When this Government came to office, we set ourselves three key metrics for success: we would regain control of our public finances, make economic recovery a reality and reform and modernise our politics and public institutions.

These metrics are not abstractions; instead they serve to expand the employment prospects, prosperity and democratic participation of the ordinary people of this country.

And it is only by the sustained creation of jobs that we can enhance their prospects, prosperity and participation.

Three years on, I can report that we are on the right road.

The Troika has checked out for the last time, Ireland has exited the bailout, the economy is growing again and, crucially, we are getting people back to work.

In the year to the end of December, employment increased by 61,000 or 3.3%, to reach just over 1.9m.

Unemployment is down from a crisis peak of 15.1% to 12% now.

And since the very nadir of the economic crisis, almost 70,000 jobs have been created.

The Live Register has fallen on a seasonally adjusted basis for 19 months in a row, and I am confident we will see that hugely positive trend continue when the latest monthly data is published tomorrow.

There are many within this House and outside who were utterly dismissive of this Government’s target to create 100,000 extra jobs by 2016.

I can now say that we are well on the way to achieving and even exceeding that number.

The evidence is there for all to see.

Three years since this Government took office to rescue the country from the worst financial crisis it has ever suffered, Ireland is in a much better place.

We can be confident about the future again.

The crisis is over and the recovery has begun – that was the first phase.

Today, I’d like to speak about the second phase – ensuring that the recovery is felt in every person’s life and in every community across the country.

This means building the recovery from the bottom up and the middle out rather than the top down.

It means a dividend for those who were squeezed most by the crisis.

This means doing our utmost to deliver full employment, fair wages, and an income tax system that gives the hardest-pressed workers – those in the low- and middle-income categories – a break.

I’d now like to deal with each of those issues in turn.

Full employment:

When the financial crisis erupted, it brought with it a devastating impact on jobs.

At one stage, the Live Register looked set to smash 500,000, and some commentators feared Ireland would not see full employment again for decades, if ever.

This Government took a different view.

I introduced the Pathways to Work strategy, and my Cabinet colleague, Richard Bruton, pioneered the Action Plan for Jobs.

The strategies complement the other – to ensure the creation of new jobs and that as many of them as possible go to those on the Live Register.

Pathways represented a sea-change in how the State tackled the issue of unemployment.

As the OECD noted, “labour-market activation policies were relatively weak in Ireland prior to the crisis”.

Put simply, the Department was by and large a passive benefits provider – providing income support to jobseekers but little in the way of concrete employment supports that would help them leave the Live Register.

Through Pathways, we changed this for the better, introducing significant structural reform and transforming the Department into an active and engaged employment service.

We have replaced the dole offices of old with new Intreo centres, one-stop shops where jobseekers get their income and employment supports in the one place for the first time.

Last month, the Taoiseach and I opened the 44th such centre in Castlebar.

The energy in the room from both staff and prospective employers was palpable.

They are united in their determination to get Ireland back to work.

By the end of this year, we will have completed the roll-out of Intreo to all 63 of the Department’s offices nationwide.

In all of this, the buy-in of employers is crucial.

Already, the Department has a range of employer supports and services to help businesses expand and find the right recruits.

We want employers in Ireland to follow the example of their counterparts in countries like Germany and Austria and be willing to give not alone young jobseekers but also long-term unemployed persons work, training and apprenticeship opportunities.

This is why I appointed a Labour Market Council of leading industry and policy experts, featuring representatives from some of Ireland’s biggest employers, to drive implementation of the Pathways strategy.

The Council will help deepen our engagement with business, and advise on what further actions can be taken across Government to increase employment.

The Intreo offices, the Pathways approach and the work we do with employers, are all making a massive difference.

The employment figures prove it.

But a 12.1% unemployment rate is still far too high.

This is why, this year and beyond, my absolute priority will be to ensure that the Live Register falls substantially further, with full employment the central target.

It won’t happen overnight, but I am absolutely confident it will happen faster than anyone could have predicted when this Government took office.

I’m not the only one.

