Dáil Éireann Debate, Thursday - 24 February 2005
77 Mr. Durkan asked the Minister for Enterprise, Trade and Employment the extent to which he has monitored relocation of jobs to lower wage economies; if it is intended to put in place measures to combat this trend; and if he will make a statement on the matter. [6226/05]
Amharc ar fhreagraRelocation is just one factor in the many enterprise related issues that determine employment levels. Firms invest in different regions for a variety of reasons and while there is little doubt that some firms establish themselves primarily to take advantage of reduced costs in lower wage economies this is often not the only factor in deciding where to invest. It is not possible to monitor the extent to which jobs are relocated to lower wage economies with any degree of accuracy or to determine the employment change arising directly from just one aspect affecting the enterprise economy.
The competitive characteristics of our enterprise base has made a reliance on low technology, basic manufacturing less sustainable than it was in the past. There has been a fundamental shift in the strengths and competitive advantages of our economy, which is now typified by higher output and productivity together with high returns to labour in the form of wages, salaries and better living standards. Clearly, a more attractive cost environment abroad will inevitably attract some firms that are unable to produce in the high-wage, high skill environment of modern Ireland. The continuing structural transformation of our economy is inevitable. With this, some plant transfers and other adjustments are bound to come, but where relocation has occurred to date, it has largely been limited to relatively low-technology, labour-intensive activities.
To counterbalance the competitive threat from lower cost competitor economies, our policy is to encourage a move to higher levels of competitiveness and value added products and services. Sustainable employment will be driven by companies with higher profitability, that are more technologically advanced and prove a better fit with the competitive characteristics of our economy and that are therefore less likely to move on the basis of simple cost influences. This new investment will be sourced by a combination of developing existing clients and new investors in existing or new activities or sectors. Given the critical mass of FDI in Ireland and its linkages with indigenous companies, one of the greatest potential contributions will come from developing companies already operating here. The enterprise development agencies are working to encourage companies into more sophisticated activities where competitive advantage is less likely to be whittled away by cost based competition.
