|Wednesday Dec 02, 2009: Pictured at the launch of the Report of the High Level Action Group on Green Enterprise were Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan and Taoiseach Brian Cowen.
Creating 160,000 net new jobs in the Irish economy is a
daunting challenge but starry aspirations and pious hopes
about exports from armchair "experts," are
a far from adequate response.
It may be ambitious to seek to return to an unemployment
level similar to the total of 126,700 in the second quarter
of 2008, for a current workforce of 2.2 million but setting
the goal may bring a more practical focus to the issue.
The scale of the task of creating sustainable jobs in the
international tradeable goods and services sectors, is
illustrated by stark statistics from State agency,
which show that in the ten years to 2008, less than 4,000
net new jobs were added by foreign and Irish-owned firms,
while overall employment in construction, the public sector,
retail and distribution, expanded by over half a million.
Employment in companies assisted by Irish State enterprise
agencies - - IDA Ireland, the foreign direct investment (FDI)
promotion agency and agencies supporting indigenous
enterprises in the tradeable goods/services sectors:
Enterprise Ireland, Shannon Development and Údarás na
Gaeltachta - - in December 2008 was 1.4 per cent (3,981
jobs) higher than it was in 1999. Employment in Irish-owned
companies had increased from 142,142 in 1999 to 144,734 in
2008, while employment in foreign-owned companies increased
from 150,975 in 1999 to 152,364 in 2008, increases of 1.8
and 0.9 per cent respectively.
Irish employment in December 1998 was 1.54 million and was
2.05 million in December 2008 - - a surge of 33 per cent.
In the peak boom year of 2006, 83,000 new jobs were added in
the economy while direct job creation in the export sectors
was less than 6,000.
In the third quarter of 2009, there were 279,800 unemployed
or 12.7 per cent of the workforce, up 120,400 in a year. In
its December 16 release, the Central Statistics Office said
there were 192,000 males and 87,900 females unemployed in
the third quarter. In November, the Live Register total was
422,500 It includes 73,600 part-time workers (those who work
up to three days a week), and seasonal/casual workers
entitled to Jobseekers Benefit or Allowance.
In 2007, when the Irish invested €13.9 billion in European
property deals, while the Irish-owned business sector didn't
even get a total of €200 million in venture capital
investment, there was no official urgency about the
imbalance. Since the crash, the development of a so-called
"smart economy" has
been a mantra of policy makers and is a typical case of live
horse and you'll get grass. The potential of clean
technology and the green economy has also been promoted
while the latest quick-fix solution is to attract bankers
from London who wish to flee new tax measures in the UK- -
as if beggar-my-neighbour
policies will always turn up trumps.
We are good with announcements and aspirations. Last
September at the diaspora forum at Farmleigh, Taoiseach
Brian Cowen asked for help on how
a European Silicon Valley can be established in Ireland. It
could be worthwhile or maybe not, because the biggest
deficiency at policy level is that there is an evident
unwillingness to face inconvenient truths. The poor
performance of the indigenous high-tech sector and the
shambolic development of broadband, at a time of prosperity,
merit no attention. The official target to be recognised as
a "world class knowledge
economy" by 2013, has been quietly junked and we
have moved on to new aspirations.
However, a public policy framework or company business plan
is useless unless it credibly addresses issues such as
strengths, weaknesses and competitive threats.
It is foolish to assume that we will in future be able to
outsmart other countries on incentives for investors. Given
the changed economic circumstances, there is likely to be
more competition from the big economies. Two weeks ago, the
UK Shadow Chancellor of the Exchequer, George Osborne, said
Britain should follow the lead of Ireland, Belgium and the
Netherlands and not tax profits from most intellectual
Earlier this month,
a report on the potential of what is termed
the “green economy”
said that “while
care must be taken in aggregating…there is potential to
create over 80,000 sustainable jobs in the coming years.”
The total includes estimates from industry groups who have a
vested interest in promoting their sector. There are no
estimates of job losses elsewhere.
The Minister for Communications, Energy and Natural
Resources, Eamon Ryan, said yesterday that the Government’s
plan to create “a green
IFSC” (Dublin’s International Financial Services
Centre) could create 20,000 jobs over the next five to 10
“It could specialise in clean energy project finance or
Ryan said. “It could also
look at ethical fund management and administration. We would
specialise in three or four key areas.”
