Sinking into the depression of our recession

IN January this year, then Employment Minister Micheál Martin, not for the first time, said the secret to Ireland’s economic growth lay in ‘high-end’ high-skilled manufacturing rather than the traditional low-cost unskilled area.

The last nine months have proved that Ireland is not capable of holding onto either category.

Manufacturing jobs have been lost at a rate of 130 per week since the start of the year, a total of just under 5,000 job losses due to the economic downturn or because they have chosen to move their operations to a cheaper cost base.

In January alone, there were 1,300 jobs lost in the manufacturing sector, while in April, there were more than 850.

The 5,000 manufacturing jobs which have gone have not solely been in basic assembly areas. The chemical firms which Mr Martin would like to maintain in his home county of Cork have been shedding the jobs on an almost monthly basis.

Skilled workforces, such as those at medical device manufacturer Abbot in Galway or computer manufacturer Iqon in Dundalk, have not been protected from the axe by their knowledge base.

According to the latest central statistics office figures, there has actually been a 3.5% decrease in high-end manufacturing output over the last 12 months.

However, to be fair to now Foreign Minister Martin, every sector of the economy is facing the same meltdown as the high-skilled workforce to which he aspired.

Construction is almost at a standstill — figures today showing house planning permissions have shrunk by a third. Construction companies which suckled plentifully from the Celtic Tiger for up to 15 years are not getting the bitter after-taste of a recession.

Land that developers snapped up at high cost two years ago is now worth a fraction of the price. The high tax breaks with which they were tempted have long gone. Therefore private development is no longer lucrative and developers are off-loading their employees and contractors at a rate of knots.

It was hoped the multi-billion euro projects in the national development plan might have cushioned the blow. However, now it seems that too is going to be scaled back in next month’s budget as the Government desperately counts its pennies.

The financial sector which had appeared to be one of the few bastions of safety from the dole queue — staff from the struggling mortgage companies had hoped to migrate to banks — is also looking increasingly unsettled as financial institutions fear they will follow in the footsteps of the American banks. News that HSBC may be about to shed jobs could be followed by announcements in other financial institutions.

One of Ireland’s most lucrative jobs generators for so many years has been tourism.

However, the global downturn means key markets such as British and American tourists are simply not coming here.

That means hoteliers are seeing their profits shrivelling and that means they are having to cut their biggest overhead — staff pay.

All of these industries, particularly construction and tourism, generate thousands of jobs in ancillary trades. While they are less quantifiable, their loss has no less of a brunt on the economy.

The future is not looking any brighter. According to the ESRI, the recession in which we find ourselves will be a noose around the country’s neck beyond the end of 2009.

In the coming days, we can expect to hear the announcement of hundreds of job losses in Aer Lingus.

Further manufacturing job losses are also inevitable. The only small hope in the sector is the fact Eastern European pay scales are increasing rapidly though possibly not fast enough to slow the exodus from Ireland just yet.

Even Taoiseach Brian Cowen has admitted that while the multinationals are still productive and have still not started a mass exodus, “one would have to question how long that’s going to last”.

Last week’s national wage agreement draft proposed a 6% pay increase across the workforce. The pay pauses before those increases kick in range from three months in the private sector to 11 months in the public.

Construction industry employers are already saying that to adhere to the deal would drive many of their members out of business. It cannot be ruled out that many more employers in other sectors will be claiming inability to pay for fear of being driven out of business.