Innovation and the labour market

Issue 21: Third level funding

Ibec recommends

In order to address this problem, the Government should increase capital spending in third level by €10 million as this area has suffered the most. This will avoid running the asset base down further. Government should also adopt more innovative approaches for capital funding such as PPP’s.

Part of the €400 million of fiscal space dedicated towards demographics will be used to increase current spending at third level. However, due to significant cuts in recent years, an additional €5 million should be allocated towards this funding. The Cassells report has recommended a number of sustainable funding stream options for the future of third level education. Ibec holds that the most effective way of doing this is to implement a fees and loan scheme.


How Ireland will benefit

Ireland’s high skilled labour force has played a key role in its economic success. The proportion of the population with third level qualifications has doubled in the past ten years with 52% of those aged 30-34 with such qualifications. This has meant that Ireland has the highest level of educational attainment in the EU. This asset will be threatened if funding issues are not addressed soon. In the next five years, the number of people who are of college going age will increase by 25%. In order to keep our current attainment levels constant, this would mean that an additional 26,500 students would need to be catered for at third level.



Issue 22: Fuding for up-skilling

Ibec recommends

Funding is needed to broaden the types of apprenticeships on offer to meet the skills needs of industry while providing real choice for potential workers. A ring-fenced fund should be established to support the development of new apprenticeships and traineeships.


How Ireland will benefit

The returns from investing in education mainly accrue in the medium and long term. This investment needs to happen today, in order to reap the benefits in the future. Investing in skills will help transform the kinds of employment on offer, as employers will find it easier to recruit new workers with the necessary skills, who in turn will improve the quality of work. In order to bring long-term unemployment back to its previous levels, re-skilling is needed to equip these workers with the skills needed to re-enter the workforce.



Issue 23: Focus of the National Training Fund

Ibec recommends

The National Training Fund currently only allocates one fifth of total funding to training for those who are currently in employment. However, given that unemployment has fallen significantly in the past few years at least half of this fund should be used for in-work training. This would enable the restoration of funding to up-skilling programmes, such as Skillnets, with a proven track record of robust training needs analysis, curricula designed in collaboration with employers and work-based training.


How Ireland will benefit

During the crisis it was necessary to re-direct more of the funding into re-activation programmes which helped people get back to work. However, a new approach is needed so that the recent fall in unemployment is reflected in how these funds are allocated. Allocating a greater share of the current budget towards in-work training will help address skills gaps which have already started to emerge. We need to focus on the sustainability of existing employment by improving our competitiveness through up-skilling and re-skilling.



Issue 24: R&D spending

Ibec recommends

In order to prevent us moving further away from our targets and to keep Government spending at 0.4% of GDP an additional €150 million would need to be allocated to R&D.


How Ireland will benefit

The benefits from investing in R&D are long term and a key factor in driving sustainable economic growth. Success is complimentary and for every €1 the Government invests in R&D, industry spends €2. Given that Ireland is a small open economy, it is essential that we remain an attractive place to conduct R&D as well as facilitating the emergence of indigenous firms and encouraging innovation in key sectors.



Issue 25: Cyber security voucher scheme

Ibec recommends

In order to improve this area, the Government should assist SMEs through a €2,500 cybersecurity voucher scheme similar to the current trading online voucher scheme.


How Ireland will benefit

To enable a competitive economy, we must encourage continued digital innovation and investment in innovative digital products and services. Ireland’s digital economy is a major driver of growth and we have the potential to be a global leader in this area. However, to make this a reality we must ensure that we have an environment that adequately protects personal data and IP, while providing the conditions for businesses to invest in the creation of innovative products and services.



Issue 26: Childcare

Ibec recommends

Child benefit payments should be means tested so that they remain the same for low income households but taper off gradually for higher income households. This has the potential to save the Government €200-€500 million depending on the cut in point for tapering. These savings should then be redirected as follows:

  1. Extension of the Early Childhood Care Education scheme.
  2. Implementation of a formal after-school care system.
  3. Continued professionalisation of the early years’ service. In addition to the higher capitation grants, the ratios (i.e. workers per child) should be relaxed if the worker in question has a level 7 qualification or above. This would provide a greater incentive for providers to encourage workers to obtain these qualifications.


How Ireland will benefit

Current childcare costs are a huge deterrent for parents with children of these ages to continue working. Female participation rates are relatively low in Ireland and the differential between male and female participation is much wider than in other European countries. The employment rate for women aged 25 to 49 in Ireland is almost eight percentage points lower than their UK counterparts. Child benefit payments are poorly targeted, with €330 million going towards households who earn more than €100,000 a year. If this money was redirected towards childcare services it would improve the financial incentive to work, increasing our labour force and the productive capacity of the economy.

Improving the quality of existing services will also bring benefits.The level of qualification of practitioners in early year settings has long been acknowledged as an important contributor to and indicator of quality service provision and while it doesn’t guarantee high quality it is the best measure for the sector. The EPPE/EPPSE study (Sylva et al., 2012) among others has shown that the benefits of high quality early care and education persist to at least age 14 in relation to both academic outcomes (especially maths and science) and social-behavioural outcomes (e.g. motivation, self-confidence, empathy, impulsiveness, anti-social behaviour).


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