Rural unemployment blackspots have no access to Capital
Now comes the hard part 20 April 2008 By Richard Curran Sunday Business Post Rural unemployment blackspots didn’t even do well during the boom years, so what chance do they have of surviving an economic slowdown? Unemployment numbers are heading the wrong way. The number of people signing on the live register is rising at a pace not seen for more than a decade. Headlines about job losses in companies such as Iralco and Waterford Crystal are causing concern. While the overall unemployment level remains quite low nationally, it masks the harsher reality that some regions around the country are suffering more than others. A headline that says unemployment has hit 5.5 per cent may not seem too alarming, but in some towns in counties such as Donegal and Laois, numbers on the live register are rising dramatically. In the 12 months from March 2007 to March 2008, the number of people on the live register in Buncrana in Donegal rose by 554 (33.1 per cent). In Portarlington, Co Laois, the increase was 490 (56.6 per cent). Down the road in Portlaoise, the increase was 600 (66.5 per cent). There were more than 1,000 extra people signing on last month in Newbridge, Co Kildare, and an extra 521 (39.5 per cent) in Tullamore, Co Offaly. Employers and trade unions agree on the worrying nature of job losses in rural areas and in small towns - many of which found it hard to create sustainable employment in the good times, never mind during a downturn. However, the employers and unions disagree about what needs to be done to halt rising unemployment. Employers warn about competitiveness and the need to control wage increases, with Isme, which represents small and medium-sized firms, calling for a freeze on wages. The unions, meanwhile, look to the state to act more aggressively in bringing in new investment and public sector funding. Some 600,000 new jobs have been created in Ireland in the last ten years, bringing the workforce to more than 2.1 million people. It has been an extraordinary achievement - but a closer analysis of the figures shows clear patterns that don’t always point to long-term sustainability. According to the 2007 employment survey published by Forfas, the total number of people employed by Irish-owned firms that received assistance from state agencies such as Enterprise Ireland, rose from 140,000 in 1998 to 153,000 in 2007 - a net increase of 13,000. The total numbers employed by foreign-owned firms assisted by the likes of IDA Ireland rose from 136,000 to 151,000 in the same period. That brought the total net increase in state agency-assisted foreign and Irish-owned firms to just 28,000 in nearly a decade. While much progress has been made in creating service and construction jobs, many of the traditional industries located in smaller communities have virtually disappeared. In 1998, 6,500 people were employed by Irish firms in the clothing, footwear and textile industries. By 2007, that had fallen to just 1,469, a drop of more than 5,000. Foreign-owned firms in this sector reduced employment even more dramatically, from 6,400 to just 810 between 1998 and 2007. Aside from the performance of particular sectors, the overall decline in the number of people employed in manufacturing has caused concern, particularly in regions where it has proved difficult to replace old-style jobs, with higher end, so-called ‘knowledge economy’ jobs. Employment in manufacturing has been falling in Ireland for the last decade. The total number of people employed full-time in manufacturing grew between 1986 and 1995 from 197,000 to 209,000. But in the last ten years, manufacturing employment in companies assisted by state agencies fell by 17,000. A regional assessment of job creation also highlights a number of gaps in the government’s stated strategy of creating employment in all parts of the country. For example, the number of people employed by foreign multinationals in the border counties fell by nearly 5,000 between 1998 and 2007 - the Celtic Tiger years - and has been falling for a decade. A fall of 4,000 was recorded for the mid-west since 2001, while places such as Dublin put on an extra 11,300 since 1998, and the southwest added nearly 7,000 more IDA-backed jobs. The border counties have been worst affected by the decline in manufacturing jobs and the poorer track record in attracting foreign multinationals. Indigenous industries in these counties have created a lot of extra employment in the past decade. However, despite an extra 2,000 people working for Irish-owned agency-assisted companies, the total numbers employed in state-assisted firms in the border counties fell by 2,500 in the last decade. This is not the whole picture, of course. As with every other part of the country, thousands of other jobs have been created. Lots of companies - particularly those in certain sectors, such as retail banks - don’t rely on Enterprise Ireland or IDA Ireland for job creation assistance. Other professional service providers, such as accountants, solicitors and owner/managers of small businesses, have prospered. However, the vast majority of new jobs have been in the services sector and construction, and may be hit by an economic downturn. Politicians and community groups question whether sustainable