Irish Economy
Irish Economy: Only 8% of 90,000 jobs added in 2013/14 in Industry/ ICT sectors
By Michael Hennigan, Finfacts founder and editor
Feb 26, 2015 - 6:26 AM

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Long-term vision at last? Enda Kenny (back 2nd from right), taoiseach, with Joan Burton , tánaiste, flanked by ministers Gerald Nash (l) and Richard Bruton (r), back at school to launch the Low Pay Commission, Dublin, Feb 26, 2015.

Irish Economy: Jobs growth resumed from early 2013 and in the two years to the end of 2014 only 7,000 or 8% of the 90,000 jobs added were in the Industry and ICT (information and communications technology) sectors according to CSO data published Wednesday — See table below.

There were no net jobs added in ICT in the two year period while of the 7,000 added in Industry, only 1,000 related to 2014.

Since the start of the recession in Q2 2008 jobs in Industry have fallen by 40,000 while jobs in ICT have risen by 11,000.

Following the property crash, the evidence to date is that there hasn't been a rebalancing of the economy towards productive sectors despite official data and PMI (purchasing managers' index) surveys which exaggerate manufacturing and services activity because of distortions in the foreign-owned sectors..

Industrial production rose by 19% in 2014 including booking of foreign manufacturing in Ireland for tax avoidance purposes; the CSO's non-financial traded services index rose 4% in 2014 — much more muted than the services PMI — and ICT declined in the year. The latter again may reflect changes in Double Irish tax-related transactions.

Last week we looked at the food and drinks sector using data to show that while it's the key part of the indigenous international tradable sector, it is underperforming. Employment data in the primary Agriculture, fisheries and forestry sector have been volatile in recent years and the 16,000 estimate of net additional jobs in 2013/2014 and a decline of 10,900 jobs in 2014 may reflect a correction of an understatement in earlier periods when the CSO acknowledged that it had a problem with its sample for the sector.

Benchmarking Irish food & drinks industry in 2015 - Part 1

Ireland: Only 3% of Irish SMEs are active in manufacturing - Part 2

Ireland has 4,000 exporters, Denmark has 30,000

Scotch whisky exports at £3.9bn; Irish whiskey exports at €365m

On Thursday IDA Ireland, the inward investment promotion agency, published what is termed a strategy but it is effectively a statement of goals.

The agency is targeting 80,000 new jobs in client companies in 2015-2019 with a net of 35,000 — a similar annual level to what has been achieved in recent years.

However in 2014 jobs in foreign-owned exporting firms were below the level 14 years before  — despite a surge in headline exports.

Winning: Foreign Direct Investment 2015-2019 is available at:

http://www.idaireland.com/en/docs/publications/IDA_STRATEGY_FINAL.pdf

http://issuu.com/idamag/docs/winning_foreign_direct_investment_2

IDA Ireland says: "It is important that the proposed Knowledge Development Box (KDB) is successfully designed and implemented. The KDB will be part of Ireland's suite of measures to incentivise companies to develop new technology in Ireland. This will help support IDA Ireland’s efforts to persuade more overseas companies to undertake R&D and innovation activities in Ireland."

By 2020 it's likely that significant changes in international corporate tax rules will have been implemented.

The KDB type so-called patent box with a lower corporate tax rate in respect of local development is no panacea as several countries have such a scheme and the European Commission is working on common rules.

  • Less than one-third of IDA client companies spend on Research & Development;
  • Almost half the staff in ICT companies work in administration functions;
  • Patenting is at a low level compared with countries such as Denmark and Finland. It's rare for the big American exporters to file patents for research done in Ireland;
  • Ireland ranked at the bottom of a 2013 international ranking of 30 countries, behind Portugal, for the value of business funding of academic research.

Replacing the Double Irish with Knowledge Development / Patent Box - Part 2 looks at business research & development in Ireland

Irish patent filings at European Patent Office fell in 2014

Last month the Department of Finance opened a 12-week public consultation  on the patent box: Consultation document [pdf]

Germany and UK agree to restrict 'patent box' tax incentives to local R&D

After 60 years of low corporate taxes and State supports the indigenous sector remains an underperformer at exporting while the Government of course welcomes the convenience of ready-made jobs provided by foreign firms.

