Date Uploaded: 04/04/2017
Ireland can respond to the uncertainty created by the changing international economic environment by pursuing a “skills incentivisation strategy” that develops school leavers into the most highly-skilled graduate workforce on the planet.
A successful strategy would result in more students enrolling on programmes relevant to addressing identified skills shortages.
Students would need better information about designated programmes associated with skills shortages and incentives to undertake such programmes.
Change often brings fear. Brexit coupled with President Trump’s election has created uncertainty for Ireland’s economy.
Successive Irish governments have prioritised maintaining our competitive advantage, over international rivals, through a corporate tax rate of 12.5 per cent.
Keeping that advantage is out of our hands. We cannot prevent other countries reducing their corporate tax rates. There are warning signs that Britain and the US might lower their headline rates. With fresh memories of a harsh recession, it would be prudent to plan for a world where Ireland no longer has a corporate tax rate advantage.
Currently Ireland is experiencing skills shortages in certain disciplines. There are simply not enough qualified graduates in several disciplines to fill all the jobs available.
This situation has occurred because not enough school leavers choose key programmes to study at third-level.
In order for Ireland to start to have a graduate workforce with an appropriate skills mix, five years from now, school leavers would need to apply for designated programmes, associated with recognised skills shortages, when selecting their course preferences.
Information is power. Ireland has a mechanism for identifying skills shortages. The National Skills Bulletin is a report published by Solas for the Expert Group on Future Skills Needs. A component of the bulletin identifies the disciplines in which skills shortages are occurring. The information provided should be invaluable to any school leaver choosing their college programme and potential career path.
But how many school leavers actually read it when making their college choices?
In reality, probably very few but this can be swiftly solved in a cost-effective manner, through the publication of a user-friendly information booklet based on the bulletin’s content.
Every Leaving Cert student in the country could receive an information booklet annually. An associated student project could identify the third-level programmes that optimise an individual’s employment and career prospects.
Incentives work. The 12.5 per cent corporate tax rate is an incentive to promote foreign direct investment in Ireland. People respond to incentives. We could provide incentives for school leavers to undertake designated programmes. Through pricing innovation, we could reduce fees on some programmes and increase fees on others depending on the economy’s needs.
By way of example: programmes associated with skills shortages might cost €2,750 per year, while programmes associated without skills shortages could cost €3,250.
A potential second incentive could be an educational future tax credit which is effectively a promise of future tax credits for graduates who enrol on designated third-level programmes in disciplines with skills shortages.
These tax credits could be availed of for a number of years after graduation. One potential model might result in graduates from designated programmes, employed in the State, receiving a generous tax credit for 10 years after graduating. This measure would have no impact on the current government’s remaining budgets.
The impact of better information combined with incentives would influence individual choice and result in an increased number of graduates with crucial skills. Skills the country needs to attract foreign direct investment leading to greater levels of employment, higher incomes and higher tax revenues for the State.
Thankfully, high participation rates in a well-established third-level infrastructure, is a solid foundation on which to develop a “skills incentivisation strategy”.
Progress has been made at policy level through strategies and investment. Interventions such as Springboard demonstrated how upskilling individuals in a targeted manner can bring people back into employment.
Education is and always should be more than just training people for employment.
Developing independent and autonomous learners, with high levels of critical thinking, must remain core to education provision but need not be incompatible with building a highly-skilled nation.
Any incentivisation strategy must build in safeguards to avoid students enrolling on programmes they are not suited to.
Where change brings fear, contingency can bring hope. Implementing the globally most proactive “skills incentivisation strategy” can insulate our economy in the event of losing our competitive corporate tax rate advantage.
With a potential economic winter of international protectionism on the horizon, it is time to get insulated.
* Owen Ross is head of department of business and management at Athlone Institute of Technology
Journalist: Owen Ross