Ireland has had more bad publicity that it would like in recent times – the last two and a half years to be precise. Even today the spectre of Ireland defaulting on its debts, failing to secure a satisfactory economic bailout, even a departure from the Eurozone, have shaken confidence in the Emerald Isle in every quarter. But the nation also gets a fair share of luck perhaps, as established investors continue to assess their Irish risk profile in a positive light. Ireland is winning investment projects that any other county would relish. For now Minister for Enterprise, Trade and Innovation Batt O’Keeffe TD, and IDA CEO Barry O’Leary can pause to take breath.
The recent PwC Survey shows that 200 Irish business leaders are more positive about foreign direct investment. 25% more are considering additional investment in Ireland compared to last year. Three-quarters said they are neither reducing investment nor closing existing operations in Ireland. The number of respondents considering closing operations in Ireland is down by almost half on last year, down to 8% from 15% in the previous year. MNC CEOs cited improving cost competitiveness (51%) as a critical factor to maintaining or increasing Ireland’s attractiveness as a location for foreign direct investment. This was followed by a continued commitment to a stable and low tax environment (43%) and enhancing investment in education (30%).
IDA’s rearguard strategy, enacted 18 months ago to focus heavily on re-investment, is bearing fruit. On 21 October HP confirmed to add 50-120 software support jobs. A change of policy in favour of openly supporting e-gambling sees online sports betting firm Betfair create up to 100 jobs at a new Dublin office from next year. Facebook will increase staff numbers at its Europe, Middle East and Africa (EMEA) headquarters in Dublin from 200 to 300 in 2011.
In the last ten days alone Accenture and Citi have both committed new jobs to the country. Accenture is to create a 100 new highly-skilled jobs (adding to the 1,300 people hired in Ireland today) to open a new concept research, development and innovation centre in Dublin, Ireland. Citi, the leading global financial services company, is to 250 new roles to its established 2,300 workforce over the next 18 months, mainly in funds management, client services and product development. The Irish FÁS Work Placement Programme has played a key role in this decision.
But the hole that Ireland is crawling out of is big. The unemployment rate in Ireland, peaking at 13.8% in September is now 13.5%. But the number of people categorised as being long-term unemployed rose by 6.5% in the year to the end of September, according to figures published by the Central Statistics Office (CSO). That’s almost 47% of total 299,000 unemployed at the end of September, compared with 25.5% a year earlier. Compare this to IDA’s contribution to jobs. IDA client companies created 8,837 new jobs in 2008 but net jobs fell by more than 1,000 to 136,000 in that year. In 2009 4,500 new jobs were created by companies supported by the IDA, but around 13,400 were also lost by these companies. IDA’s goal is to attract 5,000 new jobs in 2010.
Unemployment is the true gauge of economic performance. Despite these efforts the Irish government is accused by its critics of failing to stimulate the economy or invest in job creation. They have instead fostered the conditions for a prolonged crisis, they say. Indeed, analysts point put that the inability to devalue the Irish currency or to apply other monetary easing measures, means that the main control that the government and Central Bank can manage. The planned €4bn budget cut figure quickly became €5bn. The government now concedes that it will take at least €15bn of spending cuts and substantial tax increases to reach the EU-imposed target of cutting the budget deficit to 3% of GDP by 2014. Public spending cuts and tax rises threaten to depress the economy further. Despite IDA’s results and forecasts, the worst is far from over.