated in the CREST OMC 3% Working Group R&D in Services in order to develop a policy approach to R&D in the services sector.

The working group provided suggestions and recommendations on how to develop the service sector with research -related policy measures. The WG report highlights the importance of the service sector and service activities in the European economy and the essential role R&D can play for the improvement of the European economic performance and its innovative capacity.

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Annex 4: Competition Policy Recommendations

Recommendations Implemented, January 2007 – August 2008

Private Health InsuranceThe Government has implemented by legislation virtually all of the recommendations addressed to it in the Competition Authority’s 2007 Report on Competition in the Private Health Insurance Market –

Removal of Vhi Healthcare's exemptions from the EU Non-Life Directives; Vhi Healthcare to be brought under oversight of the Financial Regulator as

a conventional authorised insurer, and made subject to normal solvency requirements;

Vhi Healthcare will establish subsidiary or sister companies for activities other than health insurance;

Removal of the requirement for Vhi Healthcare to seek Ministerial approval for premium increases.

The statutory regulator (Health Insurance Authority – HIA) is currently finalising its plans to implement the following Competition Authority Recommendations-

Employers should be made aware of their ability to set the multiple salary deduction mechanisms – HIA is finalising an information programme for employers;

Implement a (consumer) switching code for private health insurance – HIA currently finalising a switching programme.

PharmacyThe Government reformed the law applicable to the pharmacy profession via the Pharmacy Act 2007. The Act implemented many Competition Authority recommendations, for example:

Comprehensive new Act replacing 140-year old legislation which was completely outdated and unsuitable;

Governance of the statutory regulator (Pharmaceutical Society of Ireland) overhauled, to replace a pharmacist-dominated governing Council with a new Council featuring a lay majority;

Fitness to practise provisions introduced; The present restriction on overseas-trained pharmacists setting up a new

pharmacy business in Ireland will be removed in September 2008. The Government is also tackling the issue of the fees and margins paid to

retail pharmacists, as the Authority recommended.

Solicitors and BarristersThe Bar Council (the self-regulatory body for barristers) implemented 8 Authority recommendations for reform of the barrister profession. These include –

Removal of unnecessary restrictions on barristers’ ability to advertise;

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Removal of unnecessary barriers to switching between the professions of barrister and solicitor;

Removal of unnecessary restriction on consumers switching from one barrister to another;

New barristers are now allowed to act for former employers; Barristers are now allowed to practise part-time; The Bar Council advised barristers that the practice whereby junior counsel

charge fees at two-thirds of senior counsel’s fee is anti-competitive; Barristers are now required to issue meaningful fee estimate letters; The Bar Council providing useful information for consumers (partially

implemented).

The Law Society (the statutory regulator of solicitors) implemented 3 Authority recommendations for reform of the solicitor profession –

Solicitors are now allowed to advertise as specialists; Removal of unnecessary barriers to switching between the professions of

solicitor and barrister; Law Society providing useful information for consumers (partially

implemented).

The Government abolished the existing basic Irish Language competency requirement for both barristers and solicitors, and replaced it with a voluntary system of high level Irish Language training.

DentistsThe Government has approved New Rules which will allow a new oral healthcare profession of Clinical Dental Technicians to operate independently of Dentists.The Dental Council is engaging with training providers to establish courses in Clinical Dental Technology.Government is reviewing the number of training places for dentists and other oral healthcare professionals to address supply issues.The Dental Council has removed unnecessary restrictions on advertising by dentists.

OptometristsThe Government is in the process of implementing 2 of the 5 Recommendations made by the Competition Authority for reform of the optometry profession –

Allow optometrists to provide State-funded eye examinations to children identified at national school exit screening (some progress);

Review the number of training places for optometrists (implementation in progress).

The Opticians Board has agreed (January 2008) to remove unnecessary restrictions on advertising.

Architects

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The Competition Authority made 11 recommendations in its 2006 Report on Competition in the Architect Profession. The Government has legislated to implement 3 of the 6 recommendations addressed to the Government –

Provide for lay majorities on the various committees of the statutory regulator (the Royal Institute of Architects of Ireland – RIAI);

A Code of Conduct for Architects should be competition-proofed by the Competition Authority;

The Government should avoid unnecessary and inadvertent restrictions on professions related to architect (e.g. landscape architects).

The RIAI – removed unnecessary restrictions on advertising; ceased the inclusion of actual percentage fees in draft contracts published

by it.

Also, new schools of architecture have been established and a system for recognising modular courses put in place.

