Enterprise, Trade and Employment | Identifying the causes of price increases likely to impact on employment or employment prospects
To ask the Minister for Enterprise; Trade and Employment the extent to which efforts continue to be made to identify the causes of price increases likely to impact on employment or employment prospects, with a view to ongoing remediation; and if he will make a statement on the matter.
Price movements are primarily measured through the Consumer Price Index (CPI) and the Wholesale Price Index (WPI) published by Ireland’s national statistical office, the Central Statistics Office (CSO). My Department actively monitors price developments through these price indices and regularly engages with the CSO.
A combination of issues was responsible for the initial rise in prices since mid -2021, including the rapid recovery in the domestic economy following the COVID-19 shock, international supply chain bottlenecks partly related to China’s zero COVID policy stance, and base effects relating to weak price trends in 2020.
The Russian invasion of Ukraine has led to a further pick-up in the rate of inflation. These geopolitical events have put exceptional upward pressure on gas and oil prices, and in turn electricity prices. These rising energy prices have been largely responsible for the rise in overall inflation (headline inflation) since early 2022, and this has spilled over to core inflation (headline inflation minus energy prices) in more recent months. High rates of inflation place a burden on households and businesses, but to date there appears to be a limited impact on employment. According to the Central Statistics Office, employment levels reached 2.55 million in Q3 2022. We now have more people employed in our country than ever before, while the monthly unemployment rate stands at just 4.4%.
I know that overall levels of employment do not reflect the lived experience for all businesses and workers, however. Some businesses are still struggling, especially with increased costs, and we will continue to help through our support schemes, including those announced in Budget 2023 and the additional measures announced yesterday.
The Government has been proactive by putting in place measures to cushion the fallout from higher rates of inflation over the past 18 months. Budget 2023 contained a number of measures aimed at assisting businesses with rising costs. The main programme introduced by Government to alleviate cost pressures for enterprises was the €1.25 billion Temporary Business Energy Support Scheme. In yesterday’s announcement, the TBESS scheme was extended, to 31 May 2023, and enhanced, including by reducing the threshold for qualification from a 50% increase in electricity or gas costs to 30% increase (to apply retrospectively from 1 September last year), and by increasing from 1 March 2023 the level of relief from 40% to 50% of eligible costs, subject to a monthly limit.
Alongside the Temporary Business Energy Support Scheme there has been a reduced rate of VAT on gas and electricity from 13.5% to 9% extended until the 28 February 2023. A phased restoration of the rates of excise on petrol, diesel and marked gas oil will take place in three stages over the coming eight months which will also cushion businesses from a sudden increase in fuel prices. Through supporting businesses in meeting energy costs, this scheme will help protect the jobs of those working in impacted sectors.
The Government continues to offer supports to firms improving their energy efficiency, helping businesses reduce the amount of energy they use in the first place and improving take-up of the approximately 20 existing schemes that are in place for business to help them reduce their energy costs. These include the Green4Micro programme and the Climate Toolkit for Business. Additionally, small businesses can receive an energy audit voucher from SEAI to get professional advice on how to increase efficiency and reduce their costs. Other financial assistance includes the SEAI Community Grant and grants for microgeneration.
The Department of Enterprise, Trade and Employment is also working closely with the Department of Social Protection in implementing Pathways to Work, the national employment strategy, and with it the labour market activation of the unemployed, groups underrepresented in the workforce, and workers transitioning to more viable roles or sectors across the economy.
This is particularly important in the context of rising inflation, but also the dual digital and green transitions, which are providing substantial employment opportunities across Ireland. The Government continues to provide thousands of additional re-skilling and upskilling opportunities, as set out in the Economic Recovery Plan, in order to build a highly skilled workforce that serves the needs of the economy.
The Government will continue to keep price increases, including energy costs, under review and will be prepared to support enterprise should the need arise.
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