Trying to transform public perceptions

BETWEEN Apr and Jun 2011 — the first few months of the Government’s term — 1.82m people were employed, according to the CSO.

A year later, the comparable figure was 1.78m.

Those figures suggest the country is going the wrong way. But Jobs Minister Richard Bruton disagrees.

“No, I think what you have to do is look at what’s happening in the economy. We’ve had a massive transformation,” he claims, arguing that to see this, you have to look beneath the headline figure.

“When you look beneath that, what is really exciting is the change in the make-up [of the economy].

“Export-oriented companies, which had lost 45,000 jobs in the period up to Mar 2011, have since added 10,000 jobs. The tourism sector, which had shed I’d say about 30,000 jobs in the three-year period [to Mar 2011], has added about 9,000 jobs. ICT has added 5,000 jobs.

“There is a huge transformation in the make-up of the economy. Yes, we have the continuing decline of construction, of banking, and of course the restructuring of the public service, which has seen maybe 25,000 jobs taken out in that period.

“So what’s happening is that the old economy, the parts of the economy that grew to unsustainable [levels], they’re being restructured, but the new economy is growing.”

He cites a particular day that he feels “sort of symbolised the change” for him. Cloud computing company Salesforce.com announced 100 jobs, while National Irish Bank cut the same amount.

“So on balance, on your test, nothing had changed. [In] reality, a huge amount had changed.”

Yet if you listen to Michael Noonan, he still appears to be doing his best to talk up the construction sector. Just last month, the finance minister spoke of it being “a pretty good time to purchase” a house.

It sounds like Mr Noonan and Mr Bruton have very different views of where the economy should go, I suggest.

Again, Mr Bruton disagrees.

“The truth is that of course the construction sector is below its natural level… So Michael is absolutely right: We need to reach a bottom in the property sector, we need to get people in a situation where they’ve confidence to invest in construction because it remains an important part of our economy, and that has a significant jobs dividend.”

I suggest to Mr Bruton, once Fine Gael’s finance spokesman, that I couldn’t imagine him in a million years telling people it’s a good time to buy. He smiles but continues to defend his Cabinet colleague’s comment. “Well, I mean, objectively that’s probably true in that you look at all the indices and they’ve been falling relentlessly.

“We’ve seen that, but the last number of observations on price index would suggest that it’s rebalancing.

“You know, we did decide in last year’s budget that we would give an incentive for people to get back into the market and that expires at the end of this year.

“There’s no doubt that we need the housing market to find bottom and to get confidence back into it. So there’s nothing unusual about the Minister for Finance saying that asset prices in the property sector are stabilising.”

Nonetheless, Mr Bruton says the days of the construction sector employing 260,000 people are long gone. “We will never see that again.”

Retraining and new opportunities will have to be offered to those who lost their jobs in the sector, he says. In that respect, the Government promised in its much-touted Action Plan for Jobs to have an additional 100,000 people in work by 2016, bringing the overall number employed to 1.9m.

Yet while Mr Bruton can measure the jobs lost between 2008 and 2011, and talk about the numbers gone in the construction sector or created in IT, there seems to be no measurement of how many jobs the Action Plan has created eight months after its launch. So how can the public judge?

“No, we never said this would happen — you know, that 100,000 would be 20,000 in year one, 20,000 in year two. We knew that that wasn’t the case,” Mr Bruton says. “We’re building on, in some cases, the ruins of a banking system. You’ve seen the credit figures yourself — banking has completely recoiled from lending to small business. That has to be rebuilt. We have to retool the whole finance system.”

He lists a series of initiatives the Government is taking to improve access to credit for small businesses and outlines where he thinks the banks and SMEs themselves have to do more.

“You go back to any recession… you have to get the system of finance working again, otherwise the paradox of saving, as they say, will see the economy shrink. So it’s absolutely vital that we get the instruments that allow good enterprises to emerge.”

Instead of measuring precisely how many jobs the Action Plan has created to date, he says he can point to figures on how many additional supports have been put in place, and so on. “We can with absolute confidence point to more high-potential start-ups this year — 95 high-potential start-ups will be delivered this year,” he says by way of example.

Irish efforts are one thing, but they come against a backdrop of Europe’s austerity approach to solving the crisis. An Oxford-trained economist, does he really believe austerity will work?

By way of answer, he says that the European response is more nuanced than the commentary suggests, but acknowledges there is an issue with the pace of that response.

The collaborative nature of the EU “does make it slower than the markets, and we’ve seen that time and again”, but there is now “a much greater understanding of what the challenges are”, he says.

Rather than austerity alone, “there are a number of strands to Europe’s approach. One is fixing the currency — we have to have a stable currency in which people have confidence”.

“I think that was significantly stepped forward by the (decisions taken at the) June council, but obviously that has to be delivered — the whole nine yards.

“Europe has (also) espoused a growth strategy — that has to be turned into real policy instruments.”