Banking and InsuranceThe Authority published reports on the non-life insurance market and the non-investment banking sectors in 2005. Many recommendations have already been implemented, 3 were implemented in the period since January 2007:

The Financial Regulator increased the notice period for renewal notices to be sent by motor insurers and liability insurers;

The Financial Regulator issued guidelines detailing the regulatory requirements, including solvency standards, that insurers seeking to enter the Irish motor or liability insurance marketplace will have to meet;

The Irish Payments Services Organisation has begun the process of introducing new cheque truncation technology to the payments system.

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Annex 5: Transport 21 DevelopmentsThe following are key Transport 21 developments since January 2008:

LUAS

Luas Docklands Extension (Line CI)On 7 April 2008 the RPA announced the commencement of work on the main civil and track infrastructure contract for the Luas extension to the Docklands. The target completion date for this project is end 2009.

Completion of Tram Extensions on Luas Tallaght line On 26th May 2008, the Minister for Transport launched the final tram to be extended on the Luas Tallaght line. The programme to extend the trams is now complete and all 26 of the original 30-metre trams have been extended to 40 metres providing a capacity increase on each tram of 40%.

Cherrywood Luas Extension (Line B1) On 4th May 2008, the RPA announced the commencement of the main track-laying contract for the Luas extension of the Green line from Sandyford to Cherrywood. These works involve the construction, testing and commissioning of 7.5 km of new Luas track, stops, power and communications systems. These works are estimated to take two years to complete and the new extension is scheduled to be operational by end 2010.

Luas extension to Citywest (Line AI)On 16 June 2008, An Bord Pleanála granted a Railway Order (planning permission) to the RPA in respect of the planned Luas extension to Citywest and Saggart which became enforceable on 11 August 2008. Construction of the new spur line is expected to be completed by end 2010 and the RPA expect to have services operating on the line in early 2011.

METRO NORTH

On 13th May 2008 the RPA announced that it had issued the tender documents for Metro North to the four pre-qualified bidding groups. The bidders have been asked to tender for the design, build, funding, maintenance and operation of the Metro on a PPP basis. Tenders are expected in February 2009 with ‘best and final offers’ being sought later that year subject to the grant of a Railway Order for the project by An Bord Pleanala. The RPA submitted the application for the Railway Order for this project in September 2008.

HEAVY RAIL

Cork Commuter Rail line: Construction commenced in February 2008 with a target completion date of Summer 2009.

Navan Railway Order approval: An Bord Pleanála approved a Railway Order on 29th February 2008 - to construct the line from Clonsilla to the M3 Interchange at Pace, north of Dunboyne. The project is phase one of the proposed development of the Navan rail line under Transport 21. It is anticipated that construction will commence in late 2008, to ensure the line reopens in 2010.

Re-Signalling: The re-signalling on the Rosslare line was completed over the weekend of 26 April. This marks the completion of the current national Re-Signalling Programme.

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183 new Intercity Railcars: Since January 2008 tranches of the new Intercity railcars have entered service on the Westport, Galway and Limerick and Waterford lines. It is expected that all 183 will be in service on the remaining lines (Kerry & Rosslare) by Summer 2009.

Portlaoise Train Care Depot: On 25 July the Portlaoise Train Care Depot was officially opened. The Depot provides a high quality maintenance and servicing facility for the 183 new intercity railcars and some facilities for outer suburban railcars serving the Kildare route.

Kildare Route Project: On 28 July the new Park West/Cherry Orchard station opened and the new Clondalkin/Fonthill station opened on 13 October. The opening of these stations is another important milestone in the Kildare Route Project.

Park West/ Cherry Orchard Station: On 28 July the new Park West/Cherry Orchard station opened for business. The opening of the station is another important element of the Kildare Route Project.

Automatic Ticket Checking: On 31 July automatic ticket checking was introduced at Pearse Station.

ROADS

Schemes Commencing Construction

Work began in February 2008 on the N7 Castletown to Nenagh road and the N9 Kilcullen to Carlow and Carlow to Knocktopher roads. 

Work also began in February 2008 on the N25 Tullamore By Pass.

Schemes Opening to traffic

The N11 Kilpedder – Delgany Junction was opened to traffic on 7th March.

Phase 3 of the M50 Upgrade was substantially completed with four lanes (3 plus auxiliary lane) open to traffic.

N9/N10 Carlow Bypass was officially opened on Thursday 29th May 2008 on time and within budget. This is the first section of the Dublin/Waterford major interurban route to be opened and consists of 18.5km of high quality dual carriageway.

