Business

Sunday 22 October 2017

New jobs on horizon not always good news for local unemployed

Indigenous skills deficit a big factor in deciding to import qualified staff for foreign direct investment companies. By Mark Keenan

ON a sunny lunchtime at the Beacon South Quarter dozens of bright young workers mill about between the stalls and vans at the outdoor food market. Here there is food for all tastes: burgers, paella, sushi and even horse meat kebabs aimed at the area's French office workers.

Mixing among the lunchtime diners, the first thing you notice is that almost all are foreign nationals -- perhaps as high as 80pc. They have come here from Sweden, the USA, South Africa, Germany, China, Lithuania, Russia. From every location imaginable they have travelled to Ireland to seek employment at the dozens of multi-nationals based in Sandyford in south Co Dublin.

For the most part, the only Irish nationals in evidence here today are those manning the food stalls. Almost all are recession casualties. They range from former event managers to former marketing executives to former builders. Now they're selling burgers.

Is this what Dundalk's lunch hot-spots will be like in the years ahead?

Earlier this month it emerged that PayPal, which just moved to Dundalk, will fill at least half of its 1,000 jobs with a workforce from abroad. These workers will travel to Ireland and to the unemployment blackspot that is Dundalk, and take up at least 500 of the new positions.

CEO Louise Phelan said that upon arrival in Dundalk, the company discovered skills gaps among local candidates -- that there weren't enough speakers of Dutch, German and Nordic languages for example. Phelan said PayPal would now have to shell out more money to bring in the necessary workers from 19 different countries. "That shouldn't be a cost to the industry, the education system should have groomed them," she concluded.

But the thing is this: Dundalk has never been noted as a hot bed of multilingualism. Given that PayPal is also advertising online for Russian and Spanish speakers, perhaps they'd have trouble finding any such Babel in Europe?

Either PayPal messed up by failing to select a geographic location with the suitable skills for the jobs it needs, or else PayPal knew all along that it would have to bring in large numbers of foreign nationals. Perhaps it wasn't expedient to say so when unemployment strides atop the national political agenda. Half a million unemployed Irish might not react so well to news of 500 new jobs for foreign nationals who will have to be brought here for the privilege.

PayPal raises a question which needs to be asked: How many new FDI jobs being created in Ireland today are actually Irish jobs -- that is for those living in Ireland? And how many of the companies opening up today will, like PayPal, have to bring a substantial proportion of their new "Irish" workforce with them? And what's the point in the Irish taxpayer subsidising new jobs from FDIs like PayPal if large tranches of the new jobs are to be imported?

With PayPal in mind we asked three leading key foreign direct investment companies in the technology sector -- Microsoft, Google and Facebook -- what proportion of their workforce here is Irish.

Microsoft, which employs 1,200, said around 80pc of its workforce are Irish nationals. The company also pointed out that the nature of its international outlook dictates a need for foreign nationals and also that large numbers of its Irish employees regularly relocate to further their own careers in other countries within Microsoft's global organisation. For their parts neither Google (which employs 2,000) nor Facebook (400) would give a breakdown, although Facebook offered: "We have a significant number of Irish employees."

Speaking in 2010, Google's David Martin said: "Our EMEA headquarters is located here and we have been successful in attracting very talented people from across Europe to work in Dublin." He added: "Dublin is rapidly becoming the multilingual internet capital of Europe and Google is proud to be leading the charge on this and further increasing our presence here."

But do we really want Google scouring Europe for talent to bring it here when so many of us are still unemployed? And what's the point in becoming a multilingual hub if not enough of us speak enough languages to fill the relevant jobs -- at least according to PayPal?

Older FDIs in Ireland tend to have more Irish staff. Newer arrivals like Google and Facebook, by the nature of their operations here, require high numbers of non-Irish workers who have been brought here specifically to fill positions and that those numbers may run somewhere between Microsoft's 20pc and PayPal's 50pc non-Irish positions.

The question of just how many "Irish" jobs are among those being brought by new arrivals is a sensitive one. But amidst the changing face of FDI, it needs to be asked.

The IDA answered the question with a 10-paragraph tract from the 1986 Industrial Development Act. This said plenty about the IDA's function in the role of "industrial development" and bringing "industrial development" to Ireland but with no mention of jobs at all. The message appears to be: "It's our job to bring companies here, what happens next is not up to us."

The IDA said that it did ask client companies what proportion of locals they intended to employ before locating them here but added that: "The ultimate decision on what staff are recruited remains with the company."

When asked how many of the 14,000 jobs it steered to Ireland in 2011 went to Irish workers the IDA said: "We do not publish figures on the national origin of employees at IDA supported companies. However the CSO collects data on broad occupational groups at their national origin. The most recently published figures show that apart from labourers, all occupational groups had over 80pc Irish nationals."

