Workers spoilt for choice in rich economy

 

Full employment means workers will have all the options next year in the Republic's booming jobs market.

But after another record year for job creation - unemployment fell below 4 per cent for the first time - employers will face increasing pressure to secure and retain staff in an economy that is fast running out of surplus labour.

With the Government forecasting that 10.7 per cent gross domestic product growth this year will dip to a yearly average of 6.9 per cent in 2001-2003, no one is suggesting the jobs boom will run aground any time soon.

On the contrary, employers can expect another difficult year in 2001 and, at least at senior grades, more pressure on wages.

In addition, retention strategies and childcare provision will become increasingly important in a market, where some well qualified job-seekers can play two or three potential employers off each other at final interview stage.

Such circumstances are indeed new. Whereas Irish society was dogged for generations by waves of emigration due to crippling unemployment rates, the thrust now of the Government's jobs policy is to tap new sources of labour among older Irish people, women working in the home and from outside the EU.

This is important. The State will need about 200,000 new workers by the end of the National Development Plan, according to the Tanaiste. Ms Harney Tanaiste, Ms Harney. She says new workers are needed for the economy to "stand still" - and the State training authority, FAS, believes there are 40,000 immediate vacancies.

Ms Harney has said the processing of Irish work visas and permits may be subcontracted to private firms or to FAS.

Delays in this process - and the high cost of property and accommodation in Dublin - are seen as significant factors slowing the arrival of non-EU workers into the State.

Previously focused on training the unemployed, FAS toured the world this year seeking workers for Irish-based companies. Further efforts will be made next year, when its Jobs Ireland programme visits Russia, India, Australia, New Zealand, Canada and a clutch of European states.

The managing partner at recruitment consultants Merc Partners, Mr Bill Hennessy, said workers will be needed in the international marketing, telecoms, IT and financial services sectors.

As the boom continues, the attentions of IDA Ireland are changing too.

That body, which has attracted significant inward investment from high productivity firms based in the fast-growing US economy, wants to attract 50 per cent of all foreign investment to the Border, Midlands and West (BMW) region by 2003.

If successful, this will be three years ahead of the Government's deadline of 2006. As an indication that this objective is attainable, IDA Ireland's planning division manager, Mr Dick Ryan, cites commitments this year by US drug firms such as Cardinal Health and Teradyne, and the credit card company MBNA, to create jobs in the region.

He added, however, that infrastructure shortages in the region, on the electricity network in particular, may hold back development.

The IDA's other objectives are to foster Internet-linked developments and to "upgrade" the quality of low-productivity investments by existing firms.

This, said Mr Ryan, was crucial to prevent job losses, the ordinary rate of which runs at 5 to 7 per cent. "While it's very tough on the individuals concerned, it's unavoidable," he said. He cited the recent loss of 750 jobs at Motorola's Dublin plant. Low-productivity workers, he added, were the most vulnerable in an environment where low-wage economies increasingly compete with the Republic.

Evidence of such competition was seen last week when IDA Ireland lost a prestigious US investment to Hungary.

Another potential weakness lies in the Republic's heavy dependence on US IT firms, a slew of which issued profit warnings this year.

Blue-chips that issued such alerts included Intel, Microsoft, Compaq, Dell, Apple and Xerox. All have Irish operations in a high-tech sector employing about 72,000.

Particularly vulnerable is Xerox, which employs 2,600 people at Dublin and Dundalk. Facing financial crisis, the company has embarked on a cost-cutting assessment and commenced disposals last week.

When the general manager of its Irish operations, Mr Joe Browne, was asked whether the review would impact on its planned $500 million (€557 million) expansion at Dundalk, he said: "Clearly all operations are under review. We have no plans to reassess the scale of development in Ireland in the long term."

Mr Browne added: "Retention and motivation is my absolute priority for the next three months." Was high attrition linked to Xerox's difficulties? "You can do without it, but it's not a defining factor," he said.

Anecdotal evidence suggests Mr Browne's experience is not unusual. Companies are raising salaries because they fear losing key workers, said Mr Hennessy at Merc Partners.

He added: "It's a very, very tough market. Retention is an issue. People have huge difficulties committing to take jobs even at management level. People are making job decisions on the basis of location, particularly in Dublin."

So can the jobs boom last? Yes, said NCB Stockbrokers' chief economist, Mr Dermot O'Brien. The Republic could record 3 per cent employment growth in 2001, the equivalent of about 50,000 jobs, he said.

"I would still be optimistic. We're still sticking with the notion that we could sustain pretty good growth next year. GDP growth of 6-7 per cent is probably sustainable."

There was "nothing magical" about the unemployment rate of 3.7 per cent, he added, and every possibility that this could yet fall to 2.5 per cent.

The co-head of equities at Merrion Stockbrokers, Mr Shane Nolan, also saw more potential for growth. "The reality is that Dublin has hit full economy. The economy outside Dublin is going to grow more rapidly than in the city."

He added: "I think people have underestimated the effect of low corporate tax on the services sector. You're going to see more inward investment in the coming year. The financial services sector in particular should continue to expand."

Many observers believe such conditions amount to a "workers' market". When asked whether this was so, Mr Ryan at IDA Ireland was clear: "It was a year ago, but it's more pronounced now."