A NUMBER of reports on the prospects for economic recovery have carried warnings that job creation will lag behind export growth and that unemployment levels are likely to remain stubbornly high. That analysis should encourage the Government to concentrate to a greater extent on the development of indigenous industries. Multinational companies and their exports will provide a vital impetus towards employment creation. But, as in the late 1980s and early 1990s, the success of home-grown enterprises is likely to have a significant effect in terms of job creation.
Predicting a return to economic growth later this year, both the Central Bank and the Economic and Social Research Institute (ESRI) expect further job losses. Tough budgetary decisions, required to close the gap between Government income and expenditure, are likely to depress growth. And a slight fall in unemployment levels will be caused by a rise in net emigration, rather than through the creation of new jobs. In other words, a more creative approach is required from Government to tackle unemployment, which now accounts for one in eight of the workforce.
The Opposition parties have been particularly insistent on the need for a special Government jobs initiative. Recapitalising the banks will not, of itself, rescue the economy and generate employment in the short term. Small businesses, in particular, have complained that credit is extremely difficult to access and a majority of owner-managers are concerned their companies may be forced into closure.
A recent survey by the Irish Small and Medium Enterprise Association (Isme) showed that its members favour the establishment of a special development agency to cater for their particular needs. Nine out of 10 respondents believed Government policy was directed towards the attraction of foreign direct investment and fewer than one in five felt the Government was acting in their interests.
We need multinational companies. Their research and development facilities keep export figures healthy. Their sourcing of components and raw materials feed into local enterprise and create jobs. But domestic companies must also be encouraged to exploit opportunities at home and to expand into foreign markets. Decades ago, before the formation of the Progressive Democrats, Des O’Malley was a committed advocate of this approach. Its importance has not diminished in the intervening years.