ANALYSIS:A job protection and creation initiative will be at the core of any economic recovery deal, writes MARTIN WALL.

IF, AS now seems likely, there is to be a final set of talks between the Government and social partners aimed at securing a national economic recovery deal, the issue of a comprehensive job protection and creation initiative will be at its core.

However, the exact nature of such a measure would appear to be open to determination by the social partners in any forthcoming negotiations.

Taoiseach Brian Cowen, in a letter on Wednesday to the Irish Congress of Trade Unions (Ictu), gave voice to suggestions that have been floating around in Government circles for some weeks – as reported in The Irish Times earlier this month – that money which otherwise would have been spent on social welfare payments could be used to finance such a new intervention to protect employment. Mr Cowen specifically did not put a figure on the amount to be allocated under such a new initiative, merely noting that Ictu had sought a State investment of €1 billion for a job creation and retention programme – a move broadly backed by the employers’ group Ibec.

Neither did he spell out how any new initiative would work.

Informed sources said yesterday that while the Government had some ideas of its own about a new jobs initiative, it was not being prescriptive and would leave it open for the talks with the social partners to design a model for Ireland.

However, one proposal for keeping people in work with the help of State financial support has been on the table in the social partnership process for some time. Ictu has been proposing that the Government look at adopting a Danish employment model known as “flexicurity”. This involves a combination of flexibility to change on the part of the worker with security of income.

This system works by guaranteeing redundant workers up to 90 per cent of their wages provided they retrain for another job. Ictu has acknowledged that the flexicurity model would have to be adapted to meet Irish conditions. However, it has contended that it would allow people to remain in employment while equipping them for other jobs.

For employers, such a scheme would allow them to temporarily reduce their labour costs while keeping workers on the payroll and protecting salaries.

Ibec, in a pre-budget submission in April, called for a reallocation of €1 billion from the NDP to a programme to support employment.

Its director general, Turlough O’Sullivan, has said that both unions and employers were singing from the same hymn sheet on the issue of job protection measures.

However, one source close to Government said any new employment protection scheme could not just involve borrowing €1 billion to shore up unviable jobs.

In addition to the social welfare funding idea, it is understood the Government could also propose reviewing existing expenditure on job training measures, such as those put in place by the State training agency Fás.

One informed source said that current projects could be evaluated to see if they could be “tweaked” in the current climate and to determine if they provided value for money.

Any new initiative would also have to fit in with the €100 million enterprise stability fund announced by the Government in the budget.

The social welfare funding proposal floated by Mr Cowen, however, has attracted the most attention but it could pose some problems, particularly in relation to competition and State-aid concerns.

In his letter to Ictu, the Taoiseach said: “The Government intend to put in place new approaches to intervening and to apply resources which would otherwise be required for social welfare payments to interventions that are worthwhile, targeted and effective and which address the constraints which inevitably arise in order to ensure effectiveness and to meet the relevant regulatory requirements.”

It is this obligation to meet regulatory requirements that could cause some difficulties in designing a new scheme.

The provision of “social welfare” funding to a company to offset threatened redundancies and to keep workers in their jobs could be viewed as a State subsidy and could lead to complaints from competitors.

In his letter the Taoiseach also said that “we need to be imaginative and to break new ground” by intervening to sustain jobs.

One source close to Government said the challenge now would be for the social partners to elaborate on their various proposals and put together a scheme suitable for Irish needs.