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NESC Strategy 2006: People, Productivity and Purpose no. 114 december 2005 NESC Strategy 2006: People, Productivity and Purpose December 2005 Published by the National Economic and Social Council Copies of this Report may be obtained from The National Economic and Social Council, 16 Parnell Square, Dublin 1 or the Government Publications Sales Office, Sun Alliance House, Molesworth Street, Dublin 2 Price: c15.00 Students: c5.00 Pn. A5/1971 ISBN: 0755773624 ii Membership of the National Economic and Social Council Chairperson Nominated by Business Nominated by Community and Employers Organisations: and Voluntary Organisations Mr. Dermot McCarthy Secretary General, Ms. Aileen O’Donoghue Fr. Sean Healy Department of the Taoiseach and IBEC CORI Secretary to the Government Mr. Brian Geoghegan* Mr. Dónall Geoghegan IBEC NYCI Deputy Chairperson Mr. Liam Kelleher Ms. Deirdre Garvey Ms. Mary Doyle CIF The Wheel Assistant Secretary, Department of the Taoiseach Mr. Brendan Butler Mr. John Mark McCafferty IBEC SVP Government Nominees Mr. John Dunne Mr. John Dolan Dr. Sean Barrett CCI DFI Professor Brigid Laffan Nominated by the Irish Secretariat Professor John Fitzgerald Congress of Trade Unions Dr. Rory O’ Donnell Professor Eithne McLaughlin Mr. Dave Begg Director ICTU Dr. Peter Bacon Mr. Noel Cahill Mr. Tom Considine Ms. Sally Anne Kinahan Economist Secretary General, ICTU Mr. Bill Thompson Department of Finance Mr. Manus O’ Riordan Served as an Economist Mr. Sean Gorman SIPTU in the Secretariat until Secretary General, Mr. Peter McLoone August, 2005 Department of Enterprise, IMPACT Dr. John Sweeney Trade and Employment Mr. Jack O’Connor Economist Mr. Brendan Tuohy SIPTU Mr. Jarlath McKee Secretary General, Social Policy Analyst Department of Communications, Nominated by agricultural and Ms. Jill Matthews Marine and Natural Resources farming organisations Served as a Social Policy Mr. John Hynes Mr. Seamus O’ Donohue Analyst in the Secretariat Secretary General, ICOS until March, 2005 Department of Social and Family Affairs Mr. Ciaran Dolan Ms. Aoife Halligan ICMSA Served as a Research Mr. Niall Callan Assistant in the Secretariat Secretary General, Department Mr. Damian McDonald until August, 2005 of Environment, Heritage and Macra na Feirme Local Government Mr. Michael Berkery Mr. Diarmuid Torney IFA Served as a Research Assistant in the Secretariat Mr. Con Lucey until August 2005 IFA Ms. Catherine O’Brien Ms. Tracy Curran *Mr. Danny McCoy Ms. Sheila Clarke IBEC, has taken up Mr. Brian Geoghegan’s position, October 2005 Table of Contents Abbreviations vii Preface ix Acknowledgements x Executive Summary xiii Chapter 1 The Economic, Social and Environmental Context 1.1 Introduction 1 1.2 Demographic Trends 1 1.3 Macro Economy, Incomes and Participation 12 1.4 Income Inequality and Poverty 27 1.5 Quality of Life and Social Wellbeing 40 1.6 Spatial Development 50 1.7 The Environment 57 1.8 Conclusions 63 Chapter 2 Vision and Analysis 2.1 Introduction 81 2.2 The NESC Approach to Vision and Visioning 81 2.3 Updating and Enriching Our Account of the Economy 85 2.4 Deepening our Account of Social Policy and Irish Society 92 2.5 Factoring the Environment more fully into our Understanding of Ireland’s Experience and Challenge 105 2.6 A Better Account of Relation between Ireland’s Economic, Social and Environmental Goals 110 iv contents Chapter 3 Key Challenges, Goals and Strategies 3.1 Introduction 115 3.2 Enterprise and Innovation 118 3.3 Training 125 3.4 Migration 133 3.5 Participation and Fairness 143 3.6 Pensions 162 3.7 Infrastructures of Care 165 3.8 Housing and Sustainable Neighbourhoods 174 3.9 Health 177 3.10 Education 185 3.11 Regional and Rural Development 193 3.12 Agriculture 199 3.13 Infrastructure and a New National Development Plan 203 3.14 The Environment 209 3.15 Enabling Voluntary and Community Activity 220 Chapter 4 A Consistent Policy Framework for 2006-2008 4.1 Introduction 235 4.2 A Consistent Policy Framework 235 4.3 The Public Finances 238 4.4 Wage Bargaining 254 Chapter 5 Policy Making, Implementation and Partnership 5.1 Introduction 281 5.2 The Problem: ‘Implementation’ 281 5.3 The Context 282 5.4 Analytical Insights on Policy Making: Negotiated Approaches and Government Authority 287 5.5 Implications for Irish Policy Making, Implementation and Partnership 294 Bibliography 305 Publications 314 contents v List of Tables Table 1.1 Net Migration Flows by Age Group, 1981 – 2002 (‘000) 8 Table 1.2 Population by Place of Birth, 1996 and 2002 9 Table 1.3 Private Households at Census Time, Selected Characteristics 11 Table 1.4 Trend in Average Industrial Earnings and the Minimum Wage 17 Table 1.5 Percentage of Persons below 60 Per Cent of Median Income 27 Table 1.6 Percentage of Persons in