Annex. Progress in structural reform

Improve the structural fiscal balance by greater than 0.5% of GDP per annum until it reaches balance. Allow the automatic stabilisers to work around this path.

Ireland has made a structural improvement of at least 0.5% of GDP since 2015 and is projected to achieve the Medium Term Budgetary Objective of a balanced budget in structural terms in 2018 (defined as a structural deficit of 0.5% of GDP).

Broaden and protect the tax base by shifting the burden of taxation to immovable assets, reducing allowances for capital income and continue aligning the corporate income tax system, including its transfer pricing rules, with recommendations from the OECD/G20 BEPS project.

The OECD BEPS reports were adopted in October 2015 and Ireland was among the first countries to implement measures on country-by-country reporting and on patent boxes. Ireland has also signed up to the EU Anti-Tax Avoidance Directive and a public consultation is currently underway on the implementation of remaining BEPS measures following the publication of the Review of Ireland’s Corporation Tax Code in 2017.

Step up efforts to develop and implement a more agile, relevant, and gender inclusive apprenticeship system. Ensure that students receive information on education options after schooling, notably vocational and technical options.

Ireland has a major expansion and reform of its apprenticeship system underway. Through public calls for proposals, 11 apprenticeships in a range of new enterprise sector and a range of durations and levels of the European Qualifications Framework (EQF) have been established – targets are set out in our Action Plan to Expand Apprenticeship and Traineeship 2016-2020. A review of career guidance will begin shortly, which will include examining how information on the full range of post-school options is delivered. A review of routes to apprenticeship, including female participation, is also underway.

Provide additional support to disadvantaged schools, for example by attracting better teachers and providing additional tutoring to students

In 2015 Ireland conducted a full review of its educational disadvantage programme which led to the launch of the Delivering Equality Of Opportunity In Schools (DEIS) Plan 2017. This plan is the Government’s main policy initiative to tackle educational disadvantage at school level. It has over 100 actions focused on achieving 5 key goals including a better system of identifying those in need of additional educational support; improving learning outcomes for those in disadvantaged areas; improving the capacity of leaders and teachers in disadvantaged schools; supporting inter-agency collaboration, and supporting schools through improved research, evaluation and feedback. 79 additional schools were included in the programme in 2017 expanding the number of schools receiving additional support to 902 overall.

Upskill long-term unemployed by improving both the quantity and quality of training via public employment services or via private providers

One of the key objectives of the National Skills Strategy 2025, launched in 2016, is to focus on active inclusion to support participation in education and training and the labour market.

Targets have been set and achieved for long-term unemployed on Further Education and Training (FET) programmes. However, with a significant reduction in the number of unemployed people over the past few years, demand for provision has reduced. Investment has been re-prioritised to support provision for people in employment, with increased investment in the apprenticeship programme and the “Skillnets” programme.

Fully enforce the obligations of the unemployed and improve the enforcement framework by defining more objectively the suitable job offer that the benefit recipient has to accept in terms of wages and contract types.

No action taken

To reduce welfare traps, more gradually reduce housing assistance payments and family income supplement as income increases.

Poverty traps within the Family Income Supplement have been reduced and its effectiveness has improved over time through a combination of a fall in the withdrawal rate, a switch in the assessment from gross to net earnings, reductions in the minimum hours requirement and increases in the earnings thresholds. In Budget 2018 the income thresholds for families with one, two and three children were increased.

Continue to improve the evaluation of training and activation programmes. Scale-up those that are effective in helping people to return to the open labour market. Shut-down the ones that are not.

A review of the Back to Work Enterprise Allowance (BTWEA) was published in February 2017. New operational guidelines relating to BTWEA were introduced during 2017 incorporating the findings of the BTWEA Review.

A Focused Policy Assessment (FPA) of the JobsPlus Scheme was completed during 2017. Following on from the findings of the FPA, changes targeting older Jobseekers are being introduced from 1st January 2018. In particular, jobseekers aged over 50 years will qualify for the higher grant rate (EUR 10 000) when 12 months or longer on the Live Register and the qualifying period for receipt of the higher grant for jobseekers under 50 years has been increased from 24 to 36 months.

A counterfactual evaluation of the JobsPlus Scheme is underway.

An internal review of the AFSP has commenced and new operational guidelines will be introduced following the completion of the internal review.

To ensure that FET provision is planned and provided on the basis of social and economic impact, a series of independent evaluations of the full-tie and employment focused FET programmes are scheduled to take place over the life of the FET Strategy 2014-19.

Every two years SOLAS commissions an independent assessment/survey of its training programme. This is to establish what happens following training participation and to gather an accurate assessment of the number of job placements arising from these programmes, the type and relevance of employment to the training course, engagement in further studying and upskilling, as well as incidence of unemployment. The surveys will be extended to include further education as well as training the next time the survey is undertaken.

Evaluate the effects of tightened conditionality in place since 2012 on the recipient’s commitments to active job search and re-employment prospects.

An econometric evaluation by the Economic and Social Research Institute of the impact of reforms to the employment and income support system has been commissioned. A report should be available early in 2018.

