Job creation - We must get our cost base right

News that 200 jobs are to be created by expansion of the pharmaceutical giant Allergan, which already employs 900 people in Ireland, is to be warmly welcomed, especially in the midst of the current economic gloom.

The company is to invest a further €350 million in its plant at Westport, Co Mayo, where it manufactures Botox.

Plans are already drawn up to expand the manufacturing facilities. Around 250 people will be employed locally in the constructions phase, which is due to begin shortly.

Accenture, the IT consultancy firm, has announced that it intends to hire a further 100 graduates and experienced specialists to help its clients to cut costs and increase efficiencies to support growth nationwide. Such efficiencies cost jobs by replacing workers with technology, but it is necessary to keep pace with technological advancements in order to remain competitive globally.

IBEC recently conducted a survey of 400 companies which found that 69% are planning to freeze wages during 2012, while 5% intend to cut wages, and only 23% are making any provisions for pay increases. A positive aspect of the survey was that about 20% of those companies are planning to hire staff this year.

Speaking on behalf of IBEC, Brendan McGinty noted that labour costs fell by 1% in Ireland last year, but he warned that there is still a long way to go. Costs must be further reduced, and improved technology is one way of reducing costs without reducing wages. Improved productivity is the secret to increasing business and thus job creation.

There have been upbeat assessments by the IDA and Enterprise Ireland in recent days, and the news that agricultural incomes are likely to increase by 25% is a positive indication that should help alleviate the gloom, but it is necessary to be realistic.

The latest monthly survey of consumer sentiment detected the biggest fall in consumer expectations in over 10 years. This corroborates a survey conducted by the Irish League of Credit Unions, which found that many people are considering dropping health insurance and other vital expenses to cope with the impact of recent budget changes. Some 86% of consumers expressed concern over rising fuel and energy costs, because those costs will impact on their spending ability.

Without consumer confidence, it will be exceedingly difficult, if not impossible, to generate jobs in many sectors of the economy. Some 350,000 jobs have been lost during the downturn, and this has had a devastating impact on national confidence.

In the midst of economic pressure, it is difficult for people to appreciate any of the positive signs of recovery. Hence the Government must define a clear strategy to get our cost base right in order to inspire confidence and promote the necessary job creation.