Aims of this section Be able to: • List the ways in which the government creates a suitable climate for business. • Explain the ways in which the government affects the labour force. • Explain the impact of the economy on business. • Explain the impact of business in the development of the economy.
What is the role of government? • Which of these directly affect business development and growth in Ireland?
Local Government Helps businesses by: • Zoning of suitable land for industrial development. • Provide affordable housing in an area. • Waste & sewage disposal for households and businesses • Provision and maintenance of good infrastructure. • County Enterprise Boards help new enterprises.
Central Government • Comprises of the Dail and Seanad. • Dail is the place where all revenue & spending decisions are made and new legislation is introduced. • Budgets and bills must be approved by the Seanad. • When the bill has been passed by the senate it must be signed by the president.
Reasons for Government Intervention The government intervenes for a variety of reasons. • Legislation • To protect those who have dealings with business. • E.g. Companies Act (memo of assoc), Health and Safety • Protection of employees and consumers • Ensure the fair treatment of workers and consumers through legislation. • E.g. Employment Equality Act, Sale of goods supply of services Act. • Provides Infrastructure • Government capital expenditure is spent on roads, rail, ports etc so that the economy can operate efficiently.
Reasons for Government Intervention • Promotion of enterprise and employment • Through state agencies such as Ireland and Solas, the govt promotes employment. Grants and subsidies promote enterprise. • Environment • The government must take measures to protect the environment from damage, and the promotion of sustainable development. • E.g. Environmental protection Agency, An Taisce, BordPleanala. • To provide essential services • The government will provide unprofitable services that would not be provided by private companies. E.g. bus routes, electricity supply. • Public amenities such as libraries, museums, parks must be provided for the welfare of the citizens.
Creating a suitable business climate It is the role of government to create a suitable climate in which businesses can thrive: • Taxation • PAYE • Tax Credits • VAT/Excise duties • Corporation Tax • Stamp Duty • Government Expenditure • Capital Spending • Current Spending
Creating a suitable business climate • Government Agencies • County and city enterprise boards • Enterprise Ireland • IDA Ireland • Solas (Fás) • Government Planning • Wages • Industrial Relations • Economic Policies • Low interest rates • Low inflation • Low unemployment
The Government and the Labour Force • As an employer: • The government is the single largest employer, employing approx. 250,000 workers. • Taxation: • Low rates of personal taxation result in consumers having more disposable income. Spending on goods and services increases demand which leads to job creation. • Low corporation tax provides incentives for companies to create jobs in Ireland. • Grants and incentives: • Given to both domestic and foreign companies to locate their businesses in Ireland providing employment.
The Government and the Labour Force • Government expenditure: • The government spends large sums on products and services from Irish businesses thus maintaining employment. • Investment in infrastructure leads to an increase in the number of workers employed in the construction industry. • Education spending: • Investment in education through training schemes, short-term courses, and schools and colleges result in a more skilled and employable workforce.