To increase the incentive to work for the low-paid, smooth the increase in marginal effective tax rates by introducing a third income tax bracket and more gradually increasing universal social charge and pay-related social insurance rates.

The three lower rates of the universal social charge have been reduced, targeting increases to after-tax income at low to middle income earners.

From January 2016, a new pay-related social insurance (PRSI) credit was introduced which positively impacts low-paid workers by reducing the amount of their PRSI charge.

Consider further reducing tax allowances for capital income from lump sum pension payments.

The Government intends to publish and commence the implementation of a 5 year pension reform plan in the near future. The taxation aspects of supplementary pension arrangements will be examined as part of this process.

Increase the local property tax rate and simultaneously introduce a low-income waiver to protect poorer households.

A review of the Local Property Tax (LPT) was conducted during 2015 to consider and make recommendations on its operation, in particular any impacts on LPT liabilities due to property price developments. The central recommendation of the review report was for a revised system whereby a minimum level of LPT revenues in each local authority area would be determined by Government. This in turn would allow for the estimation of LPT rates for each local authority area. Local authorities could adjust this rate upwards by a factor of up to 15%.

A further review of the LPT will be undertaken during 2018.

Eliminate reduced VAT rates for restaurant meals and accommodation.

No action taken. However, the Minister has committed to carrying out a detailed economic analysis of the 9% reduced VAT rate in the first half of 2018.

Monitor regularly the effects of the minimum wage on employment patterns and adjust where necessary to ensure the low-skilled are not priced out of the labour market.

The Low Pay Commission was established by statute in July 2015. The principal remit of the Commission is to make a recommendation each year on the appropriate rate of the National Minimum Wage (NMW). The Commission takes an evidence-based approach, and the legislation sets down specific criteria which must be considered, including changes and impacts on employment and unemployment. The Commission has made three recommendations on the NMW since its establishment, all of which have been accepted by Government.

Adopt institutional investor’s codes to ensure alignment of incentives and to take an active long-term interest in the company.

The European Union has adopted a revised Shareholders Rights Directive. (Directive 2017/828 /EU of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement). The Directive must be transposed into national law by 10 June 2019.

The financial crisis revealed that shareholders in many cases supported managers' excessive short term risk taking. The revised Directive is intended to redress this situation and contribute to the sustainability of companies, which will result in growth and job creation.

The revised Directive establishes specific requirements in order to encourage shareholder long-term engagement and increase transparency. These requirements apply to:

remuneration of directors;

identification of shareholders;

facilitation of the exercise of shareholders’ rights;

transmission of information;

transparency of institutional investors, asset managers and proxy advisors; and

related party transactions.

The Department of Business, Enterprise and Innovation has launched a public consultation, on the implementation of the Directive, on its website.

Together with social partners foster a strong business sector focus on building human capital through job training and career management.

A network of nine Regional Skills Fora has been created as a mechanism for employers and the further and higher education and training system to work together in responding to the skills needs of their regions. Key objectives are to help employers better understand and access the full range of services available across the education and training system, to have more informed dialogue with employers to inform programme planning and to improve links between education and training providers in planning and delivering programmes, reduce duplication and inform national funding decisions.

Rebalance innovation support towards direct grants.

Innovation 2020, Ireland’s cross Government Strategy for Research and Development, Science and Technology, was launched in December 2015. Contained within the strategy are a number of actions aimed towards increasing public investment in programmes to support enterprise R&D.

Enterprise Ireland (EI) is broadening the scope of its direct in-company research, development and innovation (RDI) support for new sectors such as horticulture; business and services innovation and innovation-led pre-commercial procurement.

Make better use of international students as a channel for high-skill immigration by increasing post-graduation job search periods and exempting graduates from employment permit fees in highly demanded areas where there are significant skills shortages.

The Third Level Graduate Programme administered by the Department of Justice and Equality has been recently adjusted to allow Irish educated non-EEA graduates a longer period post-graduation to secure suitable employment in the State.

The employment permits system already makes concessions for graduates to ease their entry into the Irish labour force (e.g. a lower remuneration threshold on offers of employment for certain categories of graduates from outside the European Economic Area). A further comprehensive evaluation of the employment permit fees structure will be conducted in 2018 and will consider a broad range of factors.

Develop a stronger whole-of-government productivity agenda. Consider expanding the remit of the National Competitiveness Council into a more productivity-focused body.

The Government’s Enterprise 2025 strategy, published in 2016, sets out a range of cross sectoral initiatives across Government designed to support enterprise sector productivity. A key objective of the strategy is to deliver 2%-2.5% productivity growth over the medium term.

The Department of Finance has established a dedicated productivity unit.

In 2017, the National Competitiveness Council published a report Benchmarking Ireland’s Productivity Performance relative to other countries and the performance of individual sectors within Ireland.

Ireland joined the OECD Global Forum on Productivity in 2016. The Secretariat to the National Competitiveness Council and the Department of Finance Productivity Unit participate in the work of the Forum.

Subject to Government approval, the National Competitiveness Council will in 2018 undertake the role of National Competitiveness and Productivity Board in line with the European Commission’s recommendation on the establishment of National Competitiveness Boards within the Euro Area.

