Enda needs to be a better salesman when flogging economic recovery pitch
By Colette Browne
ENDA Kenny, writing in a national newspaper on Monday, painted a picture of the Irish economy so unrecognisably rosy that I had to pinch myself and check the unemployment figures to be sure we’re still in crisis.
Headlined “together we have started to turn the tide on recovery”, his column regurgitated the hodgepodge of platitudes that are exclusive to the lexicon of government members.
Declaring that “the sacrifices of the Irish people are beginning to pay dividends”, the subtext was clear: the beatings will continue until morale improves.
Mr Kenny said we were “going in the right direction” and the “light at the end of this tunnel” was finally in sight. He needs to adjust his sat nav to avoid the oncoming locomotive.
One metric the Taoiseach uses as proof of the economy’s Lazarus-like rise from the dead is Irish export figures. Mr Kenny said “they’re at an all-time high” and signal Ireland’s recovery is well under way.
Regrettably, the headline figures, relied on by Mr Kenny, are a mirage. So, for example, goods exports. They were €92bn last year, up 1% on 2011. Despite this increase, Davy Stockbrokers were cautious on Monday, saying: “monthly data on Ireland’s export performance have painted a worrying picture”.
Mr Kenny failed to mention them, but preliminary estimates for December reveal that goods exports fell by a whopping 15% that month, and were down 7.5% in the last quarter of 2012.
This precipitous decline was largely due to the pharmaceutical sector and the so-called patent cliff, the expiration of a number of patents on drugs manufactured in Ireland.
This has started alarm bells ringing because the pharmaceutical industry is worth 10% of GDP. The export figures are also distorted because companies use Ireland to book manufacturing sales for products that are produced in other countries.
Dell, with a turnover of €9.9bn in Ireland, remains, according to one database, this country’s biggest manufacturing exporter, despite it having closed its manufacturing base in Ireland, with the loss of 1,900 jobs, in 2009. As goods exports slow down, service exports, which account for more than half of all Irish exports, are hugely overstated.
Mr Kenny never tires of telling us that he wants to make Ireland the best small country in the world in which to do business, but Ireland is already the best small country in Europe, for multinationals, in which to do their taxes. Google, for example, channels 45% of its global revenue through Ireland, while Facebook Ireland accounts for 40% of that company’s global revenue — figures that are not reflected in the risible levels of corporate taxes paid by those companies.
Routing these revenues through Ireland is hugely beneficial for these multinationals, and for others like them, but the benefits that accrue to the economy here, from vast sums of money resting briefly in business accounts, are negligible.
Since 2000, the value of service exports has skyrocketed by more than 300%, but this exponential increase has not been accompanied by a commensurate increase in employment in the sector, which has remained static.
Business and finance website, Finfacts.ie, has estimated that Ireland’s service exports are overstated by as much as 33%, meaning that the figures, the only positive economic metric the Government can routinely cite, are a gross distortion.
The official figures do not present “credible data on what should be termed ‘exports’ and do not serve the public interest,” was the withering appraisal of Finfacts.
This assessment is borne out by decidedly lacklustre employment figures in the sector, with just 50,000 workers, out of a workforce of 1.8m people, responsible for 70% of annual exports.
Simply put, if the Government is relying on export companies to solve the unemployment crisis, we’re in big trouble.
Last year, despite all the breathless hyperbole from government about our booming export figures, industry was the worst-performing sector in terms of jobs growth, with employment down 6,300.
As employment in industry continues to plummet, Mr Kenny and other government members have been popping champagne corks since it was revealed that overall employment figures last year recorded their first annual increase since 2008.
At the risk of raining on their parade, this increase was a very underwhelming 0.1%, a figure you won’t find touted in any government press releases, and, according to the spoilsports over at Davy, “the underlying picture is that private sector employment has been broadly flat since the start of 2011”.
This 0.1% employment growth, recorded in the last six months of 2012, is also a pretty poor return on all of the much-vaunted jobs strategies (four at my count) the Government has heralded since its election.
First, there was the jobs budget, in May 2011, which was supposed to create 100,000 new jobs. Then, in October 2011, Enterprise Minister Richard Bruton announced his intention to devise a strategy to create 200,000 jobs.
True, he was vague on the details, and even fuzzier on the timeframe, but was nevertheless confident that 200,000 jobs could be delivered.
Fast forward to November 2012 and there was a “green” jobs strategy to create a more modest 10,000 jobs, while, at an “Action Plan for Jobs update” last month, the 200,000 jobs target had mysteriously disappeared and had been replaced with the original 100,000 figure.
To date, with a 0.1% employment growth, just 1,200 net new jobs have been created — meaning the Government has only 98,800 to go before its term of office expires in 2016.
This target, dependent on a recovery in the flat-lining domestic economy, seems herculean in its ambition, considering that retail sales are continuing to plunge, having fallen 25% since the start of the recession, thanks to the near-eradication of families’ disposable income as a result of five successive years of budgetary austerity measures.
Meanwhile, the banks, the black holes into which we have been shovelling money since 2008, are still dysfunctional, with lending to small and medium businesses, which employ the vast majority of workers, down by nearly 5% last year.
Mr Kenny, in his column, was accentuating the positive, but his cheery appraisal of Ireland’s moribund economy does not accord with the fact that, for at least another two years, there is nothing but service cuts and tax increases on the horizon.
His insistence that the Government has “taken actions to protect the most vulnerable” also rings hollow: two announcements in the past week, the abolition of the mobility grant and the slashing of a disability grant by 40%, directly attack those he claims to be protecting.
The Taoiseach, ultimately, is a salesman, hawking government policies to keep a jaded public pliant, but it’s best to examine the small print instead of being gormless and swallowing the sales pitch.
© Irish Examiner Ltd. All rights reserved