Written Answers - Foreign Direct Investment.
Michael Noonan
Question:
23
Mr. Noonan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if she has formed a view as to the possibility of a slowdown in US investment here; her views on whether there will be significant redundancies in the Irish operations of US companies during 2001; and if she will make a statement on the matter.
[10355/01]
Bernard Allen
Question:
52
Mr. Allen
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
the way in which she sees the downturn in the American economy effecting employment in American companies operating here; and if she will make a statement on the matter.
[12583/01]
Michael Noonan
Question:
60
Mr. Noonan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if she has formed a view as to the possibility of a slow down in inward investment from the US; her views on whether there will be significant redundancies in the Irish plants of US companies before the end of 2001; and if she will make a statement on the matter.
[8993/01]
Ivor Callely
Question:
75
Mr. Callely
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if she will advise of the impact which the downturn in the American and Chinese economies is likely to have on the Irish economy; the impact on jobs, foreign investment and other such implications; and if she will make a statement on the matter.
[11647/01]
Bernard J. Durkan
Question:
87
Mr. Durkan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if she has satisfied herself that adequate measures are in place to cushion against any uncertainty arising from a downturn in the world economy affecting foreign investment here; and if she will make a statement on the matter.
[12690/01]
I propose to take Questions Nos. 23, 52, 60, 75 and 87 together.
While the US economy has slowed down, impacting directly on the global economy, it is not clear at this stage how severe or protracted this slow down will prove to be. Obviously, a sharp and prolonged slowdown could have significant effects on Ireland as on all trading economies. This would be particularly true if the slow down substantially reduces the inflow of foreign direct investment or results in a sharp depreciation of the dollar and sterling against the euro.
However, there are now a range of factors at work which will help to ameliorate the effects of any slowdown in the US economy. These include economic conditions within the EU are, in contrast to the US, still strong – since this is the main market for the output of US owned companies in Ireland; Irish operations are somewhat less likely to be affected by any slowdown than those in the US; much of the recent foreign investment into Ireland from the US has been in the form of strategic investments designed to operate under new management structures and achieve better efficiencies and margins than US plants – such operations would probably be least likely to experience job cuts; a large part of the recent weakness in the US economy has been confined to the IT sector – while this sector is very important to Ireland it is by no means the only significant sector in terms of US owned investment in Ireland; in the event of a continuous slowdown in the US economy, the most vulnerable jobs in US multinationals in Ireland are likely to be those in relatively low skill areas – these jobs are, in the long-term, at risk anyway, from competition from low wage economies; in this respect a primary element of current IDA Ireland policy is to assist client companies to move up the value chain into higher tech jobs, requiring higher skilled, and better paid employees. This should help to secure employment levels in FDI firms into the future.
The current strength of the Irish economy, with very low unemployment and strong demand for labour in most sectors, means that Ireland is in a better position than it would have been in the past to weather the effects of any economic slowdown in the US and global economies.
Many forecasters see a recovery in the US economy setting in and continued buoyancy elsewhere during the second half of 2001, and I am confident that this will, in fact, be the case. Indeed, IDA Ireland still hopes to create about 12,000 new jobs in 2001. While this is not as strong as the record breaking 2000 figure, it is still high by historical standards.
The impact of a downturn in the Chinese economy would be minimal from an FDI perspective as there is only one IDA Ireland assisted Chinese company based in Ireland at the moment, employing 12 people.
In respect of the economy as a whole, the potential impact of a Chinese downturn would not appear to be significant. Total exports to China from all sectors of the economy, which stood at IR£114.755 million for the period January to November 2000, represent only a small percentage of total trade, IR£59.318 billion during the same period.
I am satisfied that arising from positive Government actions the economy is now in a much more robust condition to weather the vagaries of the global economic cycle and that foreign direct investment will continue to play a key role in our economic success.
Trade statistics of Ireland provided by the Central Statistics Office. Certain other reports, received by the inspectorate more recently, concerned workers engaged in activities connected with the agricultural sector. In view of the very serious concerns generated as a result of the foot and mouth crisis, however, it was deemed prudent that inspectors should not engage in any activity which would bring them in contact with this sector. With the relaxations now in place these outstanding reports are receiving priority attention.
With regard to employment agencies, submissions have been sought on a review of the relevant legislation from the social partners and from other interested parties, for example, the Irish Federation of Personnel Services. When the views of all are to hand, we will meet with the interested groups and prepare proposals on options open to us. Such options could include the amendment of the 1971 Act or the introduction of a code of practice that would involve self-regulation by the sector. Advice from the Attorney General's office will also be necessary. I expect to complete the review during the second half of this year.
While on the topic of employment agencies I would like to mention also that my inspectorate undertook an exercise targeted at that sector recently. The results of that campaign did not yield evidence of any malpractices by those interviewed. However, it is a sector to which the inspectorate plans to turn its attention once again, shortly.
The remit of the labour inspectorate is to ensure workers receive their minimum statutory entitlements. In this regard the inspectorate can pursue allegations of workers being subjected to excessive working hours, illegal deductions e.g., excessive accommodation fees, non-payment of compensation for Sunday working or of holiday-public holiday pay, etc. However, a theme of complaint that has been identified concerns the reneging on the pay terms and other working conditions offered to the immigrant worker before departure from his or her home country. There are some indications also that recruitment fees are being sought at the point of origin. This presents us with a problem of jurisdictional responsibility. In addition, there can be difficulties which fall within the scope of contract law and are not the province of the inspectorate.
It should be noted that the Employment Agency Act, 1971, permits employment agencies to charge placement fees to the employers for whom they source foreign workers but it precludes them from charging the individual workers fees for seeking employment for them. In this connection, possibilities for administrative co-operation with regulatory authorities in other countries are being examined as a means to control extortionate fee charging by employment agencies which facilitate the placement of foreign workers in Ireland.
In the meantime the administrative procedures for the issue of work permits have been examined carefully so as to better protect the employment rights of the immigrant workers concerned. A particular initiative aimed at addressing part of the current problem is the preparation of an explanatory document setting out the essential elements of Irish employment rights legislation and protections for workers. This document, which will be presented in a range of languages, will in future accompany all application forms for work permits. The work permits application form will also have to be signed by the prospective employee.
I am already on record as saying that I do not intend to preside over a situation whereby a small number of employers will be allowed to get away with the exploitation of vulnerable people. I unreservedly condemn any abuses of the statutory employment rights and protections to which immigrant workers may have been subjected. Such unscrupulous employers can take note that I am determined that they will be pursued and dealt with appropriately.
