Closure exposes job creation policies

THE Semperit closure has been followed by the usual calls for task forces, replacement investment etc, yet Irish industrial policy now faces choices which such standard responses blithely ignore.

Competition from low wage producers outside Europe is hardly new. The novelty is the pressure since 1989 from central and eastern Europe. Continental firms in particular are finding they can produce in Poland or Hungary for a fraction of the wages they pay in Germany or Ireland.

This is particularly true for total wage costs as opposed to simply direct wages. Such countries are even closer to the European market than Ireland and they offer political stability, a developing infrastructure - and lower wages.

In this situation, Irish industrial policy faces a choice of strategy. One option is what researchers of globalisation call "the race to the bottom", trying to win jobs from the competition by lowering wages and cutting, indirect wage costs.

Crucial here is the question of welfare. If welfare payments are relatively high and welfare is badly policed, then there is no pressure on people to take low wage jobs. In the US, welfare is being replaced with "workfare". In the most extreme workfare schemes, as in Riverside, California, the aim is to push the unemployed into jobs - any job - as quickly as possible.

If you want welfare, you have to look for a job every day and take the first one you are offered. Such programmes therefore push down - wages and lower job security in the local labour market and they increase the extent of casual and low paid work. Of course, in President Clinton's phrase, they can "end welfare as we know it"; however, they do little to end poverty - even if they do make the poor work.

In the EU, Britain is approaching this strategy. Irish politicians would - at least in public - deny they were doing the same. The alternative is often termed "the high road" - competition through skill and innovation - yet there is no evidence that Irish policy has strayed much beyond the foothills of this path.

One prerequisite for this strategy is co operation and social partnership between unions and employers. In recent years, much has been accomplished in terms of national agreements since the Programme for National Recovery. However, the problem, more so than in the past, is that many foreign firms which the IDA is trying to woo are determinedly non union.

But, as Semperit shows, good industrial relations do not by themselves guarantee jobs. The highroad strategy requires that the entire workforce is continually upgraded.

GOVERNMENT policy here is to intone the virtues of "our skilled work force" - and do nothing else. Politicians (and trade union officials) need to face the fact that the "skilled Irish workforce" and the "wonderful Irish educational system" are merely figments of their imagination.

When people make such claims, they are usually comparing us with Britain - which is hardly a sensible comparison given the notoriously low standards of British vocational education.

In 1992, the Culliton report argued that Irish industry suffered from a "low skill equilibrium" in which employers are satisfied with the skills of their workforce merely because their products do not require higher skills.

In 1993, the NESC report on education and training policies compared the best Irish owned firms with their European competitors. Irish firms emerged seriously deficient in technical and managerial skills. Overall, NESC showed the Irish labour force is under skilled and ill prepared for the sort of change now occurring.

The explanation is not far away. FAS is the main training agency in the State, but it makes virtually no contribution to increasing the skill level of people already at work.

FAS concentrates on training young people who are about to enter the labour force and on various forms of community enterprise for the unemployed. Its main intervention for those in work is the training support scheme, which absorbs about 1 per cent of its budget. Not surprisingly, one response to welfare fraud is the proposal to merge FAS and the Department of Social Welfare.

In Ireland, a smaller proportion of training resources are devoted to training those in work than in virtually any other European country. At best, the claims about "high skills" refer to young people entering the workforce - they certainly do not apply to those people who have been at work for several decades.

IN PRACTICE, Irish education is about getting children into third level, hence the national obsession with the Leaving Certificate. Thus, compared to many European countries, vocational education remains of low status and with few resources.

Within third level, the Government has responded to the increased demand for places by providing more places in humanities - as IBEC remarked in its submission to the HEA in 1995, this seems to have been because such places are cheap rather than because of any economic contribution they might make.

Many of the Semperit workers have been working for 20 years or more. Their chances of finding another job are slim. Their plight suggests that sooner rather than later Ireland will be pushed into a race towards the bottom - and they will be the losers.