IDA Ireland has delivered a succinct message: that the current spate of job losses and closures at multinational firms should not be seen as a harbinger of economic doom. In its annual report published yesterday, the agency was at pains to stress that "there is no exceptional trend occurring here".
On the contrary, the "contraction" currently being seen in some sections of the multinational sector, although not part of some grand plan, is to be expected as economic circumstances - both here and globally - continue to change with mixed consequences for multinational firms operating here. In some cases the outcome is job losses; in others it is job gains.
In any case, the IDA argues that the success of Ireland's current policies for attracting inward investment should not be judged solely on the jobs created. They must be viewed instead in terms of the quality and value to the economy of the activities undertaken here by multinationals. The objective is to win investment from companies involved in skill-intensive manufacturing and services and also the regional headquarters operations of multinationals. And, indeed, the IDA has had some notable successes in this regard attracting the likes of Google and eBay along with many big names in biotechnology such as Amgen.
It is a message that the IDA has been delivering for some time but it has been brought into sharp focus by growing concern over the economy. While our economic fortunes were being propelled by domestic consumer demand and house building, the success or otherwise of the IDA in attracting the next generation of multinationals to Ireland did not attract too much attention. But with rising interest rates sapping consumer spending and the housing market slowing, Ireland's ability to sell goods and services abroad will be crucial to continued economic growth.
At one level the timing is fortuitous. The tapering off of domestic demand coincides with a resurgence of activity - and thus demand - in European markets as the main continental economies strengthen. The problem is that costs have risen so sharply here that many Irish-based companies, including long-established multinationals, are finding it increasingly difficult to offer their goods and services at competitive prices in these markets. Inflation is currently running at 5 per cent and is threatening to undermine the current national wage agreement. Yesterday saw a meeting on the issue between the Taoiseach and the social partners. And although remedial measures are promised, the reality is that the inflation tide will be slow to turn.
Against this background, the strategy being pursued by the IDA will continue to be critically important to underpinning the economy by delivering replacement employment to compensate for further and inevitable job losses in the more established and less competitive parts of the multinational sector.