Job losses: Reverse the neglect of SME sector

Job losses: Reverse the neglect of SME sector

The loss, within a matter of days, of more than 800 jobs at two US multinational companies highlights, once again, the nature of Ireland’s unbalanced economy and the urgent need to assist, promote and encourage indigenous industry.

It also reveals a worrying lack of vigilance by Government ministers with responsibility for protecting Irish jobs at multinationals located here. Minster for Business, Enterprise and Innovation Heather Humphreys said she did not have any advance notice of the lay-offs at Novartis in Cork, while her junior minister, Pat Breen, said the decision by the US multinational Molex to close its Shannon base came as a “lightning shock” to him.

This is despite the fact that, according to Minister Humphreys, “we are in close touch with all the (multinational) companies all of the time”.

She is correct, however, in acknowledging that unpalatable decisions are sometimes made in boardrooms outside of Ireland and they have an impact on jobs here. The job losses should also serve as a reminder to the Government that over-reliance on foreign direct investment makes us unnecessarily vulnerable to multinationals that have no ties to this country other than to make profits.

In fact, according to economist Michael Hennigan, Ireland has two economies: The foreign-owned exporting sector that has driven economic transformation and its underperforming indigenous counterpart which is vulnerable to Brexit and global ill-winds.

At the same time that the Novartis job losses were being announced, ISME was holding its annual conference in Dublin. In his speech to the conference, Fianna Fáil spokesperson on business, enterprise and innovation, Robert Troy, addressed the over-reliance on multinationals. He told delegates:

For the past decade, SMEs have been treated as an afterthought, while the red carpet is rolled out for the multinational sector

But the reality is that successive governments, including those led by FF, have pursued foreign direct investment to the detriment of Irish owned businesses.

Most shameful of all is the fact that the National Training Fund — an employers’ levy aimed at supporting on-the-job training — is running a surplus of more than €450m. A fraction of that money could be used to raise the standard of entreprenurial and management skills in Irish SMEs and help them become bigger and better at what they do.

Indeed, the Organisation for Economic Co-operation and Development (OECD) suggests we adopt the German model of assisting SMEs — known as “mittelstand” firms in Germany. The German “Mittelstand Action Program” concentrates on developing entrepreneurship, knowledge about finance, and exporting skills, all areas where smaller Irish businesses are weak. Mittelstand firms, many of them family owned, are the driving force behind the German economy.

Ms Humphreys commissioned the Paris based thinktank to carry out a review of Irish SME policy and the OECD found it wanting. She showed wisdom in commissioning the report. She should now show similar wisdom by implementing its recommendations.

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