However, Ireland will never be a wealthy country by having its typical farmer much more dependent on Common Agricultural Policy (CAP) payments compared with counterparts in Denmark and the Netherlands; a small indigenous international trading sector with a focus on English-speaking countries and a foreign-owned sector where about 40 American firms account for two-thirds of total headline exports while many of the jobs in ICT services and financial services are in administration.

German per capita standard of living highest in Europe; Ireland below EU average

Almost three-quarters of Google Ireland staff is from overseas mainly doing administration work while Google UK has over 500 engineers.

It's good that Apple selected Ireland as a location for a data centre but it would be better if a young Irish company that wins international attention remains and scales-up not cash-out under pressure from venture capital investors.

As Enda Kenny, taoiseach and Richard Bruton, enterprise minister, and other ministers claim credit for job creation, besides the taoiseach and tánaiste, two other minister will join them today to publicly launch a Low Pay Commission to recommend the appropriate rate of the national minimum wage to the Government.

There is a general election campaign underway and it would be a surprise if anyone of them today or any day would focus on long-term strategy with an acknowledgement of the real world challenges.

Ireland 2016: "Best small country in the world" for business? - a FAIL

Chinese investment into Europe at record high; UK on top, Ireland hopes

Irish overseas 'contract manufacturing' mainly tax avoidance

Forty American firms account for two-thirds of Irish exports

Ireland: Jobs in foreign-owned exporting sector in 2014 below 2000 level

Ireland: Government explains how it understates recession job losses

Irish Boom & Bust: Could conventional wisdom be fooled again?

2013: Irish Innovation: Evidence of science policy failure mounts

Israel's Startup Nation not a jobs engine; Nor is Irish high tech

Irish resident patenting not suggestive of 'world class knowledge economy'

Irish R&D Tax Credit: No evidence of rising business innovation; Facts don't matter

Dublin's Silicon Docks: Separating hype and reality

Dublin Web Summit 2014: Separating hype and realityPaddy Cosgrave, co-founder of the Web Summit commented in a tweet: "Phenomenal level of research + info in this post about Irish tech policy & startups in general"

The idiot/ eejit's guide to distorted Irish national economic data

Irish Employment 2008Q1 2012Q4 2014Q4 Change 2012/2014
All NACE economic sectors '000s
Person aged 15 years and over in Employment (Thousand) 2,146.4 1,848.9 1,938.9 90
Person aged 15 years and over in Employment (Seasonally Adjusted) (Thousand) 2,160.2 1,843.0 1,927.6
Agriculture, forestry and fishing (A) 116.3 90.0 105.9 16
Construction (F) 255.8 103.2 116.7 14
Wholesale and retail trade, repair of motor vehicles and motorcycles (G) 319.6 273.4 276.7 3
Transportation and storage (H) 94.8 89.0 90.2 1
Accommodation and food service activities (I) 132.3 118.3 137.5 19
Information and communication (J) 72.2 83.2 83.5
Professional, scientific and technical activities (M) 111.7 102.2 117.1 15
Administrative and support service activities (N) 83.1 63.2 65.6 3
Public administration and defence, compulsory social security (O) 103.4 96.0 94.7 -1
Education (P) 139.7 145.3 154.0 9
Human health and social work activities (Q) 222.0 245.7 248.9 3
Industry (B to E) 284.1 237.2 244.5 7
Services (G to U)
Person aged 15 years and over in Employment (Thousand) 1,482.0 1,415.3 1,468.2
Financial, insurance and real estate activities (K,L) 104.7 102.8 101.8 -1
Other NACE activities (R to U) 98.4 96.2 98.1 2
Not stated 8.1 3.2 3.6
Source: CSO via Finfacts.ie

NACE- Nomenclature générale des activités économiques dans les Communautés Européennes


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