Consistent Poverty 29 Table 1.7 Percentage of Persons (Aged 16 and Over) in Consistent Poverty and Below 60 per cent of Median Income by their Principal Economic Status, 2003 29 Table 1.8 Percentage of Persons below 60 per cent of Median Income by Labour Force Status of Household Reference Person 30 Table 1.9 Breakdown of Persons below 60 per cent of Median Income by Labour Force Status of Household Reference Person 31 Table 1.10 Indices of Growth in the CPI, GAIE, After-Tax Earnings and Selected Social Transfers, 1994-2003 32 Table 1.11 Annual Rate of Growth (%) in Equivalised Disposable Income in Real Terms, Ireland and Sweden, Mid-1980s to 2000 33 Table 1.12 Selected Social Welfare Payments relative to 60 per cent of Median Equivalised Disposable Income, 1994 –2003 37 Table 1.13 Redistributive Impact of Budgets 2000-2005 38 Table A1.1 Average Annual Births, Deaths, Natural Increase and Estimated Net Migration for Each Intercensal Period, 1926-2002 65 Table A1.2 Share of Net Migration in Population Change 1996-2002 66 Table A1.3 Annual Percentage Change in GNP, Employment, Productivity and Living Standards 67 Table A1.4 Components of GNP: Annual Percentage Change 67 Table A1.5 Trend in Average Industrial Earnings 68 Table A1.6 The Sectoral Composition of Employment, 2000 and 2005 69 Table A1.7 Nominal Compensation per Employee ((Annual % Change) 70 Table A1.8 Average Weekly Earnings by Sector 71 Table A1.9 Economic Forecasts for 2005 and 2006 72 Table A1.10 Age Distribution of the Population, 1991 – 2002 72 Table A1.11 Level and Percentage Change in Gross Weekly Earnings (nominal), 2000-2004 73 Table A1.12 Minimum Wage as a Percentage of Average Manufacturing Earnings (Gross and Net) 74 Table A1.13 Employment and Unemployment by Region 75 Table A1.14 Percentage of Total Employment by Sector in Each Region 75 Table A1.15 Estimates of 2002 population and changes 1996-2002 for Gateways and Hubs, inclusive of catchment areas 76 vi contents Table 4.1 Age Related Expenditure as a Percentage of GDP 244 Table 4.2 Reasons for increase in the Exchequer Pay and Pensions Bill 256 Table A 4.1 Projection 1 A Balanced Budget 268 Table A 4.2 Projection 2 The Golden Rule 270 Table A 4.3 Projection 3 Intermediate Option, Deficit close to 1 per cent of GDP 272 Table A 4.4 Projection 4 Tax Increase of One Percentage Point of GNP Over 10 Years 274 List of Figures Figure 1.1 Age-specific fertility rates, 1960-2003 3 Figure 1.2 Estimated Annual Out-Migration and In-Migration (’000), 1992-2004 5 Figure 1.3 Natural Increase and Net Migration, Older EEA Countries, 2002-03 6 Figure 1.4 Manufacturing Output: Annual Percentage Change 14 Figure 1.5 Average Annual Days Lost in Industrial Disputes 23 Figure 2.1 Relationship Between Social Capital and Social Institutions and Interactions 113 Figure 3.1 Core Structure of the Developmental Welfare State 144 Figure 3.2 The Life Cycle Approach: A Unifying Perspective 147 Figure 3.3 The Partnership Framework 228 Figure 3.4 Three-way Learning Between Agency-Level, Sectoral-Level and National-Level 231 vii Abbreviations ACR DES EU SILC Annual Department of EU Survey of Income Competitiveness Education and Science and Living Conditions Report DHC FDI AEGI Department of Foreign Direct Adult Education Health and Children Investment Guidance Initiative DJELR FIS AHP Department of Family Income Affordable Homes Justice, Equality Supplement Partnership and Law Reform GAIE A&E DoEHLG Gross Average Accident and Department of Industrial Earnings Emergency Environment, Heritage and Local Government GDA APOCC Greater Dublin Area All-Party Oireachtas DP Committee on the Drugs Payment GDP Constitution Gross Domestic DWS Product BMW Developmental Border, Midland Welfare State GGB and Western General Government ECEC Balance CAP Early Childhood Common Education and Care GHG Agricultural Policy Greenhouse Gas ED C&AG Electoral District GNP Comptroller and Gross National Product Auditor General EDR Environmental GNI CB Dispute Resolution Gross National Income Child Benefit EEA GP CCCC European General Practitioner City and County Economic Area Childcare Committees GVA EIA Gross Value Added CDA Environmental Child Dependant Impact Assessment HALE Allowance Healthy Life EOCP Expectancy CECDE Equal Opportunities Centre for Early Childcare Programme HEI Childhood Higher Educational Development and Care EPA Institution Environmental CIE Protection Agency HICP Coras Iompar Éireann Harmonised Index of ESF Consumer Prices CPI European Social Fund Consumer Price Index HSE ESG Health Service CSO Enterprise Executive Central Statistics Strategy Group Office IBEC ESRI Irish Business and CSPVG Economic and Employers Civil Service Social Research Confederation Performance Institute Verification Group ICT ET Information and DBOF Emissions Trading Communications