Dáil Éireann debate -
Thursday, 26 Mar 1998

Vol. 489 No. 2

Written Answers. - Job Losses.

Michael Ferris

Question:

13 Mr. Ferris asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has satisfied herself regarding predictions that entering the euro without Britain could put approximately 100,000 Irish jobs at risk; and the plans, if any, she has made to protect the competitiveness of Irish exports in the event of a significant fall in sterling against the euro. [7694/98]

Tánaiste and Minister for Enterprise, Trade and Employment (Miss Harney)

I am aware that some recent reports and commentators have eluded to significant job losses in the event of a serious depreciation in sterling post EMU. Depending on the report or commentator involved the estimates of possible job losses fluctuate within a wide range. While I am unaware of the source of the Deputy's estimate I suspect it is towards the higher end of the scale. These predictions are largely based on a significant depreciation of sterling whereas the current exchange rate of 82p to the Irish pound provides a substantial competitive advantage for Irish exporters.

The industries in question where jobs may be most vulnerable if sterling depreciates substantially against the euro are in those sectors, mainly labour intensive, and low margin that are generally vulnerable to sterling-Irish pound exchange rate fluctuations and would be vulnerable to sterling exchange rate fluctuations irrespective of Irelands entry into EMU.

At the moment such exporting companies or companies competing against UK products are enjoying substantial competitive advantage through the current Irish pound-sterling exchange rate, more so than would otherwise be the case were we not about to become members of EMU.

In the longer term there is much greater commitment by the current Labour Government in the UK to the principle of EMU than was present in the last Conservative Government. In such circumstances substantial movements in the value of sterling against the euro are less likely.

In addition member states will have a significant voice in the terms on which sterling would join and they will be anxious to ensure that sterling does not gain a substantial once off competitiveness advantage by significantly depreciating before entry.

In answer to the Deputy's query as to what plans are in place to protect the competitiveness of Irish exporters I would like to identify the following strategies: In anticipation of EMU the ABT has been given a specific target to lessen our dependence on the UK market and to increase the proportion of our indigenous exports going to continental EU markets by 2 per cent per annum up to 1999. Currently about a quarter of all Irish exports are sold in the UK while 41 per cent of indigenous exports are sold there; at the level of the exporter, the EMU Business Awareness Campaign is aimed primarily at small and medium enterprises and is designed to ensure that Irish business is fully prepared to meet the practical challenges of EMU. This campaign is being co-ordinated by Forfás with full participation by An Bord Tráchtála, ABT, the national trade board; ABT which has responsibility for export promotion activities, has published an EMU guide for exporters which deals specifically with the marketing challenges and opportunities presented by EMU; ABT is also stepping up its export development programme in Europe in 1998 and will invest in excess of £10 million in support of Irish exporters in continental markets as part of a medium term strategy to increase the proportion of indigenous exports going to these markets by 1999 and as part of the EMU Business Awareness Campaign carried out by Forfás, a study has been undertaken in order to determine the actions needed by Irish firms in order to counter any possible fluctuations in the sterlingeuro exchange rate in the event of the UK remaining outside EMU. The study is now completed, and it has identified a wide range of actions in the fields of finance, marketing, distribution, etc., that firms could consider as part of their contingency planning. These actions will be summarized in a document to be included in the Forfás information pack prepared as part of the EMU Business Awareness Campaign to be widely distributed in the next few weeks.

In conclusion, let there be no misunderstanding that each individual exporter must take responsibility for the transition to and through EMU and may have to have recourse to various strategies including: market diversification; product diversification; creating value-added; niche marketing and decreasing cost and increasing productivity.