1. National Economic Social Council The Irish Economy in the Early 21st Century National Association of Youthreach Coordinators: 15th Annual Conference, Athlone John Sweeney, NESC Secretariat, 25th February, 2009

2. Three theses: • The knowledge-based economy as an inclusive project is (was?) a worthy ideal; 2. Its feasibility is being tested by the ‘perfect economic storm’; • The right set of comprehensive, sequenced, sustained and clearly communicated policies will yet see it materialise ...in an altered but still acceptable form. 1

3. The Knowledge-Based Economy as an Inclusive Project Core elements in the ideal 1. The best (only?) response to Ireland’s changing relative position in the world: ‘In a globalised world, the strength of Ireland’s economy and the attractiveness of its society will rest on the same foundation – the human qualities of the people who participate in them’ (NESC, 2005: xxiii) 2. A new interdependence between economic and social policy: - the successful pursuit of current economic objectives has inherent social implications that will directly serve social justice and a more egalitarian society; - major improvements in social protection ,now required to address people’s needs more effectively, will also prove to be economic assets and contribute directly to “reinventing the economy. 3. No-one need be left out 2

4. Upskilling the workforce The National Skills Strategy: A Social as much as an Economic ‘One Step Up’ 3 12

5. The Perfect Economic Storm A downturn…like no other 4

6. The Perfect Economic Storm A downturn…like no other 4

7. The Employment Barometer 5

8. Planning public services…December 2007 (framing Budget 2008) 6

9. …the difference 10 months made… 6

10. …and another 3 months! 6

11. The Perfect Economic Storm... Ireland’s export-led and increasingly services-orientated economic model benefited hugely (disproportionately?) from the increase in world trade and the boom in financial services. As the world economy slows and the global financial services undergoes major downsizing and radical surgery, Ireland – correspondingly – has more to lose. Its economy is facing ‘a genuine adjustment on a large scale and not just some cyclical adjustment’ (Dumas). ...and key crew members are found wanting Ireland’s banking and financial regulatory system – humbled - and humbling , major reputational damage to Ireland Inc.(‘knowledge is our nature’?!) Lesser but still significant skill deficits among other key crew - poor fiscal management, social partnership not (yet?) ‘seizing the hour’ 7

12. Policies for the way forward The current ‘perfect storm’ has five interacting sub-plots : a banking crisis, an economic crisis, a fiscal crisis, a social crisis and a reputational crisis The national programme for the way forward must, correspondingly, be comprehensive, sequenced, sustained, clearly communicated and credible • The national programme must feature: • the educational system; • training and labour market policies; and • social policies and the welfare state. • Positive interaction between these three areas is core to achieving and sustaining a dynamic, knowledge-based economy and a cohesive and attractive society (NESC 2008, Chapter 6) 8

13. 1. The educational system Past achievements. Current strengths. Yet specific and profound innovations are urgent if people are to meet the future with confidence –in particular ‘at the two ends’ (early childhood, adult learning) Educational success is cumulative 2. Training and labour market policies Motivation (the ‘demonstration effect’), barriers, quality (involvement of employers), content (generic and specific skills), support in work proportionate to support if unemployed 9

14. Social policies and the welfare state • The developmental responsibility of the income relationship – getting ‘activation’ right – the test case of lone parents • Lessons from the Danish model of flexicurity. The virtuous interaction between: • enterprises free to adjust; • generous unemployment benefit for a period; • quality ALMPs; • against the backdrop of a population educated to a high level and with a high propensity to return periodically to education (LLL). 10

15. The Danish Model of ‘Flexicurity’ 11

16. A Postscript The next 5 years will represent a crossroads as the downturn will .....either result in critical shortfalls in public service-quality as lower spending increasingly fails to meet higher public needs and expectations. .....or drive radical transformation across the business of government [In a period of crisis, what was previously unthinkable can become the ‘least bad’ option] ‘The constraints on available resources over the coming period should be utilised to incentivise organisations and individuals to secure greater efficiency' [Transforming Public Services, 2008: 11] 12

17. Thank you