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News : Irish Economy Last Updated: Mar 19, 2013 - 7:48 AM

Irish Economy: Bruton running permanent publicity campaign; Where are the jobs?
By Michael Hennigan, Finfacts founder and editor
Mar 15, 2013 - 6:24 AM

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Announcement on March 13, 2013 of ministerial-led International Travel Programme for 2013 by the tánaiste (deputy prime minister) and the minister for jobs, enterprise & innovation. Enterprise Ireland's programme has 18 ministerial-led trade missions 'as part of intensive programme of international activity.' Pictured are Kevin Sherry, manager, International Sales & Partnering, Richard Bruton and Eamon Gilmore, tánaiste and minister for foreign affairs and trade.

This week and next, Brendan Howlin, minister for public expenditure and reform, is visiting Jakarta, Singapore and Manila, with an entourage of officials to promote job and investment. On that score the trip will likely be a complete waste of time but there is a reason why there is never a check on what is the return from all the actionless actions.

In 2004, 3 Irish ministers and 21 civil servants headed to Hong Kong to attend a trade meeting at which the EU trade commissioner was leading negotiations. About 17 representatives from Irish charities/NGOs also tagged along on the arduous trip. If each of the then 150 member countries of the World Trade Organisation had brought as many hanger-ons per population rate as the Irish, HK would have been swamped!

Irish Economy: The odds of an indigenous Irish high tech firm becoming well-known in the United States are slim at the best of times and on Sunday the announcement by Intrade, the Irish online prediction market, that it was suspending operations because of suspected financial irregularities, prompted coverage in several US media outlets including The New York Times, The New Yorker and The Washington Post. Richard Bruton, minister of jobs, enterprise and innovation was in Washington DC, overhyping his temporary involvement in the pre-planning of talks on a US-EU free trade and investment deal that are expected to commence after the end of the Irish presidency of the EU on June 30. Bruton appears to be running a permanent publicity campaign with much time each week engaged in announcements but what is the net result?

In 2012, according to the household survey [pdf], when 1,200  jobs were added in the economy  -- the first annual rise since 2008 - - full-time employment fell by 12,800 (-0.9%) over the year and this decrease was offset by an increase in part-time employment of 14,000. Self-employment, counted as a job, rose by 12,000 last year, more than the total number of jobs created and part-time underemployment increased marginally over the year, up 200 or +0.2% to 145,800 - - so in addition to the 295,000 that were officially unemployed at December 31, 2012, there were 145,800 seeking longer hours and 34,000 had emigrated in the year to April 2012.

About 3,000 work permits were given for skilled immigrants from outside the EU alone, to fill positions in foreign multinationals in Ireland in 2012. IDA client companies added a total of 6,570 new net jobs in 2012. So when jobs to citizens of the other 26 EU countries are included, it could mean that all the net IDA-related jobs went to foreign nationals.

We recently highlighted that coincident with high youth unemployment, the Irish apprenticeship system is a shambles. Nevertheless, a new 333 set of job actions were recently announced by Bruton.

As tens of thousands face years of unemployment, the almost exclusive concentration on high tech and  American companies, will help promote significant employment from overseas.

Today, Minister Bruton will "announce a series of initiatives aimed at making Ireland the leading country in Europe for 'Big Data', a sector growing at up to 40% per annum."

"Making Ireland the leading country in Europe for Big Data is a key commitment in the Government's Action Plan for Jobs 2013," he said.

At 10am in eBay, he will announce the establishment of "an industry-led technology centre in Data Analytics, focused on developing ways of generating business ideas, profit and ultimately jobs from this fast-growing area. Led by agencies of the Department of Jobs Enterprise and Innovation, and involving significant State investment, the centre will bring together leading-edge Irish and multinational companies - including eBay, Accenture and Dell - - with researchers to turn good ideas into good jobs.

Later in the morning, Minister Bruton will announce the establishment of a Masters in Data Business and a Diploma in Data Business, designed to help business leaders in Ireland to take advantage of the major opportunities offered by Big Data to enable enterprise growth and job-creation. This initiative is being launched in cooperation with leading US multinational EMC as well as UCC, IMI and SAS."

In April 2012, Bruton said Ireland could become a world leader in cloud computing thanks to a new €1.2m research programme.

A €1.2m investment was announced to create a Cloud Computing Technology Research Centre, which would bring academic researchers together aimed at generating business ideas and boosting growth in the sector.

Paul Rellis, Microsoft Ireland managing director  said "the cloud" could be worth €9.5bn to the economy by 2014.

Finfacts reported in July 2012: Cloud Computing: Weak and uncompetitive indigenous Irish cloud computing sector

Last December, we wrote on the naive reliance on university research to create a jobs engine:

Irish Economy: Innovation, a failed enterprise policy and inconvenient facts for 2013

FT video on the Irish recovery

Actionless actions will not create jobs.

Richard Bruton would need to acquaint himself with data that most Irish workers are not involved in exporting. Policies should not be geared to a small segment of the workforce.  The university research programme is subsidising higher-income people while the apprenticeship system that should benefit young people from low income families, is neglected. The wealthy minister may well not realise that the orientation of his policies is skewed towards the upper end of the economic pyramid.

Central Bank research published in 2012 [pdf]  showed that 78% of workers are employed by Irish enterprises. Irish firms accounted for 15% of total exports and Irish SMEs (small and medium size enterprises) accounted for 7% in 2008.

The purpose of this paper is to clarify the importance of SMEs in the economy. SMEs account for 72% of private sector employment outside of construction and agriculture, with 63% working in indigenous SMEs. We highlight the reliance of private sector employment in Ireland on domestic demand: 64% of private sector workers are shown to work for indigenous nonexporting firms, with 57% working for indigenous non-exporting SMEs, figures that highlight the need for job creation strategies to aim beyond an export-led recovery.

In terms of Gross Value Added and investment, indigenous non-exporters are shown to be less important, accounting for 33 and 39%, respectively. Irish SMEs are shown to account for just 7% of total export flows, with 67% coming from large multinationals and 7% from large Irish exporters. Jobs in multinational and large firms are shown to pay higher wages on average than those in indigenous firms or SMEs. In terms of job creation, SMEs are shown to be more dynamic than larger firms, in that they both create and destroy jobs at a higher rate.

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