In his column on the employment figures last week, the respected economic commentator Dan O’Brien also pointed out that there was a long way to go, but added:

“If current momentum is maintained, we could return to full employment far sooner than almost anyone would have thought even one year ago.”

Fair wages:

There is another aspect to employer buy-in, and that is recognising what their existing employees have done for them.

I appreciate that businesses endured significantly during the crisis, that the recovery is still a nascent one, and that not every business has yet felt the benefits of it.

But many businesses have – their order books are growing again, their profits are returning to healthy levels, and those businesses must recognise that their employees were crucial to this recovery.

Those employees took pay cuts or pay freezes, they took reductions in hours, and along with their employers, they hung on in.

That solidarity in hard times needs to be recognised as the outlook improves.

As employers see the benefits of the recovery, so too should their employees.

I don’t think it’s unreasonable to say that companies which are prospering again should recognise the contributions of their employees and ensure that they, too, share in that prosperity.

In the same vein, I believe there is scope, as the economy recovers, to examine the introduction of a Living Wage in Ireland.

A Living Wage would be higher than the Minimum Wage, and would provide the income necessary to meet basic needs, including housing and healthcare, on top of items such as food and heating.

In my view, we should consider a gradual phasing-in of a Living Wage, beginning on a voluntary basis – with buy-in from employers.

And much like full employment, a Living Wage would boost tax revenues, reduce the welfare spend, and create the room for additional investment in essential public services.

Reducing the tax burden:

But decent wages are only part of the solution.

We also need to reduce the tax burden on low- and middle-income workers.

IBEC’s Danny McCoy was not wrong when he said that the effective 52% higher tax rate kicks in too early.

It acts as a barrier to people taking on more hours of work and more responsible and better-paid roles.

Just this week, I had the case of a mother-of-four who has gone back to work part-time, 20 hours a week.

When she looked to gradually increase to 25 hours, she found to her dismay that the vast majority of the extra money she was earning was being taken in tax due to hitting the higher rate band.

She will now go back down to 20 hours and the economy will lose the extra wages and productivity that it would otherwise have enjoyed.

A tax system that discourages people like her who want to work from working more, earning more and taking on greater responsibility is a tax system that risks being discredited without radical reform.

But it’s also important to remember that not every family or every worker earns enough to be taxed at the higher rate.

We need to find a way to ease the burden for low-income workers too.

One of the first things this Government did upon taking office was to take 330,000 low-income workers out of the Universal Social Charge net.

When there is sufficient scope to examine the tax burden, I firmly believe we must look further at the USC as well as the marginal tax rate – to ensure that both low- and middle-income workers share in the social dividend.

Such a move would be socially just – enhancing the living standards of those on the lowest incomes.

But it would also be economically sound, for a shared social dividend of this nature would provide a vital stimulus, boosting consumer spending and injecting money into the economy.

A strategic approach to investment:

The recovery would also pick up pace if viable businesses had sufficient credit to expand.

But credit remains constrained, because the banks are still working through the problems caused by the crash, and viable projects are struggling to get off the ground.

Work is ongoing on the establishment of the Strategic Investment Fund, which will utilise the €6.4 billion currently in the National Pension Reserve Fund for infrastructural and commercial investment, including the provision of credit for SMEs.

The SIF will be a crucial next step in further boosting the recovery by part-filling a credit gap.

But the SIF will not be sufficient to close the credit gap that exists for SMEs and capital investment.

We therefore need to be more ambitious and set out a clear plan and timeline for the establishment of the Strategic Investment Bank committed to in the Programme for Government.

The Strategic Investment Bank would work along the lines of the KFW, which has played a key part in Germany’s economic development.

It would ensure that in the medium to long-term, a secure credit line is available for high-potential, high-growth companies, in turn placing the economy on a sounder long-term footing.

The Strategic Investment Bank could also be a stable and carefully scrutinised source of medium to long-term financing for another area – housing.

One of the problems during the boom is that the banks sank all their lending into one asset class – property – with disastrous consequences.