Eamon Ryan said 30,000 jobs could be created in digital and
clean technology. He
launched a report which said: “In
the next ten years, Ireland will move decisively to being a
creator, developer and exporter of products and services
meeting real needs in an era of serial crises - - climate
change, peak oil, energy, water shortages, food production,
In March, at the launch of a research link-up between the
universities, Trinity College and University College Dublin
(UCD), the forecast jobs in a decade was 30,000 - - one of
the architects of the venture was reported to have wanted a
target of 75,000.
Ireland has not a strong exporting tradition and the UK
market remains the dominant one for Irish-owned firms while
the 16-country Eurozone market, with the stability of a
common currency, has been largely unexploited. The biggest
Eurozone member, Germany,
increased food and drinks exports by 15 per cent in 2008
and became a net exporter in the sector, for the first time
in decades. In contrast, the Irish food and drink sector,
which is the only significant area of export activity that
is dominated by indigenous firms, saw exports fall 6.5 per
cent in 2008.
According to a US government agency, Ireland is more
dependent on US companies than any other developed country.
The US economy will continue to face challenges in coming
years and last week, Jeffrey Immelt, the head of America's
largest industrial group, General Electric,
said:"I have taken on the challenge to
increase manufacturing jobs in the United States."
This is a signal of the pressure on companies to keep jobs
Returns from Irish investment in science will take many
years to realise and in a decade, we could have as little as
1,000 jobs from the commercialisation of university
less than 30 per cent of the high-tech start-ups in the US
survive to see their 10th anniversary, with the first
years being the most dangerous ones. Enterprise Ireland has
a 90 per cent survival rate for Irish university spin-outs
over the past decade. It is not a credible claim.
The green economy will remain compelling to Irish
politicians in coming years and there will be demands for
cash support for the many business firms that will see
potential opportunities. But consider the challenges.
This week, The Wall Street Journal reported that the US
Department of Energy (DOE) hopes to lend or give out more
than $40 billion to businesses working on clean technology,
everything from electric cars and novel batteries to wind
turbines and solar panels. In the first nine months of 2009,
the DOE doled out $13 billion in loans and grants to such
firms. By contrast, venture-capital firms invested just
$2.68 billion into the sector in that time.
two American think-tanks issued a report, which claimed
that China, Japan, and South Korea, have already passed the
US in the production of virtually all clean energy
technologies and will invest a total of $509 billion in the
sector over the five years to 2013, compared with $172
billion in the US.
China has already allocated $177 billion in stimulus funds
for green projects including high-speed railways.
Even if an Irish company developed a significant
technology, the operation would likely be acquired by a
bigger foreign firm, before there would be a significant
return for the Irish economy.
While the ambition to build a European Silicon Valley,
ignores the patchy record of the Irish-owned high-tech
sector, why are we ignoring opportunities under our noses?
New Zealand with a similar population total, level of
development and traditional dependence on agriculture, is a
good role model.
Its biggest dairy company Fonterra, is responsible for 25
per cent of
New Zealand's export earnings, utilising largely home-grown
inputs and accounts for more than one-third of all
international trade in dairy products.
Food and drink are hugely important sectors and who would
have thought that Irish farmers would find an outlet with a
gin producer for milk, that is used in
Baileys Irish Cream - - now a world class brand?
Swiss company Nestlé, the world’s biggest food company, has
5,000 people directly involved in Research & Development
(R&D) and has 28 research centres across the world.
The Irish dairy sector is fragmented; it invests
significantly less than its major competitors in terms of
capital investment and R&D and focuses on low value-added
Finfacts Sept 2009 article:
Ireland: A "smart"
economy in food better than pie-in-the-sky aspirations?- - Dutch
cheese production is about six times the Irish level;
Irish business consultants Mazars, said in 2008 that despite
being 12,000 miles away from European markets, New Zealand
had become increasingly competitive for its chilled lamb and
their lamb exports to the EU had increased 40 per cent in
the previous two years.
Meanwhile, the Irish Farmers' Association has been focusing
on protectionist measures for Irish beef while an Irish
steak franchised restaurant is a rare if not non-existent
presence across Europe, where the Brazilian, Argentinean and
Uruguayan brands are in the ascendant.