Foreign nationals don't tend to move to a country mired in unemployment. Yet from 2006 to 2012 as Irish unemployment figures jumped from 4.3pc to 15pc (they hit 450,000 in June) CSO statistics show that the numbers of foreign nationals moving to live here increased by a quarter -- or 200,000 to 766,770.

If 20pc of the 1.8 million in employment here are now foreign nationals, this would indicate a figure in the order of 360,000 in jobs. We can presume that a good percentage have come here specifically to take up new jobs with FDI companies.

Other jurisdictions with preferential tax rates are far more ruthless when it comes to dictating job numbers for locals. In Bermuda, for example, foreign workers at non Bermudian companies which benefit from the British colony's tax regime are regularly ejected in batches at short notice as qualified locals become available for work. When local unemployment goes up, Bermuda simply terminates a batch of overseas work permits. No one is suggesting Ireland should be so extreme .

Because, of course, the new FDI jobs are additional jobs that wouldn't exist without the FDIs in the first place and the national unemployment picture would also be far worse without the arrival of new FDIs in that period.

Last year's tally of 14,000 new jobs by the IDA, against stiff international competition, is a phenomenal achievement. But PayPal illustrates what many believe is simply just a new global reality -- that a smaller proportion of new FDI jobs will be going to locals from now on because of the nature of the companies coming here and because of their particular labour market needs.

Like Microsoft, companies work on a global scale and move their employees around accordingly. Thus any new world or European hub for a truly international organisation is going to require higher levels of non-local participation in their labour force. Indeed the fact that those from other countries like the idea of living in Ireland and are more willing to move here than anyone else provides a key attraction in itself to FDIs.

Economist Constantin Gurdgiev believes the need for politicians to trumpet new jobs has given the mistaken impression of late that all new FDI jobs will be Irish. He also believes we have to change our expectations on new FDI jobs to reflect the new reality -- that more new companies will be employing less Irish. "It may be high but we should not expect up to 50pc of foreign workers coming in to take jobs in FDI's to be unusual any more. This is a change which is happening globally -- the balance of nationality is disappearing and labour more fluid between countries. If Ireland starts setting limits to how many locals should be employed, it risks boxing itself into a very narrow growth corner."

Fellow economist Ronan Lyons goes a step further: "I would be supportive of any new industry base, even if it creates no Irish jobs. There is a spin off for local businesses as the workers spend their money, there is the tax revenue that it brings into the country."

PayPal, of course, will be paying its tax here, 1,000 new workers of all origins will be paying their taxes here and the spin off synergy that PayPal creates in Dundalk will sustain and generate many more jobs in the city's restaurants, shops and service companies. And, of course, 500, if not 1,000 of Dundalk's locals, will also be getting jobs that would otherwise not be there.

And the flow of FDI to Ireland is likely to continue, says Barclays international analyst Kevin Gardiner -- who originally coined the term "Celtic Tiger". "Ireland still has the qualities needed to beat other locations hands down in attracting companies, in particular a flexible workforce, so I don't think you should start making stipulations on workforce content."

So if the question isn't about being selective in choosing FDIs, or dictating to them how many jobs should be Irish, then the answer is surely about finding new ways to maximise FDI impact on local unemployment.

First up is education and reskilling. Gurdgiev doesn't believe we should pander to the specific demands of companies like PayPal. "It's a bad idea to start front loading our education system to suit FDI companies. There's no point in teaching people Norwegian when PayPal could be gone in five years. However the education system is certainly letting us down here to some degree. There's no reason, for example, why we can't start teaching a core of useful and relevant world languages like Spanish, Mandarin and Portuguese.

"We have to adjust the system of training and through a wide range of actions to give those who reside here, particularly the long-term unemployed, the skill sets to compete for these jobs."

Once they are anchored here however, Gurdgiev believes Ireland should be pushing the envelope with FDIs to coax them into doing more to interact with their locality. "I don't mean by building playgrounds but by offering meaningful local training and reskilling with the aim of getting jobs in their companies."

Some need no prompting. The aforementioned Microsoft -- the only one of the three FDIs canvassed willing to be open about the numbers of locals employed in its workforce has been based here since the 1980s. It has never moaned about the Irish education system but has instead come up with its own training initiatives to liaise with schools and colleges to help create a skills funnel into Microsoft jobs.

Microsoft supports the FIT (Fast-track to IT) programme which helps train over 10,000 long-term unemployed and recently it held a careers open day on its campus to advise people on how to avail of these courses and to advise on the roles these positions had in Microsoft companies. Over 1,400 job seekers attended. Microsoft also works with a number of colleges to advise on curriculum development.

Back at Beacon South Quarter food market, one of the busiest stalls is Dux and Co, a mobile gourmet meatball and pasta outfit run by Leah Duxbury, who lost her job when the recession hit. She and her boyfriend John won an award last year for their tapas plate in the Dublin Street Food Awards.

"We're building a brand and we're planning to open a restaurant," says Duxbury. Thanks to PayPal and others perhaps they'll have an opportunity to open their next outlet in Dundalk.

Indo Business

Also in Business