Economics: The ebb and flow of redundancy notifications alongside a spate of job announcements continues apace in the Irish economy. The Department of Enterprise, Trade and Employment's actual redundancies data indicate that in January and February of this year the combined number of redundancies recorded was 4,299 compared to 3,309 in the first two months of 2005 - an increase of 30 per cent.
While the rate of redundancy growth was closer to 50 per cent in 2001 and 2002, the current levels are as high in absolute terms, possibly heading as high as 30,000 for the year on current trends. Yet despite this job destruction, net job increases were 87,000 in 2005 and employment growth in the order of 60,000 is expected for this year.
It is difficult to discern specific patterns from the company names in the news but the trend towards higher concentration in internationally traded services activities against the loss of jobs in primary agriculture and manufacturing industry is evident.
The demise of a primary product industry like Greencore's sugar production, while eBay, an internet sales and auction company, announces additional jobs re-emphasises such an interpretation. Within manufacturing, Johnson & Johnson's disposable contact lens manufacturing at Vistakon is expanding by 120 jobs, but Wyeth Medica announced 250 job losses due to changing product demand.
While new manufacturing jobs are arriving, there are more disappearing. The NEC electronics closure came as the company cited high costs in its need to move to lower cost locations. One common feature, therefore, appears to be the force of globalisation.
Ireland is generally regarded as one of the most globalised economies in the world. The A T Kearney/Foreign Policy index of globalisation ranks Ireland second behind Singapore in 2005, having been ranked first for the previous three years.
The Irish labour market reflects this globalisation phenomenon most strikingly. Over the past 50 years it was Irish workers who were engaged by globalised corporations in Ireland as a byproduct of the policy of attracting foreign direct investment. More recently, Ireland has opened up its labour market to an expanding European Union.
These trends in the Irish labour market mirror the globalisation influences Thomas Friedman, the acclaimed New York Times columnist, advances in his book The World is Flat. Friedman describes three waves of globalisation.
The first wave, or Globalisation 1.0 as Friedman labels it, was led by countries with the great free trade push of the 18th and 19th centuries. The second phase, Globalisation 2.0, was advanced through the 20th century by corporations. Friedman argues that since 2000 we have been witnessing the flattening or connecting of the world by Globalisation 3.0, which is driven by the individual. Technical advances are making it possible to have global reach to service diverse marketplaces and deliver innovative products.
This capacity already is fundamentally affecting the labour markets for wealthy countries such as Ireland. The trend will continue towards more offshoring of jobs - and not just in manufacturing, but also in "impersonal services". These are services that can be delivered electronically over long distances with no reduction in their quality.
These jobs will not necessarily be low-wage jobs either. Eventually, richer countries with higher wage levels will need to shift their workforces away from these impersonal services and manufacturing and towards personal services. However, the threat from offshoring need not be exaggerated. The first industrial revolution did not remove agriculture completely from the rich countries nor did the second banish manufacturing. Globalisation 3.0 will not drive all impersonal services offshore either, but it will cause dislocation as societies try to adapt.
In Ireland, the redundancy figures over the past decade demonstrate that jobs are lost not just in manufacturing but also in the services sector. In 1995 some 46 per cent of all redundancies occurred in manufacturing, while 40 per cent were in services jobs. By 2005 the positions had been reversed with 34 per cent of redundancies occurring in manufacturing and 53 per cent in services. However, in net terms, services jobs are increasing while the trend with net manufacturing jobs has not been so sanguine.
These trends over the past decade have been occurring against a global economic backdrop of a huge supply of labour stock arising from the emergence of China, India and Eastern Europe. The churning of jobs in our economy is an inevitability given its openness and the force of globalisation. For high-income economies such as Ireland, the wrong reaction would be to resort to trade protectionism.
Comparative advantage used to be through location and natural resource endowment, but now it is increasingly being created by human capital endeavour, leading to greater technical innovation. Emerging nations, through their lower-cost competitive advantages, will continue to export in order to accumulate the necessary funding to increase their own consumption levels. This consumption will give rise to demand for additional goods and services, and it is these imports that create the opportunity for Ireland.
The third wave of globalisation, empowering the individual through technology such as the internet, creates a potential for equality of opportunity but with no guarantee of equality of outcome. To harness this opportunity, the digital divide within our own society in terms of access to computing capacity must be addressed with greater alacrity.
Greater rollout of broadband supply is only part of the solution, but still critical. To ensure that net job gains are secured and that movement is up, the value-added chain requires adaptability and flexibility in worker re-training.
The workplace change agenda must be a priority to allow for Irish society to react to the pace of global change.
Danny McCoy is director of economic policy at Ibec
