News Analysis

Friday 19 September 2014

Jerome Reilly: Spin on jobs figures doesn't reflect reality

The latest performance statistics reveal a domestic economy still in critical condition

Published 06/01/2013 | 05:00

  • Share

Short of fireworks and dancing girls in the foyer of the Department of Jobs and Enterprise, there was little more Minister Richard Bruton could have done to put the best possible gloss on the latest jobs figures from Enterprise Ireland.

  • Share
  • Go To


It was all very jolly and uber-positive: "Today," Bruton trumpeted, "we're reporting significant expansion in the indigenous sector and it represents a really strong performance. We are turning the corner, albeit slowly."

Seldom has the launch of the latest performance statistics from Enterprise Ireland attracted such a big media attendance. Even the chap from The Observer turned up as print and broadcast media valiantly tried to fill the lacuna in new year news. RTE had padded its turn-of-the-year bulletins with hourly updates on Hillary Clinton's health scare, which, as it turned out, was not that scary at all.

The trouble is that, despite the spin, the figures are not that impressive and are indicative of an economy still in a critical condition, especially in the most important index of all – job creation.

The domestic economy is on life-support in intensive care. The export economy is just about sat up in bed, though not yet strong enough to try a soft-boiled egg.

Richard Bruton's figures, announced with such fanfare, reveal as much. Last year, Enterprise Ireland client companies created 13,642 jobs but slashed 9,838 jobs. Net gain – 3,804 jobs.

Yes, it's the best result since 2006 and yes, the modest net gain has to be considered in the context that we actually lost 19,000 jobs in Enterprise Ireland client firms in 2009.

But remember, the unemployment rate stands at 14.6 per cent. Don't forget that 430,900 people are still claiming unemployment benefits. Don't lose sight of the depressing reality that the long-term unemployment number rose 3.5 per cent to 187,144 people.

In that context, an extra 3,804 jobs in 12 months of Enterprise Ireland labours is not the awesome achievement that the Government would have us believe.

Enda Kenny's new year clarion call that job creation and cutting the dole queues would be his number one priority is all very well – but like most utterances from the Taoiseach, it lacked conviction.

He said: "I'm really serious about this. I will say to every minister with adequate notice now – I want to know what it is that you are intending to deliver with your department in terms of jobs."

Doesn't that sound familiar? Didn't Kenny, on his assumption to high office, pledge to issue 'report cards' on ministers who failed to do their jobs? No one expelled from school yet, though.

So where does the real economy and job creation sit now? Is it at the "turning the corner" stage that Bruton would have us believe or is it still moribund?

According to the small- and medium-sized business lobby group Isme, small businesses are bouncing along the bottom, albeit with the caveat that market conditions improved somewhat in the last quarter of 2012.

Business confidence improved from minus 17 per cent in the third quarter to minus 15 per cent by year-end.

Profitability expectations improved from minus 20 per cent to minus 11 per cent in the same period. Future employment is now expected to be merely flat rather than declining slightly.

No jobs bonanza is apparent from those figures. Isme boss Mark Fielding summed up the mood among real business thus: "It is a long way from the competitive economy. While the fourth-quarter figures are to be welcomed, the struggle by the small and medium enterprise sector is evident and the significant constraints of government-influenced cost increases, the lack of SME bank finance and the lack of real savings under Croke Park continue to inhibit the economic recovery."

It was announced with further fanfare last Thursday that the Exchequer deficit last year was €10.8bn lower than 2011 and tax revenue was up €2.6bn to €36bn.

But the strong increase in the amount of tax paid in December was also skewed. Much of it came from two multinational companies and some late payments by self-employed people.

The result left the Government €270m ahead of target for the year, instead of €210m behind, as was forecast.

Minister for Trade and Employment Joe Costello remains positive about where we stand now. He says the CSO merchandise export figures just released for October (the latest available) reveal a positive and steady trajectory which is often missed in the maelstrom of politics, bailout and Budget.

"The value of goods exports for October increased by 2 per cent year-on-year to €7.5bn and October saw Ireland running a trade surplus of €3.3bn for the month. This reflects a wider picture; as we regain competitiveness, our balance of payments has swung into surplus for the first time in a decade."

He describes Ireland's export trade as the unsung hero of the Irish economy.

"Last year, exports of Irish goods and services increased by 5.1 per cent and are now well above pre-crisis levels. This strong export performance underpinned a GDP growth rate of 1.4 per cent in 2011 – an impressive figure given the very difficult economic conditions prevailing across Europe and beyond."

He points out that Ireland has two parallel markets – the domestic and the export.

"The domestic economy boomed during the Celtic Tiger years while the potential of international trade was less fulfilled. Now the reverse is the case – domestic demand is stagnant while exports are performing strongly. This is most obvious in the services export sector, which has grown by a remarkable 7.6 per cent so far this year."

Costello hit the nail on the head. There are two economies and until the domestic economy starts to breathe unaided again, hopes for a jobs boom in 2013 appear hopelessly out of touch.

Tomorrow, in Limerick, there will be a creditors' meeting for La Creme Distribution Limited. On Tuesday in Dublin, a creditors' meeting for Toliconcorp-Europe Limited. On Wednesday, three creditors' meetings, two in Galway and one in Dublin, for Corbwell Architectural and Engineering Limited, Kinclare Construction Limited and Ronan Pubs Limited.

There are five more creditors' meetings listed around the country for Thursday, and three more on Friday.

That is stark evidence of the real state of the economy. Thirteen creditors' meetings in five working days.

According to Insolvencyjournal.ie, business failures last year totalled 1,684 – a 3 per cent increase on the 1,638 business failures for 2011 and a 10 per cent increase on the 1,525 business failures in 2010.

Turning the corner? We don't think so.

Sunday Independent

Read More

Don't Miss

Editor's Choice