Vol. 566 No. 2
7 Ms McManus asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps being taken to combat the decline in the numbers in industrial employment; her forecast for the likely growth or decline in the numbers employed in this sector in 2003; and if she will make a statement on the matter. [12273/03]
While I share the Deputy's concern at the slight decline in the numbers in industrial employment, I should point out that the issue of job creation is a day-to-day operational issue for the enterprise development agencies of my Department and not one in which I have a direct function. IDA Ireland, Enterprise Ireland, Shannon Development and the county enterprise boards are the relevant agencies under the aegis of my Department with responsibility for industrial development nationally.
While the economy slowed last year from the performance of the previous year, in line with deteriorating global economic conditions, Irish economic conditions remained robust when compared to the rest of the EU. However, enterprise development in Ireland is now facing a number of challenges with sluggish growth in the main export markets, increased competition from low-cost locations and some erosion in Ireland's competitiveness on the global stage.
While overall employment levels in Ireland increased marginally in 2002 as a result of job creation in the public sector and other non-traded sectors of the economy, employment in firms in the more exposed internationally-traded manufacturing and service sectors contracted by 2.8% in 2002.
Companies supported by IDA Ireland and Enterprise Ireland created more than 23,000 permanent full-time jobs in 2002, a strong achievement in the context of difficult economic conditions. However, these employment gains were outweighed by job losses of just over 31,000, as the economic downturn impacted on our ability to sustain jobs.
Total permanent employment in firms supported by IDA Ireland and Enterprise Ireland reduced from 284,900 in 2001 to 277,000 in 2002. However, this still represents a 50% increase on ten years ago. Jobs created outweighed jobs lost in financial services and the chemical industry. The largest job decreases were experienced in metals and engineering-electronics and internationally traded services – software.
While it is not possible to predict job gains or losses given the uncertain economic environment, the Government and the development agencies are undertaking a number of co-ordinated strategies to sustain and promote growth in industrial employment, including the following: a moderation in pay increases in line with slowing productivity growth, accompanied by a slowing of other price and cost increases; promotion of greater competition in the non-traded services sectors of the economy; continued emphasis on the importance of research and development and of new process and product innovation; and accelerated delivery of vital economic infrastructure for businesses including broadband, roads, electricity and waste management.
The development agencies are continuing to work closely with existing clients to improve their productivity and competitiveness. The agencies are also actively identifying and working with high potential start-ups and attracting new foreign direct investment.
The outside world will be interested to know that once jobs are declining it is not the Minister's responsibility. When jobs were growing she took full credit. Does she accept that the latest figures from the Central Statistics Office show that industrial employment fell by 12,500 last year on an accelerated fall from the previous year? Does she accept that the latest ISME survey published in April – and I know this is a group for which her party has strong regard – predicted up to 20,000 industrial jobs could be lost this year? Does she accept that a staggering 42% of its members involved in manufacturing reported reduced employment this year compared to last? The latest export figures which we have for January show a fall of 9%. All these are indicating significant problems for the manufacturing industry. Does the Minister recognise that fact and what is she going to do about it?
As I said earlier in answer to a previous question, according to a recent international report we are the most globalised economy in the world. We trade 180% of our GNP. We are, therefore, not able to hide or protect ourselves from what is happening in the global economy. Notwithstanding the statistics which Deputy Howlin quotes, and I have no reason to disagree with any of them, the fact remains that unemployment in Ireland is amongst the lowest of any EU country.
It is growing.
It used to be the highest. For 21 of the 30 years of EU membership it was the highest or second highest and it is now at 4.5%. The rate in Germany is over 10% and the EU average is 8%.
There are a number of things we have to do. We have to remain competitive. The bar has moved up. The things which made Ireland attractive in the past no longer apply. We do not have a large pool of unemployed labour available to employers at competitive rates. Other places can provide manpower much cheaper than we can, including many of the applicant countries to the EU.
Enterprise Ireland has established a competitiveness fund to help companies to maintain their competitiveness and, hopefully, to expand. I believe that will be of particular assistance to the indigenous sector.
There are three Deputies offering. I will take brief questions from them.
Does the Minister accept that north-east Donegal, particularly the Inishowen Peninsula, has had a hard time due to the losses in the textile industry? Many of the problems in terms of the infrastructural deficit could be resolved by co-operation on a cross-Border basis. An official from her Department would need to be assigned to look at INTERREG funding to ensure that roads and utilities such as electricity, gas and so on, in which we are currently lacking, could be brought into Buncrana with cross-Border co-operation. We need somebody to co-ordinate it because it does not specifically relate to employment. When I question the IDA or Enterprise Ireland in this regard I am told it is not their job. If we had a co-ordinator it would make us more attractive to employers in a situation where we are losing employment.
A question please, Deputy.
Can we have a co-ordinator?
I notice that on the last occasion the Minister answered questions she said that any company involved in basic manufacturing will always have difficulties in economies such as ours. It is unbelievable—
A question.
----that now that our manufacturing competitiveness is no longer what it was, the Minister is on a mission to do something about it. Will she outline more specifically the role of the competitiveness fund that was recently indicated in the media?
If the Minister is looking for a pool of workers, there are significant numbers of young unemployed workers from the ICT industry in my constituency and I am sure they are in her's also. Does she agree that large capital-intensive, high-profit operations such as inter national pharmaceutical industries can survive here but indigenous, labour-intensive manufacturing companies can no longer survive in terms of competitive advantage?
Do we not need to review our overall tack on trade policy? It is largely geared towards benefiting those companies which can engage in transfer pricing, making substantial profits for repatriation home, rather than protecting jobs and developing our indigenous industry. Will the increasingly changing pattern allow the Tánaiste to question current Government thinking in that regard?
A final reply from the Tánaiste.
We cannot turn back the clock in relation to wage levels in the economy, even if anybody wished to do so. I am not suggesting that is what people are saying. The reality is that we have reached a certain stage of development and, as in the case of other countries in that position, there are certain activities which are no longer competitive in such situations. That is the reason the goalposts have been changed and we need to raise our level of skill and innovation in accordance with the new ground rules. In the chemical and pharmaceutical industry labour accounts for a very small proportion of the overall output cost for branded products. For this reason we can compete very successfully. We have nine of the top ten pharmaceutical companies, 13 of the top 20 medical devices companies and, I hope, more in the pipeline. In terms of new bio-pharmaceutical facilities, the biggest under construction anywhere in the world is being built in Ireland.
We are doing very well on the new business side. The challenge lies in the basic manufacturing sector where wages account for a very high proportion of the overall cost of production. The enterprise fund, to which Deputy Hogan referred, is a fund of €10 million which will be targeted at companies which need assistance to remain competitive. It can involve development of the skills base or assistance with innovation or whatever are the particular requirements of companies. It will be a targeted fund, with money awarded on the basis of applications from companies.
