Enhancing activation policies. The employment rate remains low, in particular among the less-well educated, which should be addressed by effective labour market programmes.
Actions taken: SOLAS – the agency in charge of Further Education and Training – has been strengthening training programmes along with the Further Education and Training Strategy 2014‑2019, with a focus on providing fundamental skills to hard-to-place unemployed people. The agency is developing the Programme and Learner Support System, which will collect data on the beneficiaries in order to monitor how they progress after the programme.
Recommendations: Continue the strategy of profiling unemployed people and of evaluating programmes. Increase resources to the programmes that are found to be effective, making full use of the new information system for training programmes. Enforce the obligations of the unemployed effectively, by defining more specifically the wage and contract types of the suitable job offer the beneficiaries have to accept.
Reform the tax and welfare system. The share of low-income households remaining inactive is high, due to the high average effective tax rates and high childcare costs. Addressing some aspects of Ireland’s tax system which both narrow the tax base and distort the efficient allocation of resources would improve public finances.
Actions taken: The Housing Assistance Payment (HAP) was expanded in early 2017, allowing the beneficiaries to work full-time and to keep their housing support. Marginal tax rates for low-paid workers were somewhat alleviated by reducing the Universal Social Charge – an income levy funding the social security system – over the past two years.
Recommendations: Make all social benefits conditional on earnings, not employment status, and withdraw them more gradually as earnings rise. Ensure the introduction of the Single Affordable Childcare Scheme. Reduce the number of VAT rates. Reassess property values more regularly for the purposes of calculating local property tax.
Strengthen competition in non-manufacturing sectors. Competition in some service sectors including utilities, transport, the legal profession and ports remains relatively weak, hindering the growth of young and innovative firms.
Actions taken: A number of actions to enhance competition prescribed in the 2015 Legal Services Regulations Act were adopted in 2018, such as the introduction of limited liability partnerships.
Recommendations: Improve competition among the legal professions, including through the creation of multi-disciplinary practices and the introduction of the profession of conveyancer. Shorten lease periods for port terminal operators and issue more stevedoring licences.
Enhance R&D spending and innovation. Research and development capacity of local firms is weak, reducing their ability to innovate and hampering the diffusion of new technologies. Public support for business research and development is heavily skewed towards tax incentives.
Actions taken: A number of actions in Innovation 2020, including public investment programmes to support enterprise R&D, have been initiated since its launch in December 2015 and continue to progress.
Recommendations: Rebalance innovation support toward direct grants. Continue the strategy of building up fewer, larger academic research centres, and ensure strong linkages with firms, including MNEs.
Reduce barriers to entrepreneurship. Entrepreneurial activity, as measured by entry and exit rates, is low. The regulation of licence and permits required to start and operate a business is relatively restrictive, while costs of business failure are high.
Actions taken: The Integrated Licence Application Service (ILAS), launched in early 2016, has been developed, enabling businesses to apply for, renew and pay for licences provided through this on-line system.
Recommendations: Reduce the administrative burden to obtain permits and licences for start-ups by fully developing the ILAS, including achieving a full up-take. Reduce the price of construction permits and registration of property charged by the relevant authorities. Introduce guidelines for banks that specify circumstances under which personal guarantees from business owners should not be sought.
