By Andrew Bushe
DUBLIN — The economy is creating jobs at the rate of almost 100,000 a year and is now one of the top employment generators in the world, according to the Industrial Development Authority.
New figures from the central statistics office show unemployment was down to 5.7 percent in the year to May compared to 7.8 percent during the same period last year.
There was an increase of 96,600 people at work in the year to 1,591,100 while unemployment fell to 96,900. However, the success of the so-called Celtic Tiger is threatening its future as labour and skills shortages begins to cause serious problems for employers.
Staff are being recruited from as far away as India, factories are offering a range of special enticements to workers and wage inflation is an increasing problem as the country struggles to manage its new found prosperity.
The growth rate this year is forecast to be 7.5 percent — the highest in the OECD. Average annual growth has been in double digits for the last five years and cumulative current growth will have doubled by the end of this year.
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It is a huge transformation.
Ten years ago, economic growth was O.4 percent, unemployment was 17 percent and people were leaving the country at the rate of 28,000 a year in comparison to the 20,000 who returned last year.
The Irish Business and Employers Confederation (IBEC), representing 4,000 companies, is urgently seeking a package of measures to alleviate the shortage of workers and attract housewives back to work after a five or ten year absence. IBEC wants further a relaxation of non-EU immigration controls, a reduction of taxes at the lower end of the scale in the December budget, better childcare and a junior minister with special responsibility for the problem.
Divisional Director Brian Callanan says they are having difficulty filling about one in 20 jobs in the services sector — which employs nearly 60 percent of people in the country. He said there are 1,000 jobs waiting to be filled in the catering sector alone.
"The skill and labour shortages are really a significant constraint to competitiveness. We can’t continue on our current economic growth pattern if the people are not there to fill the jobs demand.
"It will have an effect on inward investment and it will have an effect on expansion of existing industries if we don’t address the issue as quickly as possible.
"It is a new phenomenon. We are not used to this situation but we are part of a global economy and if we don’t have the people to fill the jobs, investment will go elsewhere," Callanan warned.
Euro aid drops
The IDA, set up to attract foreign industry and create employment, is making fundamental changes in its policies. It is increasingly concentrating on attracting projects to 11 of the country’s 26 counties — the disadvantaged area in the west, north and midlands. This is partly because of regional disparities — with the east and south of Ireland having been the main beneficiaries of the boom — but also because of changing European Union rules which will radically cut the level of industrial grant which as been available for the last 20 years.
From next January, grants will drop to two-thirds of what has been
offer up to now. The IDA have been able to give a maximum £620,000 for an investor setting up a £1 million industrial development but this will drop £400,000 for the 11 disadvantaged counties.
For other counties, it drops to a maximum of £200,000 and for some areas it may be half that when negotiations are completed.
The disadvantaged counties, known in EU parlance as having Objective I status, have also suffered from a lack of investment in infrastructure such as roads, transport and other service. A national development plan, to be published next month, will attempt to address these problems using the cash-rich Exchequer coffers.
The IDA is confident that increased regional development will attract home a new wave of emigrants. These would be people who had originally left from rural areas and are not interested in returning to jobs in Dublin and other cities where home prices have spiralled out of their reach.
Unemployment is worst in the disadvantaged areas at about 8 percent compared to as low as 4.2 percent in parts of the east.
Large scale regional projects such as Dell (4,400 jobs) Intel (4,200 jobs), Hewlett Packard (3,500 jobs) and Xerox (3,500 jobs) are all reporting difficulties with recruitment.
IDA spokesman Colm Donlon said the teleservices industry had grown from nothing five years ago to employ 10,000 now. Almost 4,000 of the staff are drawn from other European countries due to lack of people available at home. "People are being brought in from all over the place. There are software companies that have recruited in India."
Donlon said it was inevitable the skills shortage in some sectors will slow down growth.
"As a percentage of population, Ireland has unquestionably reached the stage of being the best job creation country in the world. "Effectively we are at full employment. We are way ahead of America which is held up as being the world leader."
He said the IDA was being more selective and was concentrating on the quality of jobs rather than volume, where the factories will be located and working to hold industries already here — there is a drop-out rate of about 6 percent of jobs a year.
The IDA are also seeking added value industries, particularly in the electronics sector.
"We have been in electronic for 20 years and we have built up a very experienced workforce. We have been targeting extra, higher-skilled functions like technical support, design, and process.
"Last year 40 percent of electronics companies had added functions but this has gone up to 53 percent this year, so we have been making progress," he said.