Irish Industrial Strategy- Few prospects for hope on the horizon. Marie Sherlock SIPTU Ireland March 2009

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1 Irish Industrial Strategy- Few prospects for hope on the horizon Marie Sherlock SIPTU Ireland March 2009

2 Snapshot of Irish Manufacturing to date Industry accounts for 22% of total GDP and 14% of total employment. 10 years ago 20% of employment. Food and beverage processing-largest manufacturing employer (20%) Chemicals second largest industrial employer (11%) but highest industrial turnover High dependence on small number of sectors: Chemicals and optical & electrical equipment account for 50% of total industrial turnover, employ 1/3 of total employment (2007) Foreign companies account for just under half of all industrial jobs (2008).

3 Employment trends over past 12months Across whole economy: 123% increase in redundancies and 87% increase in numbers signing on for unemployment benefit in the 12months to February Construction: biggest collapse across all sectors, annual fall of 22% to February Manufacturing not immune: overall numbers employed has fallen by 4% by end There is lag in data but there is widespread reduction in working hours, voluntary redundancy offers etc.

4 Domestic pressures Collapse of construction: knock on impact on building supplies and production and sales of white goods and other interior design products Uncertain prospects for public finances and banking sector so consumer confidence is at record low levels: knock on impact for general retail sales, car sales, manufacturing of car parts and food processing sector. Non pay and pay costs: utility costs remain close to the highest across EU and labour costs growth accelerated as part of catching up process, knock on impact on traded sectors

5 International Pressures Sterling: down 20% in past 12months, major implications particularly for small and medium sized businesses. Global demand: Ireland as small open economy, very exposed to US FDI

6 Current firm level responses Pay freeze: Non payment of National Pay Agreement agreed last September between Government, Trade Unions and Employers. Redundancies: Particularly for building supplies producers and car component plants, a mix of voluntary and compulsory Reduced working week: scaling back of production cycles Paid Career breaks: banks and other large firms have offered 2-3years career breaks with guarantee of job Relocation: most notable example is relocation of 1900 jobs in Dell s main manufacturing operation from Limerick to Poland last month Closures: few major closures so far

7 The State response (i) None! Those on 3 day week qualify for unemployment benefit but cannot undertake training from employer during that time. Those on reduced working week must wait 2years before can access State provided back to education courses. Plan does exist for how State should benefit from when global recovery comes. Published before Christmas, it sets out plans for increased supports for venture capital etc. However, it offers no solutions to getting into a recovery situation.

8 The State response (ii) Effort to save existing jobs has amounted to paying visits to management by the Government when the job losses are announced. Government refused to act as guarantor on 37m loan to Waterford Crystal 12months ago. The amount pales in comparison to support provided to Banks. Interim Budget due out in April so it is hoped there will some new initiatives announced then.

9 The Unions and Social Partners Response Proposals put forward: Reallocate funds for R&D to companies for use to train and upskill workers Develop Flexicurity style social welfare scheme linking unemployment benefit to earned wage and training on days not in employment Considering possible cut in employers PRSI to reduce overall labour costs.

10 Future industrial policy FDI has been centrepiece of industrial policy over past three decades. Corporate tax rate of 12.5% has been viewed as critical to attracting foreign companies Some support for indigenous industry but failure to gain critical mass. Very large number of small SMEs in Ireland Question now arises as to what our future industrial base will be.