Wednesday 24 May 2017

We must learn to talk the talk for boost in trading

Given that the majority of the global population doesn't speak English, language skills are key to unlocking our export potential, says Google boss John Herlihy

If the current bust tells us anything, it's that reliance on domestic consumption to drive economic growth is not sustainable in the long term. To grow our economy and create jobs, we need to increase exports from both multinational corporations and indigenous SMEs. Forfas estimates that by 2015, internationally traded services will become increasingly important for both multinational and indigenous operations.

The IDA's recent success in attracting LinkedIn, Twitter, Electronic Arts and Gilt Groupe to Ireland demonstrates the opportunity to build and create a true exported-services hub. Our own company, Google Ireland, is an example of what can be achieved. Google Ireland started operations in 2003 with just 20 people. Today we have a sales force of 1,500 people engaged in supporting our advertisers, publishers and users across Europe, the Middle East and Africa. They are drawn from over 60 countries and speak as many languages. We like to say that our offices are the Constantinople of the 21st Century; where east and west connect, ideas are exchanged and business is conducted.

However, to maximise this opportunity, we need to be able to talk the talk. Three-quarter of the world's population do not speak English, and less than one in 10 speaks it as a mother tongue. If we are to realise the potential offered in the growth economies of Asia and Latin America, we need to be able to transact business in the native language. At Google, we need people with native fluency and, more often than not, will have to hire the skills we need abroad. Our experience is not exceptional. In a survey this month from IMI-NIB, 11 per cent of multinationals responded that they had difficulties sourcing language skills for their Irish operations. To sustain momentum and build on the potential of our existing multinationals, we must ensure that we have a workforce with the native-level fluency required to support the customers of these companies.

Language skills are also critical for Irish SMEs engaged in exporting. Some 45 per cent of SME exports go to non-Anglophone countries. Irish SMEs need foreign language skills for sales and marketing activities, although not necessarily to native-level fluency and typically these positions can be filled by Irish graduates. In a 2005 survey, 14 per cent of Irish SMEs encountered barriers in dealing with overseas companies, and 9 per cent were aware of losing business because of language or cultural barriers. Across the EU, it is estimated that over one in 10 SMEs are losing sales because of language barriers, amounting to an average loss per business of €325,000 over a three-year period. On the other hand, SMEs which invest in language skills could increase their exports by 45 per cent over those who do not make a similar investment.

The value of the 'missed opportunity' to Ireland of a failure to develop our language skills and cultural understanding on non-Anglophone countries can be seen in recently published UK data. Welsh economist James Foreman-Peck argues that the lack of language skills in British exporters acts as a trade barrier, which effectively adds a greater "tax" of up to 7 per cent on British commerce. In total, the UK economy could be missing out on contracts worth £21 bn (€24bn) a year because of the lack of language skills.

As it stands, Ireland and Scotland are the only countries in the EU where a modern foreign language is not compulsory at any stage of mainstream education. Only 3 per cent of primary school pupils receive classes in a foreign language, compared to an EU average of 79 per cent. Generally, Irish students start learning a foreign language at a much later stage than their European counterparts, and their classes tend to be short and frequent, a "drip-feed" instead of sustained immersion. For historical reasons, French dominates at Leaving Cert, with just under half of last year's cohort taking it, even though France is not one of our major trading partners. German comes in at 13 per cent , with half that number again taking Spanish. In short, our school-leavers are ill-equipped to communicate with emerging markets like Brazil, China and Russia.

The risks of not taking action are too great for us to ignore. We are a small, open economy, and our greatest national resource is our skilled people. We compete with large economies, but we must also be mindful of the smaller, nimble nations, snapping at our heels. Tiny Malta has successfully attracted international financial services and business process outsourcing, largely due to a combination of favourable tax incentives and a multilingual (Maltese, English, Italian) population. Long before joining the EU in 2004, Malta fully embraced the EU policy of "native+1" with regards to languages and communication. We could do worse than learn from them.

There's nothing like a crisis to focus our minds on improvements. We now have the opportunity to decide what is needed to grow our economy sustainably. In the short term, we need to retain the National University of Ireland requirement for one modern language for admission to its constituent universities. In the medium term we need to:

(a) roll out the Modern Languages in Primary Schools Initiative to all schools;

(b) expand the Post-Primary Languages Initiative, especially given the provision for short, 100-hour courses in the new Junior Cert curriculum;

(c) at university level, provide for languages as a "minor" subject for degrees like engineering and science, which are typically not offered with this option; and (d) fund continuous professional development and opportunities for exchange through the Leargas programmes for our language teachers, much in the same way that teachers of Irish are supported.

Just as Latin and French declined as the preferred language for international diplomatic and business communication in the 17th and 20th Centuries respectively, there's nothing to say that dominance in English will prevail in the long term, particularly with the relative growth in Asian and Latin American economies.

We need to realise that having English is simply not enough. To build a sustainable economy, we must speak the language of those to whom we wish to sell our goods and services. We have the chance to do this in the multinational sector, and we must grow it in the indigenous sector. To fail at this task would be a catastrophic waste of a precious opportunity to rebuild the nation and provide employment for our people. As the Romans might say, carpe diem.

John Herlihy, VP International SMB Sales & Operations, Google

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