Irish Economy
The invisible Irish unemployed and the challenge of creating 180,000 net new jobs
By Michael Hennigan, Founder and Editor of Finfacts
Oct 22, 2010 - 5:28 AM

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Minister for Enterprise, Trade and Innovation, Batt O'Keeffe, TD, shares a joke with Hollister employees Helena Cleary, Josephine Mangan and Michael McNamara at the US-owned Hollister Plant in Balina, Monday, Oct 18, 2010, where the minister announced a €65m expansion at the company. Looking on is Minister for Labour Affairs and Public Transformation, Dara Calleary, T.D.

Craig Barrett, former Intel CEO, said in Dublin last February that the reality is Ireland is now over-reliant on FDI and needs to come up with a new blueprint for the economy of the next 20 years.

It is striking how little attention the crisis for the invisible Irish unemployed and the challenge of creating what we see as 180,000 net new jobs, gets from the individuals and groups with a grip of the public megaphone.

Last June we noted that particularly when viewed from afar, that the issue of jobs and unemployment does not appear to be as urgent a public issue in Ireland as it is in the United States.

Brendan Behan, the Irish writer, is said to have quipped that when the Irish form an organisation, the first item on the agenda is a split. The mobile phone companies confirm our loquaciousness and the love of the pub is reflected in the interest in argument, particularly where there are known villains, against a political backdrop.

When it comes to broadcasting, articles in the press and contributions on web forums, the banking crash gets the lion's share of attention compared with the challenge of creating jobs or significant reform of a failed governance system. In recent weeks, a Russian oligarch has been added to the banking cocktail and while attention is focused on the symptoms rather than the disease, it's instructive that increased urgency on two fronts has been triggered by pressure from overseas.

We recently noted that the pattern of panic and slow-motion that has characterised the response to the banking crisis over the past two years is not an aberration.

It is the way governments have operated in Ireland for decades: respond to a serious issue only when it has become a dire crisis.

The jump in bond yields on international markets prompted attention to bringing some finality to the Anglo Irish Bank fiasco, when politicians returned from their summer break and the European Commission's demand for a detailed four-year plan for the public finances has helped to bring reality to the stark choices facing the country.

In The Irish Times today, Dan O'Brien, the economics editor, comments on last weekend's annual gathering of economists at Kenmare: "there was no consideration given to the state of the labour market and the State’s unusually high rate of unemployment.

These issues were not on the programme. They did not come up in discussion, either at the sessions or in the informal chats this writer had with participants. That those who know most about the functioning of labour markets show no interest in the crisis in the Irish labour market is – to be blunt – shameful."

Last May, I wrote on the Irish Economy Blog, the academics' online water cooler: "What is striking post the bust is that the Irish public megaphone is still firmly in the grip of well-off individuals for whom unemployment and the non-sheltered tradable sectors of the economy are largely alien places.

In addition, most of those in Ireland who were responsible for making the economy so exposed to a global recession, already in retirement or when in retirement, can still earn more than most working public officials in Europe and the US.

In the US media, the human toll of unemployment and the expectation that many lost blue-collar jobs will not return, is getting a lot of attention. In Ireland there is no serious debate on jobs; Eamonn Gilmore’s big idea is another gabfest on the Constitution and Fine Gael enterprise spokesman Leo Vardaker has nothing to say on the flawed innovation report.

Do not doubt that the price for the obsession with property, will outlast the recession."

Economists can take the populist route: feed the public with easy panaceas, put all the blame for the mess on greedy bankers and avoid alienating particular sectors by proposing for example public sector reform.

In Ireland what generally worked during the boom for the comfortable was to avoid rattling the cages of convention. Little has changed in the interval.

The recent revelation of huge pension funding deficits at the universities and the related practice of topping up pension year entitlements without any clear authority for it, coupled with the subsequent silence of the academic community about the matter, speaks for itself.

In today's urbanised money economy, the fear of running out of money is indeed very scary. The evocative line in Harper Lee's celebrated 1962 novel, "To Kill a Mockingbird," where the character Atticus Finch says to his young daughter: "If you can learn a simple trick, Scout, you'll get along a lot better with all kinds of folks. You never really understand a person until you consider things from his point of view, until you climb inside of his skin and walk around in it," was a reference to racism in the American South but it also has application elsewhere.