The N6 Kilbeggan to Athlone scheme was officially opened to traffic on 16 July, on time and within budget.

The N8 Cashel to Mitchelstown scheme was officially opened to traffic on 25 July, 10 months ahead of schedule and within budget.

BUSES

On 21 April Bus Eireann launched two new bus routes in Cork city. Funding provided under T21 to acquire additional buses has made the introduction of the new routes possible. The Cork city fleet is now 100% wheelchair-accessible.

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To date 135 of the Transport 21 funded buses have been delivered and the remaining 104 (239 in total) are expected to be delivered by Bus Eireann before the end of the year. The new buses are allocated to city, local and commuter services operations to meet customer demand.

AIRPORTS

Regional Airports: The six regional airports continued the rollout of safety, security and capacity expansion projects under the multi-annual sectoral programme approved by the Government in 2007 for grant aid under Transport 21.

City of Derry Airport: Following a commitment by Derry City Council to new governance arrangements for the Airport, both Governments began payment of grants in respect of the runway safety project under the co-funding arrangement agreed in 2005.

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Annex 6: National Indicators for European Employment Strategy

The idea of measuring and comparing performance is central to the European Employment Strategy. The majority of these comparisons are based on statistics supplied by the National Statistics bureau (in Ireland the CSO) and verified by Eurostat, thus giving cross-country comparability. In the case of certain data requirements indicators are not available on a harmonised basis and must be developed based on National Sources. As these indicators cannot offer the degree of cross-country comparability that agreed Eurostat data does, it has been agreed to focus on the trend within Member States as opposed to conducting a ranking exercise. Outlined below are indicators for monitoring Employment Guideline 19 as agreed by the Employment Committee (EMCO). The data is compiled by the Department of Enterprise, Trade and Employment and is based on National Sources and the Eurostat Labour Market Policy Database. Due to methodological differences this data may not be comparable between all Member States.

Indicator Code Definition

U-25's

U-25's

Adults Adults

Male Fem. Male Fem.

19.3

Share of young/adult unemployed becoming unemployed in month X, still unemployed in month X+4/12, and not having started a job or participated in a regular activation measure (categories 2-7)/not having participated in an assisted activation programme (sub-category 1.1.2). Data based on yearly averages.

2.1% 2.0% 2.1% 1.7%

Male Female Total

19.4

Number of long-term registered unemployed participants in an active measure (training, retraining, work experience or other employability measure) in relation to the sum of the long-term unemployed participants plus registered long-term unemployed. Data based on yearly averages.

23% 47% 33%

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Annex 7: Expenditure on Employment and Training Supports

The following table shows expenditure for employment and training supports provided by FÁS, Skillnets and the Departments of Education and Science and Social and Family Affairs in 2006, 2007 (actuals) and 2008 (allocation).

€000's €000’s €000’sFÁS Training 2006 2007 2008Apprenticeship 113,034 129,030 132,500Traineeship 22,699 25,191 28,318Training & Sectoral Initiatives and Sponsored Training

38,777 49,813 45,484

Evening Courses / FÁS eCollege 2,013 1,836 2,343Specific Skills Training 37,586 37,364 42,431Local Training Initiatives 26,326 30,736 33,211Workplace Basic Education Scheme 1,163 3,732 3,110Bridging Foundation 20,561 21,226 19,907Foundation/Progression in CTCs 42,435 46,793 47,939Return to Work 2,753 2,833 3,767Specialist Training Providers 49,371 52,009 54,950EmploymentCommunity Employment 326,233 357,505 376,602Job Initiative 37,940 40,065 42,678Job Clubs 5,552 5,642 5,900Wage Subsidy Scheme 6,694 7,610 10,500Supported Employment Programme 7,682 8,254 8,800

TOTAL€740,8

19€819,63

9€858,440

Skillnets €14,00

0€24,500 €26,734

Department of Social and Family Affairs Back to Work Allowance 56,497 71,072 79,710Part-time job incentive scheme 1,277 1,320 1,430Back to Education Allowance 52,070 64,140 70,840Assistance to Back to Work participants 2,198 3,017 3,000Grants for small projects to assist return to work 3,133 2,107 0Activation and Family Support Programme 2,190 2,894 6,000Family Income Supplement 107,137 140,020 188,200

TOTAL€224,4

91€303,27

0€349,180

Department of Education and ScienceYouthreach 51,679 59,343 65,541VTOS 61,942 68,300 68,825Senior Traveller Training Centres 24,219 26,314 26,257Back To Education Initiative 15,049 17,510 18,113

TOTAL€152,8

89€171,46

7€178,736

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