Preparing the labour market for the needs of the future

Enterprise demand for skills continues to change at an incredibly fast pace. The availability of talent, skills and people remain a top priority for Irish business. A high quality, engaging and dynamic education system is the cornerstone of long-term social and economic development and is critical for addressing the immediate challenges posed by the climate crisis, rapid digitalisation and infrastructure deficits.

Demographic demand for further and high education is forecast to increase by 20% to 2033. This is a critical time to increase investment in higher and further education to build capacity to meet known demographic growth. Continuous underinvestment in higher education is threatening the quality of Ireland’s education system, widening the gap between Irish universities and their international counterparts and damaging Ireland’s international reputation including our ability to attract research and business investment.

In parallel, Ireland must place emphasis on improving opportunities for lifelong learning. The recent OECD Review of Skills in Ireland confirms the importance of skills and talent in supporting economic while acknowledging that Ireland’s performance in workforce development and lifelong learning falls significantly short of that in comparator countries. Investment in people and skills will be core to Ireland successfully navigating the twin digital and green transition while enhancing leadership and innovation capability. The National Training Fund has the potential to deliver a step change in industry-led skills development and incentivise industry to scale investment and engagement with the education sector.

What measures business wants to see in the Programme for Government.

• A commitment to unlock the National Training Fund to support business with workforce and skills
• development.
• A commitment to implement a right sized funding model for higher education to build capacity and capability and invest in capital, technology and equipment to respond to increasing student numbers.
• A commitment to increase funding for the Universities and further education and training sector to build infrastructure and programme funding.
• A commitment to introduce a National Training Voucher scheme to boost in-company training and widen participation in upskilling and reskilling.
• A commitment to deliver a sustainable funding model to support an integrated apprenticeship system.
• A commitment to enhanced digital and learning resources, and educator Continuous Professional Development , across primary and second level education to ensure a successful rollout of the Primary Curriculum Framework and redeveloped Senior Cycle.
• A commitment to recognise and further facilitate education institutions and programmes to raise the social and educational capital of those from marginalised communities building bridges with business to achieve positive enterprise outcomes.

Labour market openness is a catalyst for economic resilience and prosperity in an increasingly interconnected world. As Ireland approaches full employment, the ability to enable future growth potential and respond to the changing economic conditions of different sectors in a timely fashion depends on how well we address labour shortages. While employment levels have seen a rapid increase, labour force participation has not kept pace with increased demand for labour. The Irish labour market remains extremely tight and new job creation has slowed, likely driven by the difficulty of filling roles. Added to this is an ageing workforce with growing cohorts of older workers reaching retirement age and far fewer new entrants.

Industry remains committed to enhancing the indigenous skills supply to meet labour market needs through upskilling and reskilling. However, given the fast-paced, changing global business model, education and training cannot meet all demands in real time. In an increasingly uncertain global environment, policy must continue to innovate and challenge boundaries. The reduced pool of available labour will remain a key constraint on growth for the Irish economy over the coming years.

Embracing a dynamic approach to talent acquisition and retention can foster innovation, competitiveness and sustainable growth. Immigration will remain an important source of labour for Ireland in the future, one that can allow both a quick response to emerging skills shortages and provide an ongoing supply of skilled workers where the number of new entrants or experienced workers is too low. The economic impact of migration reaches every aspect of the economy from population growth, labour participation and employment, the national skills base and net productivity. New ways to attract migrants must be undertaken to meet the labour market needs that extend beyond our own capacity.

What measures business wants to see in the Programme for Government.

• A commitment to maintaining a fully functioning and responsive employment permit system that can promote Ireland as an attractive destination for the skills we need.
• A commitment to introduce a single work permit and visa process to streamline immigration.
• A commitment to enhance the recognition of skills and qualifications within the EU as well as for third country nationals educated abroad.
• A commitment to speed up qualification recognition for all workers, particularly those from non-EEA
• countries.
• A commitment to providing supports for business and society to promote integration and intercultural
• awareness to support social cohesion and integration.
• A commitment to introduce an Essential Skills Occupations Visa to meet the need for lower skilled general operatives beyond what the general employment permit offers, with specific eligibility requirements, duration, wages and conditions for remaining.

Being a leader in technology, AI and digital matters to our competitiveness, regional development, better services, resilience and our place in the world. Digital leadership can enable further opportunities for government, business, individuals at home and the EU more broadly too.

The EU is committed to a twinned green and digital led future. Ireland has set out an ‘ambition to be a digital leader at the heart of European and global digital developments’ underpinned by national digital and AI strategies that are aligned to EU digital priorities and targets for this decade. Ibec has welcomed these shared ambitions. As an EU digital frontrunner, a home for advanced manufacturing and a global hub for digitally deliverable services Ireland should be well placed to realise further digital opportunity. However, we cannot be complacent.

While progress is being made, there is a significant competitive imperative to address gaps in the state and rate of our relative digital progress and meet 2030 targets in digital readiness. Technological change such as in AI, regulatory change and global competition in digital transformation are dynamic and intensifying. Ireland must position itself to safeguard its place in the world and to compete for new investment and opportunities in the period 2024-2030.

