| 14.5°C Dublin

Local clamour for FDI jobs ignores the reality of our employment utopia

Emmet Oliver


Leo Varadkar opening Microsoft’s new €134m Dublin campus in February 2018. Photograph: Naoise Culhane

Leo Varadkar opening Microsoft’s new €134m Dublin campus in February 2018. Photograph: Naoise Culhane

Leo Varadkar opening Microsoft’s new €134m Dublin campus in February 2018. Photograph: Naoise Culhane

One of the most remarkable occurrences in recent Irish economic history is how quickly the Irish labour market recovered from the Covid-19 pandemic. As recently as January there were still restrictions on aspects of the Irish economy, but now just a few months on we effectively have full employment.

Of course, Ireland was at full employment before the pandemic commenced, yet the sheer speed of the recovery has been astounding.

While data shows that pubs, hotels and restaurants have recovered the least, normally there would be even more extensive scarring after such a tumultuous event, yet here we are.

Most European countries recovered in a similar fashion, but by no means all. Unemployment in Spain still stands at 12.6pc, in Greece it’s 12.3pc, in France 7.2pc, and in Italy 8.1pc.

Clearly there are structural issues at play in these countries and many of them have been buffeted by stagflationary headwinds as a result. Spain is not just grappling with a sapping unemployment problem, but in June it was also dealing with inflation of 10.2pc, while in Greece inflation is running at an eye-watering 12pc.

The ability of a society to absorb such punitive price rises is heavily influenced by the level of employment and, on that front at least, Ireland currently sits in a comfortable position. Nobody likes to see their real wages falling, but it’s substantially less painful if you keep your job.

Now that full employment has been reached it prompts one obvious question. Who is getting the jobs?

For many years asking such a question ran into a brick wall of local politics. During and after the economic crash it seemed every TD and councillor worth their clientelist salt proclaimed their area to be an unemployment ‘blackspot’, woefully neglected by the State agencies and central Government.

While local political representatives have a duty and a right to represent their constituents, much of the commentary was preposterously overblown, particularly when certain politicians claimed their area was not just neglected, but uniquely so.

One variation on the theme was that Dublin was hoovering up jobs at the expense of other regions, that we had lopsided job growth, that all roads led to Dublin, and if they didn’t lead to Dublin, well then they led to Cork and, at a stretch, Limerick.

Much of this commentary was based on reductively seeking out job and site visit numbers for foreign-owned companies, rather than factoring in all ownership forms, which might produce a more balanced and less polemical picture.

But looking at the current job market and the data on who doesn’t have a job, rather than who does, it’s obvious that there isn’t much fertile territory for those trying to manufacture a political conspiracy.

A sort of employment cargo cult developed

For example, June live register data show there were just shy of 187,000 people signing on. Dublin had 26pc of this group, broadly in line with Dublin’s share of national population overall.

The Midlands, meanwhile, had 7pc of the jobless, again broadly in line with its national demographic distribution. The Border region, which has acquired a reputation as a tough region to create jobs due to its proximity to competitor Northern Ireland, has a slightly higher proportion of jobless than its portion of national population, but not hugely so. Such a prosaic picture emerges even more strongly when all the components of job creation are included and more selective accounts are ignored.

Business Newsletter

Read the leading stories from the world of business.

This field is required

This is because the area where the ‘lopsided’ jobs theory gets its greatest airing is in connection with foreign direct investment. Here thinking over recent years has become slightly surreal at times. For example, in recent weeks one local newspaper in Co Louth suggested that State agencies were failing in their mission to the county by not ‘splitting evenly’ all the foreign derived jobs between Dundalk and Drogheda. The idea that State agencies, and the assorted companies involved, should work towards splitting jobs 50:50 between two towns is truly in the realm of the fantastical and betrays some of the outmoded and parochial thinking that arguably damages some towns more than helps them.

Much of this thinking has deep historical roots. In the early days of foreign direct investment in the 50s and 60s foreign-owned factories would – as if from the sky – land in a Midlands or Border town. Few then, and it seems now, ever had to ask why the factory was coming in the first place. As a result, a sort of employment cargo cult developed.

It seems few believe it’s worthwhile, or important, to create a compelling narrative about why their town would be the ideal host for an expanding enterprise, domestic or foreign. One reason such narratives are needed more than ever is because the idea of a physical office itself is being actively questioned around the world and, in a full employment landscape, it’s possible towns and cities with surplus labour will carry an advantage.

In any case, the most recent data on foreign direct investment and regional locations actually undermines the idea that certain regions are progressively falling behind or being deliberately neglected. For example, the recently published IDA annual report shows that Dublin has not been the biggest winner from inward investment over recent years in employment growth terms at all. That accolade went to the Midlands which grew foreign company employment by 9.6pc over the last five years, with Dublin stuck back on 8.6pc. Admittedly the figures for the Midlands are from a low base, but they certainly do not speak of deliberate neglect or lack of effort.

In the 50s and 60s foreign-owned factories would – as if from the sky – land in a Midlands or Border town

Other regions however are continuing to face a difficulty with the Border region only growing its foreign-company jobs by 2.7pc over five years. But looks again can be deceiving. Northwest region was the best performer in terms of domestic employment growth via Enterprise Ireland companies in 2021, ahead of Dublin and the Munster region for example.

Dublin certainly remains the cockpit for foreign investment with over 40pc of employment overall, but it’s worth remembering that foreign-owned corporations are not the main sector of the economy when measured by employment. For example, just 32pc of domestic Enterprise Ireland-backed firms are located in Dublin with a vibrant 68pc outside the capital.

Ultimately death by data point serves nobody and is of almost zero interest to anyone coming to Ireland to make an investment. I know this from the direct exposure I had to decision makers from overseas companies when I worked at IDA Ireland several years ago. This was made clear on several occasions.

What many towns could usefully try to do is create a new narrative that talks less about the unfairness of a competing location winning all the investment, and more about the persuasive reasons someone should invest in their town, city or region. Also never forget the reach of Google. When a region tells the world it’s an economic blackspot without much of a demographic or commercial future, it’s should be no surprise when the outside world starts to believe it.

Related topics

Most Watched