Ireland may become a second-class economy

IRELAND is in danger of becoming a second-class economy in a two-tier Europe, losing jobs and investment to other countries.

A report on the EU’s progress in becoming the world’s number one knowledge-based economy, due to be published today, warns some countries are failing to meet the targets. It blames individual governments for not implementing reforms to create more jobs and wealth. It also warns that while countries like Sweden, Denmark and Finland are striding ahead, they are in danger of leaving other countries behind.

The Irish business and employers organisation, IBEC, said yesterday that Ireland was in the second group and was lagging behind the northern countries. “To get into the first division, we have to make a lot of improvements, especially in competitiveness, our infrastructure and telecoms. And, of course, the big one is our labour costs,” said Cathal Lynch of IBEC’s Brussels office.

One of the most damning indictments of Ireland’s performance is in the EU’s innovation survey, where the country is ranked in mid-table. Of the 18 indicators, Ireland did well in only four: science and engineering graduates in the 20-29 age bracket; hi-tech European Patents Office Patents per head of population; home internet access, and hi-tech manufacturing value added. Hourly labour costs are growing at more than double the average EU rate, while the Irish Exporters Association reported falling market shares in 10 of the 14 EU countries.

EU spokesperson Gerrasimos Thomas yesterday admitted that Europe was in danger of not achieving its goals, and lagging further behind the US in job creation. “The Commission has introduced many of the reforms it was asked for, but we have a problem when it comes to national governments adopting and implementing them,” he said. Governments have slowed rather than increased the pace of reform. The real danger is that when the ten central and eastern European countries join the EU next year change will become even more difficult. The Government’s submission to the EU on its progress calls for greater State support for childcare to allow more women enter the workforce and acknowledges the need for regulatory reform and expanding it such as broadband networks.

A final submission will be made in advance of the EU leaders’ summit in Brussels in March when the whole issue of meeting economic and employment goals will be discussed.