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.
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:
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.
Replacing the Double Irish with Knowledge Development / Patent Box - Part 2 — looks at business research & development in Ireland
Last month the Department of Finance opened a 12-week public consultation on the patent box: Consultation document [pdf]
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.
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.
Dublin Web Summit 2014: Separating hype and reality — Paddy 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"
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