Increase investment to improve water quality and reduce leakages.

In 2015, Irish Water published its business plan to 2021 which includes a EUR 5.5 billion capital investment programme both to continue improvements in compliance with drinking water supply and wastewater discharge regulations and to expand capacity to meet economic growth needs.

Increase support to improve the energy efficiency of housing, especially for low-income households.

Annual funding for residential energy efficiency programmes has increased from EUR 46m in 2015 to an allocation of EUR 84m in 2018 for the Better Energy programmes, the Warmth and Wellbeing pilot and the Deep Retrofit pilot. The Better Energy Warmer Homes scheme delivers energy efficiency measures free of charge to low-income households. The Warmth and Wellbeing pilot introduced in 2016 provides deep energy efficiency interventions to people living with chronic respiratory conditions who are in or at risk of energy poverty. Introduced in 2017, the Deep Retrofit pilot aims to determine how best deeper energy retrofits can be achieved in the residential sector. 21 679 homes were grant aided in 2015 and 24 093 in 2016. 25 300 are expected by end of 2017. It is expected that 28 500 will be aided in 2018, including 9 000 low-income households.

Consider scrapping the Special Assignee Relief Programme, granting tax rebates to multinational executives. Instead, provide tax deductions for relocation expenses incurred when workers move to Ireland.

No action taken

Step up targeted language training to adult migrants.

The Education and Training Boards nationally provide ESOL (English for Speakers of Other Languages) training for migrant and new community members in Ireland. This programme is available for unemployed migrants and asylum seekers and priority is given to those in need of basic English language skills to a level of functional competency.

Under Further Education and Training (FET), provision is made within the ESOL (2017 provision planned for 14 000+ places) and as part of the Refugee Resettlement programme (2017 provision planned for 1 000+ places). In 2016, there was an increase of around 100 places in the ESOL learning programme compared with the previous year.

To guarantee clear-cut access to social assistance by immigrants, establish a clearer definition of “habitual residence” and avoid ambiguous criteria such as “burden on the state”.

Action 21 of the National Migrant Integration Plan (launched in 2017) commits the Department of Social Protection (DSP) to continue ensuring the habitual residence condition (HRC) legislation is applied correctly and consistently. Specific measures include:

• Providing and regularly updating guidelines for decision makers within DSP;

• Publishing these guidelines on the website;

• Provision of training in HRC for relevant decision makers;

Establish bilateral social security agreements with non-EU countries from which Ireland has received significant immigration.

No action taken

Provide students with foreign language backgrounds English language support.

At both primary and post-primary levels, additional language support is provided to schools for students who do not speak English as their first language. English as an Additional Language (EAL) resources are designed to allow individual students to participate in mainstream education on a par with their peers.

Improve information available in official statistics concerning immigrant’s country of origin and ethnicity.

Action 8 of the National Migrant Integration Plan (launched in 2017) commits to establishing a working group to identify and address data gaps.

Step up efforts to check the compliance with existing quality standards for rental accommodation.

Updated and improved guidelines for Local Authority inspection and enforcement of rental accommodation have been published.

Simplify rental contract legislation.

No action taken

Increase the use of IT in employment permits processes and of simplified trust-based schemes. Pass the savings on to lower permit fees.

A number of initiatives have been taken to introduce efficiencies into the processing system. These include the introduction of the Trusted Partner Initiative in May 2015, the removal of pre-check and introduction of processing streamlining initiatives in October 2015, the introduction of the Online Status Enquiry Facility in February 2016 and the introduction of the Employment Permit Online System (EPOS) in September 2016.

Ensure that salary thresholds do not act as a barrier for recent graduates. Establish differentiated thresholds for recent graduates in case they do.

The employment permits system makes concessions for graduates to ease their entry into the Irish labour force e.g. reduced remuneration threshold. A further comprehensive evaluation of employment permit fees structure will be conducted in 2018.

Expand the availability of non-denominational school options and of international baccalaureate programs.

New plans were announced by the government in 2017 aimed at providing more multi-denominational and non-denominational schools across the country. The government is aiming to reach 400 non-denominational and multi-denominational schools by 2030. Transfers of existing schools from religious patronage will be required to hit this target.

Encourage and facilitate that SMEs make use of trusted-based schemes.

No action taken

Increase efforts to gather information on Irish emigrants on a more consistent manner.

In 2017 the Department of Foreign Affairs and Trade has progressed significant work to assist returning Irish emigrants and facilitate a smooth return to Ireland. This included an information gathering exercise to identify the issues of most importance to our emigrants. In addition, progress has been made in relation to voting rights in presidential elections for citizens outside the State. The Government has decided that a referendum will be held on extending voting rights to Irish citizens outside the State for Presidential elections.

Use the National Framework Qualifications for the recognition of professional qualifications gained abroad.

The National Academic Recognition Information Centre (NARIC) Ireland issues advice on foreign qualifications with reference to the National Framework of Qualifications (NFQ). The NFQ level and comparable award type is provided where possible. NARIC advice is used by authorities to inform the recognition of professional qualifications gained abroad. Since 2015 there has been ongoing promotion of the NARIC service to qualification recognition bodies.