Irish education exports do not even merit a separate
category in service exports' detail, while education is
Australia's third biggest export earner and earns New
Zealand 7 per cent of its export earnings.
The Irish Government has not viewed it as important and
has damaged the product by allowing private business
concerns from significant operations to small training
course providers, to engage in misleading promotion to
attract foreign students directly or via overseas commission
A training course provider, operating over a shop and
charging fees of €5,000, can be listed with the recognised
universities, in Department of Education and Science
At a minimum, private colleges should be required to
state explicitly that they are not universities and smaller
operators providing services at exorbitant charges to
foreign students should be closed. The facility to work
part-time 20 hours per week, promoted by an agent, can be
the hook for an individual from a poor country to pay fees
at a multiple of typical country earnings and collected from
extended family, for what may not be an education.
In 2007, the
Indian government refused to allow an
mission into the country following the collapse in
2004 of a business called
"Dundalk Business School."
Last August, I was contacted by five Pakistani students
who were having difficulty in getting a refund of fees from
an education business in Galway, after their visa
applications were rejected. They claimed that the Department
refused to contact the particular firm, on their behalf.
Also in August, at the McGill Summer School, Don
Thornhill, chairman of the National Competitiveness Council
performs relatively poorly in terms of attracting overseas
students and is a net exporter of students. In 2006, foreign
tertiary students comprised 6.8 per cent of the student
population in Ireland which compares poorly to other
English-speaking countries such as the UK (14.1 per cent),
Australia (17.8 per cent) and New Zealand (15.5 per cent).
We have only one higher education institution, the Royal
College of Surgeons in Ireland, which has a significant
There is no shortage of armchair
"experts" with ideas
on exports but developing new export markets is very
There are no simple panaceas and after fifteen years of
the Celtic Tiger, when primacy was given to property
investment, it would be foolish to expect anything but a
The cost of doing business in Ireland is very important
and data from the European Central Bank has shown that
n the 1980s,
it was suggested that German should be the key language
taught in schools. Now, it tends to be Mandarin.
However, the market on Ireland's doorstep, the Eurozone,
is the one to develop. It is the biggest market for exports
from Ireland and in the year to August 2009, was responsible
for 42 per cent of merchandise exports. In 2008, 37 per cent
of service exports went to the common currency area.
In 1973, when Ireland joined the then European Economic
Community, its export ratio was 21.4 per cent. By 1993, it
was 51.1 per cent; 79 per cent in 1999 - - the year of the
euro's launch - - and it is forecast to be 93 per cent this
Even ignoring the potential for a huge amount of chaos, armchair
panaceas of looking for a short-term benefit from
devaluation by exiting the euro system, ignore the
reality that it is what would be in the interest of the big
American firms who are responsible for most of Ireland’s
exports, is what counts. Besides, why would home-grown firms
get an instant market in Europe after a devaluation?
Selling commodities and building markets from scratch
require different skills.
Some 20 per cent of Irish exports go to the UK compared with
55 per cent in 1973 but about half of exports from Irish
owned firms are dependent on the UK market.
Beyond the Eurozone, niche products can be sold in Asia
but the obstacles to making an impact there from scratch,
Besides, the days when the travelling salesman could
strike off for weeks with the wife back home shouldering all
family responsibilities, are over.
Today, almost 100,000 people are directly employed in
over 570 US firms in Ireland accounting for 70 per cent of
all IDA Ireland supported employment - - after 50 years of
engagement. The American Chamber of Commerce says indirect
employment in sub-supply and community industry and services
has been estimated at over 200,000.
So we need up to 50,000 new direct export related jobs.
Iceland at least has its fisheries to provide more than
50 per cent of its merchandise exports. Ireland's
foreign-owned firms provide up to 90 per cent of annual
The international recovery will be some benefit but not
enough. We have to continue to largely depend on foreign
investment but we have some strengths and need vision, a
reformed economy and politicians who can handle the truth to
have success in job creation. It is of course a lot harder
to achieve results than increasing public spending in boom
Finfacts Dec 2009 article: IDA
Ireland puts 2009 numbers on net job losses, new investments
but no values; Total jobs fall below 2000 level