I propose to take Questions Nos. 130 and 131 together.
There are many differing and complex factors, apart from costs, that influence a firm's decision to relocate. Therefore, it is not currently possible to say how many jobs have ‘relocated' from Ireland over the past ten years. Job ‘churn' occurs in the internationally trading sector of the economy, in a number of ways and for a variety of reasons. Companies adjust their plant location and utilisation strategies to address matters such as accessing new markets, moving production nearer to customers, meeting firm or market specific customer relationship issues, accessing technology, in addition to business takeovers and consolidations. For much of the last decade this churn has been positive for Ireland, with companies replacing lower value activities with activities of higher value, resulting in better paid, more highly skilled jobs.
The phenomenon of globalisation is changing the way economic production is organised the world over. Lower barriers to trade and improvements in transport technology are increasing the specialisation of production, resulting in global supply chains. Ireland experiences both benefits and costs resulting from globalisation. Inward Foreign Direct Investment (FDI) illustrates the clearest demonstration of the benefits to Ireland from globalisation. This has been one of the principal causes of the strong economic performance of Ireland over the last two decades. However, as Ireland has gained from the mobility of modern production and supply chain models, competition from other locations for mobile investment has intensified. This shift in the structure of international trade poses challenges to economic policy makers in all countries.
Of course, some churn can be negative, when it results in a net loss of employment. Total job numbers employed in enterprise agency supported companies, (which represents a large portion of employment in the internationally traded sector of the economy), increased by approximately 7.5%, in the 10 years to 2008. The global economic downturn has seen a decline in the number of people employed in the internationally trading element of the economy in 2008/09, but this is a phenomenon being experienced by economies at every stage of development around the globe. The International Labour Organisation forecasts global unemployment to rise considerably, over the immediate term. The decline in the level of employment in Ireland's internationally trading sectors cannot therefore be simply related to job ‘relocation' alone.
Competitiveness can naturally decline in certain areas when an economy becomes more advanced — for example, developed economies cannot compete with developing countries in certain areas of low value, labour intensive production. However, competitiveness is vital to ensure Ireland continues to win investment in the areas of manufacturing and service activity in which it competes with other developed economies, such as high value manufacturing and internationally traded services.
A principal task of government is to ensure that Ireland continues to be an attractive place to do business, and to help foster economic competencies higher up the value chain. This government has made significant attempts to maintain and enhance our framework competitive conditions, and to promote new areas of competitive advantage by developing our R&D base, investing in critical physical and communication infrastructures, and promoting tertiary education and lifelong learning. The Enterprise Strategy Group report outlines the strategy being pursued by Government to move all enterprises in Ireland towards higher value added and knowledge based activities. Subsequent reports and strategies including the "Strategy for Science, Technology and Innovation, 2006-2013”, the “National Skills Strategy” and “Building Ireland’s Smart Economy” further develop and build on these objectives.
Competitiveness is a key driver of economic development and my Department closely monitors Ireland's competitiveness for this reason — by a variety of means including the National Competitiveness Council's annual work in the area, which involves benchmarking the country's competitiveness performance against key competitors across more than 140 competitiveness indicators. The results of this analysis highlight areas where action needs to be taken to improve Irish competitiveness for enterprise, and informs the policy measures formulated to support Irish economic development.
The model of manufacturing in developed countries is changing and Irish enterprises are adapting to those changes. The "Report of the High-Level Group on Manufacturing” contains some 26 recommendations directed at key areas of innovation and productivity leading to transformational change, reskilling and management development, which will ensure Irish manufacturers, can continue to compete successfully on international markets and provide high value sustainable employment.
We continue to be one of the world's leading service exporting countries. The report of the Services Strategy Group, "Catching the Wave: A Services Strategy for Ireland”, sets out new policy proposals on how we can ensure the continued development and growth of Ireland’s services sector and outlines how to maximise the future returns to the country from services activities in all enterprises, both current and potential. Implementation of the recommendations – some of which are already being acted on by the Enterprise Agencies — will enable Irish service companies to exploit new and exciting opportunities, such as eLearning, business and financial services, professional and consultancy services and others.