IBEC warns of globalisation threat

INCREASING globalisation will pose a serious threat to both high-skilled and low-skilled jobs over the next decade.

To counter that threat, we will have to develop greater flexibility and higher educational qualifications, warned David Croughan, chief economist with employers’ body, IBEC.

In a rapidly evolving global economy, even the thus far resilient services’ sector will face tougher challenges, he said.

“The evolution of electronic trading is changing the global market and very few jobs will stay safe indefinitely,” he warned.

Speaking after the launch of IBEC’s quarterly economic bulletin, Mr Croughan also warned unions not to jump on the inflation bandwagon in an effort to secure a better deal for workers in the current national pay talks.

It was unacceptable to IBEC that the current inflation figure of 3.3% would become the bench mark for wage increases, he said.

At 3.3% the CPI has probably spiked, and, Mr Croughan said, it was still IBEC’s view that it will average 2.5% in 2005.

Energy and currency losses are impacting the first half figures as will the latest mortgage rise, he said.

But, by the end of June, those pressures should start to ease. The ECB may also keep rates at 2.5% due to continuing weakness in the eurozone economies.

Mr Croughan believes forecasts of another 0.5% hike in ECB rates are misguided.

Weakness in the European economy does not warrant another hike and the ECB will be forced to soften its interest rate policy as the eurozone falters, he explained.

Within the EU, in general, the well-contained inflation rate was not a threat, he added.

In its bulletin, IBEC says the economy is likely to grow at close to its potential in the next two years.

The fact that last year’s growth was dominated by the construction sector and consumer spending, with lacklustre performance in the industrial sector, was a concern, he said.

Jobs grew strongly in the sheltered sectors of the economy, but were lost in the globally traded goods sector, which reflected the worrying loss of competitiveness in recent years.

Over the next 10 years, with the advance of technology and electronic communications, more and more jobs would be under competitive threat.

This was mainly confined to the goods sector, where jobs had been off-shored from the developed economies of the EU and the US to lower-cost economies.

IBEC also warned that previously protected jobs in impersonal services such as retailing, college tuition, and business and information services, which can be delivered electronically, will also face stiffer competition.

“We have to recognise this and stay ahead of the global game by remaining one of the most competitive economies in the world,” said Mr Croughan.