Now they have overshot on the other side and have almost developed a phobia against property lending.

We went from building too many houses in the wrong areas during the boom to building too few houses in the right areas now.

The Strategic Investment Bank would be motivated by sustainable returns rather than short-term profits and would provide the long-term investment capital necessary for the right projects in the right regions at the right times, in line with Government policy.

In the meantime, the construction strategy that the Government will bring forward in the coming weeks will contain a number of very important elements, from my point of view.

One such element will see the extension of the use of social clauses in public work contracts.

These social clauses will ensure that a set number of the jobs created through such contracts will go to persons on the Live Register.

The clauses are another valuable tool by which we will further reduce unemployment.

Bank debt legacy:

We have already made significant progress in terms of reducing the toxic debt that the Irish public was saddled with courtesy of the disastrous bank guarantee.

We have secured lower interest rates and the extension of maturities on our EU loans, meaning a €40 billion reduction in the State’s funding requirement over the next decade.

But we will not let the matter rest there.

As I mentioned earlier, we have exited the bailout and the troika have gone home.

But we have some unfinished business with the EU and the ECB.

In June 2012, Eurozone leaders solemnly affirmed that it was imperative to break the vicious circle between bank and sovereign debt.

The Eurozone leaders also committed to examining Ireland’s situation in that regard.

We will continue to push for that agreement to be honoured and for a wider deal on that debt, in particular through the potential use of the European Stability Mechanism for bank recapitalisation.

Universal pensions:

Tackling unemployment is our immediate priority, and will remain so for the foreseeable future.

But in the long-term, there is also a looming pensions problem that needs to be addressed.

It is not enough to help people back to work now if we don’t take the steps to provide security of income for them in retirement.

In successive Budgets, I have protected the State pension because of its critical importance in preventing poverty amongst older people.

But for many people at work right now, and the 1,000-plus people who are returning to work every week, they will want more than the State pension in retirement.

We therefore need to improve occupational and private pension coverage.

Less than 51% of people in employment aged 20 to 69 have pension coverage and this number is decreasing.

This is a significant concern, and that is why the Programme for Government includes a commitment to reforming the pension system to progressively achieve universal coverage, with particular focus on lower-paid workers.

Last year, the OECD reported to us on how best to make this a reality.

The OECD’s key finding was that

private pension coverage, both in occupational and personal pensions, is uneven and needs to be increased urgently.

They recommended that this could be done through a universal employment-based pension system.

The raison d’etre for the OECD recommendation is to ensure that those who do not currently have an occupational pension are nudged towards having one.

The position of those in employment with existing pension coverage is a second-order issue.

We are currently formulating a response to the findings and recommendations contained in the OECD review.

What is of critical importance here is that any system chosen is correctly designed.

It is most important that we understand that any national employment pensions scheme is just one significant part of the overall framework for retirement provision.

We need to ensure that the new scheme increases coverage for those not currently covered and lowers the cost of pensions.

I have previously stated that an opt-out approach such as that envisaged by an auto-enrolment scheme, using scale to achieve greater cost efficiencies for members, is a very proactive way in which we can increase supplementary pension coverage.

However, the introduction of such an initiative would be best supported by a more favourable economic environment than is currently the case.

Therefore in the coming months, I will publish a road-map for

the introduction of a comprehensive occupational pension scheme – a MySaver for those without pension coverage – with a go-live date that will depend on certain criteria of economic recovery and stability.

Conclusion:

Three years ago, in the Programme for Government, we pledged to help create 100,000 new jobs by 2016.

Last Thursday’s CSO quarterly data shows that, since the lowest point of the employment crisis, the numbers at work have risen by 70,000.

So while our work is far from done, we are well on track.

And as the economy continues to recover, we will do our utmost to ensure the recovery is felt by every person and every community too – by making full employment, fair wages, and lower taxes for low- and middle-income earners our central goals.

All the while, we will continue to press at European level for a better deal, so that the Irish people get the better deal they deserve – a recovery and a renewed prosperity built from the bottom up and the middle out.

ENDS