In the past, Taoiseach Brian Cowen has said at the United Nations in New York, that it was “nothing short of scandalous” that there are over 860m hungry people in the world today.

I have no doubt that he meant it.

However, he and others could say the same about the unemployed and mean it but both scandals would in reality be remote to their lives.

The lack of attention to the jobs crisis begins at the top of the pyramid with the Government and as 86% of the workforce is still employed and fear of losing a job is a worry mainly in the tradebale goods and services areas of the private sector - - an alien place for many policymakers, academics and commentators -- it is not an urgent issue.

Official unemployment as measured by the Quarterly National Household Survey for April to June 2010, was 284,500 persons unemployed. There were 98,800 persons unemployed in the second quarter of 2007, according to the survey.

This is where our net new jobs of 180,000 comes from, while ignoring population change.

The Paris-based Organisation for Economic Cooperation and Development (OECD) said last July that Ireland needs 318,000 jobs to return to pre-crisis levels.

We have repeatedly made the point that policymakers have opted for spin over substance with no debate on the challenges ahead.

Public job targets include indirect jobs and there is no allowance for job losses.

Between 1998 and 2007, there were 11,000 additional jobs added in the international tradeable goods and services sectors, at a time of unprecedented prosperity.

State agency Forfás reported last March that total permanent full-time employment in the manufacturing and internationally traded services sectors amounted to 272,053 in 2009. It was 276,287 in 1998. Employment in foreign-owned firms was 132,596 in 2009 and 140,281 in 1998.

We have also highlighted how globalization is changing and we will have to fight for our standard of living against the educated emerging economy workforces.

We have questioned the over-reliance on university research as the source of an engine of growth.

When ETH Zurich, one of the world's top science and technology universities, can only produce less than 1,000 jobs from about 100 commercial spin-outs in a decade, should we not consider the evidence?

Or ask why the Minister for Enterprise and Innovation, Batt O'Keeffe, has established the fourth advisory group on science policy since Dec 2008, in recent weeks  --  this one to advise on research priorities?

We have asked, why deal with facts on the ground that in 30 years, the tech cluster in the area of Cambridge University in the UK, has many research institutes; it has a few big tech companies, about 30,000 in employment and most companies employ less than 10 people?

Last November, Irish companies were warned by several senior executives who run some of the country’s most successful indigenous companies, to be cautious about expanding into emerging markets and focus instead on developed markets.

There are no simple panaceas but denial is not a strategy:

Finfacts articles on the jobs, research and globalization challenges:

DEC 2009: The challenge of creating 160,000 new Irish jobs

FEB 2010: Building an indigenous Irish exporting base; Being prepared for a hard slog

MAR 2010: Irish Economy: Political spin, jobs and IDA Ireland

MAR 2010: Innovation Ireland Taskforce's aspirational report; US banks / credit-card companies contribute most money for start-ups - - not venture capital companies

MAY 2010: O’Keeffe to "lead drive" to create 117,000 net new Irish jobs in innovation over next 10 years

JUN 2010: Ireland: A jobs crisis in search of a national strategy

JUL 2010: OECD countries need to create 17m jobs to get employment back to pre-crisis levels; Ireland needs 318,000 jobs to return to 2007 level

AUG 2010: Net job growth in US driven entirely by startups

AUG 2010: Irish Innovation: Ireland banking on the faith-based smart economy strategy

SEP 2010: Cowen's fairytale 300,000 jobs 'plan'; No space for inconvenient truths

SEP 2010: O’Keeffe announces another 'top-level' group to advise on retooling shambolic Irish innovation research strategy

SEP 2010: Global financial crisis increases unemployment to more than 210m -- up over 30m since 2007

SEP 2010: Irish employment decline slows to 4.1% in the year to Q2 2010; Non-Irish nationals accounted for 12.4% of workforce and 46,800 were unemployed; Net emigration rises to 34,500

SEP 2010: Irish Live Register dips 5,400 in September to 442,417

SEP 2010: US China and the rickety state of conventional globalization

OCT 2010:Eurozone unemployment rate stable at 10.1% in August; Austria lowest at 4.3%; Ireland at 13.9% and Spain's at 20.5%

OCT 2010: US lost 95,000 in September; +64,000 in private sector; -159,00 in public sector; Broad unemployment rate jumps to 17.1%

OCT 2010: US Economy: It may take 12 years for employment to return to pre-recession level based on average jobs growth in the 2000s


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