What measures business wants to see in the Programme for Government.

• A commitment to retain and intensify resources and co-ordination in driving and implementing our digital agenda in any changes to Government/Departmental responsibilities and functions and future Programmes for Government.
• A commitment to intensify investment and procurement in modern digital Government and public services. Lead by example – strengthen the State capacity to deliver better services and act as a catalyst for broader growth and resilience.
• A commitment to adequately resource and demonstrate Ireland’s stated ambitions to be a centre of regulatory excellence and an advocate of balanced regulation and key single market principles. Develop and implement overarching strategies for EU advocacy and national regulation in digital affairs. This is critically important in safeguarding Irish and EU citizens, competitiveness, and our place in the world.
• A commitment to adequately resource, implement and co-ordinate the necessary institutional infrastructure and capacities for the implementation, adoption and oversight of cyber security and resilience requirements. Develop our cyber security ecosystem and industry. Ensure Ireland continues to play a strong role internationally in these areas.
• A commitment to accelerate efforts on connectivity, boost relevant national RDI capabilities, ecosystems and infrastructure in strategic digital technologies and support further digital and AI adoption. Resource this strategic investment through a new multiannual ‘National Digital Agenda Accelerator Fund’.
• A commitment to foster, attract and deliver the skills, talent, and inclusion necessary to enhance Ireland’s digital resilience and opportunity. Resource this strategic investment by leveraging the National Training Fund (NTF).

Ireland’s voluntarist model of industrial relations, which is supported by a robust legal framework and a highly evolved body of employment rights legislation, has served the country well both in times of strong economic growth and more challenging economic circumstances.

Ibec notes the Adequate Minimum Wage Directive which must be transposed into Irish law by November 2024. Once transposed, Ireland will be required to put in place a framework of enabling conditions for collective bargaining and an action plan to promote collective bargaining. Ibec believes that it would be more appropriate, and likely more effective, for such framework and action plan to be established by way of agreement with the social partners rather than by way of legislative change.

What measures business wants to see in the Programme for Government.

• A commitment to continue to support Ireland’s voluntarist model of industrial relations.
• A commitment to facilitate the social partners in coming to an agreement with regards to a framework of enabling conditions for collective bargaining.
• A commitment to make funds available from the National Training Fund to both employer groups and trade unions for training/upskilling in collective bargaining.

Interactions between Ireland’s social insurance model, social welfare and the labour market are complex, with a patchwork quilt of benefits and entitlements and a mixed system of assistance and insurance. Certain complexities and rigid structures with existing social welfare regulations can yield a disincentive to work. These inconsistencies around the rules for different supports and the uncertainties (perceived as well as actual) around the retention of key secondary supports can reduce labour market participation.

Today, the permanent, full-time model of work is being increasingly broadened to include less traditional or atypical work and portfolio careers. With an ageing population, the number of working carers is set to grow and without appropriate supports these workers may be lost from the workforce or forced to reduce their engagement. The cost of childcare too, despite investment, still excludes many of the “squeezed middle” from affordable quality childcare impacting on individuals, predominantly females, ability to participate in the labour market. Modern social insurance and social welfare systems must enable employers and employees to harness the opportunities in a changing world of work and contribute to economic and social progress.

We are in a dynamic business environment with rapid technological progress and changing market conditions requiring employers to be able to flexibly respond to changes and manage their workforce. AI, digitalisation and the green transition will see job roles become redefined or extinct and emerging job opportunities will require new and different skillsets. An ability to harness innovation, create new jobs rather than preserving those that have become obsolete, while supporting employers and employees to adapt to market changes through employment and income security, is core to economic and societal success and remaining competitive on a national and global stage.

 What measures business wants to see in the Programme for Government.

• A commitment to build on the strengths of the public employment service and education and training systems to ensure an agile response to the changing needs of the labour market.
• A commitment to update the structure of the social welfare system to reflect labour market and societal changes (the diversity and complexity of work patterns, secondary benefits and their interplay is not fully reflected or integrated into the existing systems in terms of investment in supports, benefits or contributions)
• A commitment to evaluate existing social protection schemes and their interaction with the labour market, as well as the transparency of PRSI contributions and the schemes that they fund.
• A commitment to a model of flexicurity through the Labour Employer Economic Forum (LEEF) process. This more managed system of social insurance and social welfare would provide Ireland with a system that supports competitiveness, flexibility and economic growth while equipping people with the skills and competencies to participate fully in a dynamic labour market. It would also support the provision of a necessary safety net for individuals at different life stages while retaining a jobs-led focus.
• A commitment to fund care at all ages and circumstances in order to best support the economy, including childcare, the availability of home support hours and packages, and a statutory home scheme to finance home care akin to Fair Deal.
• A commitment to address supports for carers including the delivery of a fully funded carers guarantee with a core basket of services like emergency respite care, training and crisis support which requires increased funding and coordination to improve access.