long-term employment can be achieved in places such as Donegal, when it failed so badly during the boom years. There have been two task force reviews to tackle employment issues in Donegal, but with little apparent success. The Donegal Employment Initiative task force was set up in 1998 by Mary Harney, with the aim of creating 9,950 jobs by 2006. It got nowhere near that figure. Outside of tourism and retailing, the largest employer in south west Donegal has just 175 employees. According to Joe McHugh, the Fine Gael TD for Donegal North East, there are 18 unemployment blackspots in the county. Politicians such as McHugh are looking to state-funded infrastructure projects and decentralisation to help boost job creation. Of course, the unemployment blackspots do not represent the national picture - IDA Ireland, for example, is attracting new investment in key high-growth sectors. Companies in pharmaceuticals, biotechnology and medical devices delivered quality jobs, building on previous successes in computer software and hardware. Attracting quality research and development jobs is a key goal for the agency. However, the big factors affecting success are the international investment environment, tax breaks, available skilled workforce, competitiveness, wages, infrastructure and access to markets. While Ireland Inc can fulfil several of these criteria, particular regions may not have what it takes. Any contraction in inward investment will be felt most heavily in rural areas, where one big employer carries a large slice of the local community - as is the case with Iralco in Collinstown in Co Westmeath, where the loss of 430 jobs would have serious consequences. Nor does the replacement of one project with another always lead directly to new employment options for staff who have been laid off. For example, Waterford Crystal has agreed with unions to reduce its staff numbers in Waterford by 490. Last week, IDA Ireland announced 50 new jobs in Waterford with drugmaker GlaxoSmithKline, as part of an expansion of its existing operation. Very few, if any, of those Waterford Crystal workers would be suitable to take up any of the new jobs in GlaxoSmithKline. However, the government and responsible state agencies are hoping that the spin-off jobs that are created from new multinational investments will stimulate greater employment in the area. This has certainly been the case in bigger towns and cities, but people in areas such as Collinstown remain heavily dependent on a single large company for employment. If the challenges of creating sustainable employment in some regions could not be overcome in the boom times, it will be a lot harder during a slowdown.
Now comes the hard part 20 April 2008 By Richard Curran Sunday Business Post Rural unemployment blackspots didn’t even do well during the boom years, so what chance do they have of surviving an economic slowdown? Unemployment numbers are heading the wrong way. The number of people signing on the live register is rising at a pace not seen for more than a decade. Headlines about job losses in companies such as Iralco and Waterford Crystal are causing concern. While the overall unemployment level remains quite low nationally, it masks the harsher reality that some regions around the country are suffering more than others. A headline that says unemployment has hit 5.5 per cent may not seem too alarming, but in some towns in counties such as Donegal and Laois, numbers on the live register are rising dramatically. In the 12 months from March 2007 to March 2008, the number of people on the live register in Buncrana in Donegal rose by 554 (33.1 per cent). In Portarlington, Co Laois, the increase was 490 (56.6 per cent). Down the road in Portlaoise, the increase was 600 (66.5 per cent). There were more than 1,000 extra people signing on last month in Newbridge, Co Kildare, and an extra 521 (39.5 per cent) in Tullamore, Co Offaly. Employers and trade unions agree on the worrying nature of job losses in rural areas and in small towns - many of which found it hard to create sustainable employment in the good times, never mind during a downturn. However, the employers and unions disagree about what needs to be done to halt rising unemployment. Employers warn about competitiveness and the need to control wage increases, with Isme, which represents small and medium-sized firms, calling for a freeze on wages. The unions, meanwhile, look to the state to act more aggressively in bringing in new investment and public sector funding. Some 600,000 new jobs have been created in Ireland in the last ten years, bringing the workforce to more than 2.1 million people. It has been an extraordinary achievement - but a closer analysis of the figures shows clear patterns that don’t always point to long-term sustainability. According to the 2007 employment survey published by Forfas, the total number of people employed by Irish-owned firms that received assistance from state agencies such as Enterprise Ireland, rose from 140,000 in 1998 to 153,000 in 2007 - a net increase of 13,000. The total numbers employed by foreign-owned firms assisted by the likes of IDA Ireland rose from 136,000 to 151,000 in the same period. That brought the total net increase in state agency-assisted foreign and Irish-owned firms to just 28,000 in