40 ways to improve Ireland this Lent (#1- Get Ireland Back to Work)

The Lenten challenge - 40 ways to improve Ireland today with evidence from our leading economists, business people and politicians

#1 - Get Ireland Back to Work

The Problem: 2011 will be the fourth consecutive year of declining employment. By the end of 2011, 300,000 jobs will have been lost since 2007. There are currently over 440,000 people on the live register. This does not include those who are unentitled to benefits, or those who have left the country to find work abroad. Experts predict that 100,000 more will emigrate over the next two years. 35% of those on the live register are there for more than one year. FAS and other government training and employment services are at breaking point, and have collapsed completely in some areas.

The knock on affect of mass unemployment is far reaching. Emigration is having an adverse effect on every community in Ireland today, particularly rural communities. GAA clubs report that they may not be able to field teams in the coming season due to the rapid and devastating rate of emigration. If young people continue to leave at this rate, who will pay the taxes that cover vital services like health, education and the Old Age Pension in a few years? Retail sales remain in decline as disposable income disappears from the common Irish family home. The domestic economy, which accounts for 80% of the economy, continues to contract. Morgan Kelly, the famous Irish economist, has predicted that we are now entering a new period of economic collapse caused by a severe mortgage crisis. Anti Social behaviour is reaching epidemic proportions in many areas. All of these things can be directly linked to the lack of employment in Ireland.

The Solution: A massive job creation stimulus plan must be put into action immediately. Its is a simple scenario. The creation of jobs will get people back working and earning, which in turn will get them back spending. Government spending on benefits will go down, while government intake will go up as income tax figures increase. The local economy will be boosted by the return of disposable income. New business will open and new employment will be created.

To encourage people to return to employment, particularly self employment, changes to the tax system are needed. Sinn Féin have suggested that people who plan to set up their own business in future should have the option of choosing to pay tax at a PAYE rate rather than PRSI. This will enable them to claim benefits much easier if their business collapses. Fine Gael have suggested cutting employers PRSI altogether.

All of the political parties which contested the last election claimed that job creation would be one of their number one priorities if put into power. It must be the number one priority of the next government. Money which has been earmarked for "recapitalisation" of the banks must be used instead to fund a mass jobs programme. Unemployed construction workers could be put to work building essential infrastructure such as new roads, bridges, health centres and schools. According to information supplied in Sinn Féins pre election manifesto, €24 million is spent by the state every year renting pre fab buildings for our schools. These pre fabs are unsuitable, and the state could now take this opportunity to get rid of them and other inadequate public buildings by putting our unemployed to work on replacement ones. The knock on effect of this would be massive as many other sectors are directly linked to construction related enterprises.

The smart economy can now be developed by using this period of mass unemployment to retrain people in IT. Cloud Computing is a current buzz word, but the development of this sector could lead to the creation of thousands of new jobs.

The continued development of "Green" jobs began by the last regime should continue, and again, training positions for these sectors should be made available to the unemployed.

David McWilliams has come up with a unique plan to turn Ireland into the Silicon Valley of Europe. He suggests doing a deal with U.S. Multinationals, who currently have over $800 billion on deposit in the IFSC as a result of the amazing success of the multinationals repatriating their profits to Ireland to avail of the 12pc corporate tax rate. But if they want to redistribute these profits to their shareholders they have to pay American corporation tax of 39pc. To avoid this, they just keep all this cash on deposit at the IFSC. McWilliams suggests offering these multinationals a tax incentive in order to invest some of this $800 billion into the Irish economy and use it to set up new companies to employ out of work Irish. Over a period of ten years these companies could be built up, and then floated on the stock market at the benefit of both sides.