IDA maintains warnings over massive job losses

IDA IRELAND has been warning about massive job losses in the technology sector for the last three years, spokesperson Colm Donlon said yesterday.

The State agency said it has been urging businesses to prepare for the changes needed to survive the aftermath of the ‘Celtic Tiger’ boom years and increase the value of their products or face closure.

Mr Donlon said that prior to the economic boom, €100,000 would be enough to buy you an ordinary three-bed semi-detached home. Now you would not be able to get the same house for less than €250,000.

“To put it simply, the workforce here cannot afford to work in low end industry. They would not be able to survive on those types of wages, given the cost of living. In a very short time, Ireland has moved from the lag economy in Europe to the country with the highest growth. Industries have to change to match this or they will close or move abroad.”

He pointed out that the investment by the multinationals was based on this low-cost economy. The investment now has to change so that the people who work for these multinationals are paid enough to live on.

“In the 1980s the Government set up a temporary grant scheme for each job to try and ensure jobs stayed in Ireland. After the recession, the companies still closed down. Irish people were paying 60% tax to help subsidise companies to provide jobs that would not survive. Now every job has to be sustainable in that it is based on the company’s own profit. If the job cannot be paid for from the company’s own profit, then the job has to be shed, or be moved to somewhere where it will be profitable to provide this job,” he explained.

Eastern Europe, in particularly Poland, the Czech Republic and Hungary, are the countries now competing for those low end manufacturing jobs. These countries have massive work forces, are based in the heart of Europe with good infrastructure and wages are about one third that expected by Irish work forces, he said.

Companies setting up in Taiwan or China, countries competing for electronic assembly line work, can expect to pay their staff $1 a day or less, but then have to factor in higher exporting costs.

Despite the high level of job losses, Mr Donlon said that given the country’s work force of 1.8m, between 10,000 to 15,000 jobs have to be lost every year in order to make sure there are enough workers available for new projects.

“There has to be a certain amount of job loss every year to ensure that new industries coming in will have enough people to staff their operations. Otherwise we stagnate. This year there will be higher job loss than creation.

“But we are creating jobs as well. The IDA will help create 12,000 jobs this year, but we expect to lose about 15,000,” he added.

“Companies like Wyatt and Intel are recruiting at the moment. We hope sufficient numbers of those who have lost their jobs will transfer to these new ones, but that depends on their skills.

“If they don’t have the sufficient skills to get the jobs, then we have to look to FAS and the Institutes of Technology to upgrade their skills,” he said.