nearly a decade. While much progress has been made in creating service and construction jobs, many of the traditional industries located in smaller communities have virtually disappeared. In 1998, 6,500 people were employed by Irish firms in the clothing, footwear and textile industries. By 2007, that had fallen to just 1,469, a drop of more than 5,000. Foreign-owned firms in this sector reduced employment even more dramatically, from 6,400 to just 810 between 1998 and 2007. Aside from the performance of particular sectors, the overall decline in the number of people employed in manufacturing has caused concern, particularly in regions where it has proved difficult to replace old-style jobs, with higher end, so-called ‘knowledge economy’ jobs. Employment in manufacturing has been falling in Ireland for the last decade. The total number of people employed full-time in manufacturing grew between 1986 and 1995 from 197,000 to 209,000. But in the last ten years, manufacturing employment in companies assisted by state agencies fell by 17,000. A regional assessment of job creation also highlights a number of gaps in the government’s stated strategy of creating employment in all parts of the country. For example, the number of people employed by foreign multinationals in the border counties fell by nearly 5,000 between 1998 and 2007 - the Celtic Tiger years - and has been falling for a decade. A fall of 4,000 was recorded for the mid-west since 2001, while places such as Dublin put on an extra 11,300 since 1998, and the southwest added nearly 7,000 more IDA-backed jobs. The border counties have been worst affected by the decline in manufacturing jobs and the poorer track record in attracting foreign multinationals. Indigenous industries in these counties have created a lot of extra employment in the past decade. However, despite an extra 2,000 people working for Irish-owned agency-assisted companies, the total numbers employed in state-assisted firms in the border counties fell by 2,500 in the last decade. This is not the whole picture, of course. As with every other part of the country, thousands of other jobs have been created. Lots of companies - particularly those in certain sectors, such as retail banks - don’t rely on Enterprise Ireland or IDA Ireland for job creation assistance. Other professional service providers, such as accountants, solicitors and owner/managers of small businesses, have prospered. However, the vast majority of new jobs have been in the services sector and construction, and may be hit by an economic downturn. Politicians and community groups question whether sustainable long-term employment can be achieved in places such as Donegal, when it failed so badly during the boom years. There have been two task force reviews to tackle employment issues in Donegal, but with little apparent success. The Donegal Employment Initiative task force was set up in 1998 by Mary Harney, with the aim of creating 9,950 jobs by 2006. It got nowhere near that figure. Outside of tourism and retailing, the largest employer in south west Donegal has just 175 employees. According to Joe McHugh, the Fine Gael TD for Donegal North East, there are 18 unemployment blackspots in the county. Politicians such as McHugh are looking to state-funded infrastructure projects and decentralisation to help boost job creation. Of course, the unemployment blackspots do not represent the national picture - IDA Ireland, for example, is attracting new investment in key high-growth sectors. Companies in pharmaceuticals, biotechnology and medical devices delivered quality jobs, building on previous successes in computer software and hardware. Attracting quality research and development jobs is a key goal for the agency. However, the big factors affecting success are the international investment environment, tax breaks, available skilled workforce, competitiveness, wages, infrastructure and access to markets. While Ireland Inc can fulfil several of these criteria, particular regions may not have what it takes. Any contraction in inward investment will be felt most heavily in rural areas, where one big employer carries a large slice of the local community - as is the case with Iralco in Collinstown in Co Westmeath, where the loss of 430 jobs would have serious consequences. Nor does the replacement of one project with another always lead directly to new employment options for staff who have been laid off. For example, Waterford Crystal has agreed with unions to reduce its staff numbers in Waterford by 490. Last week, IDA Ireland announced 50 new jobs in Waterford with drugmaker GlaxoSmithKline, as part of an expansion of its existing operation. Very few, if any, of those Waterford Crystal workers would be suitable to take up any of the new jobs in GlaxoSmithKline. However, the government and responsible state agencies are hoping that the spin-off jobs that are created from new multinational investments will stimulate greater employment in the area. This has certainly been the case in bigger towns and cities, but people in areas such as Collinstown remain heavily dependent on a single large company for employment. If the challenges of creating sustainable employment in some regions could not be overcome in the boom times, it will be a lot harder during a slowdown.