Saturday 18 January 2020

Enterprise Ireland net jobs growth slides to 7-year low

Challenges: Enterprise Ireland CEO Julie Sinnamon called for more innovation investment
Challenges: Enterprise Ireland CEO Julie Sinnamon called for more innovation investment

Shawn Pogatchnik

THE net gain of jobs at Enterprise Ireland-backed firms has reached a seven-year low as Brexit jitters and a tight labour market take their toll.

Enterprise Ireland CEO Julie Sinnamon said net gains in employment in EI's food sector clients rose only 1pc last year, while more buoyant sectors struggled to retain staff and fill posts amid 4.8pc unemployment.

"We are seeing a moderation in the pace of job growth, reflecting the impact of Brexit uncertainty, as well as wider skills and talent recruitment and competitiveness challenges for SMEs," she said.

Enterprise Ireland's year-end figures published yesterday showed that EI-aided firms hired 16,971 people in 2019, but simultaneously lost 12,265 from their payrolls.

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That net gain of 4,706 was half the level reached in 2018.

"This is proof that we should never take jobs for granted," said Business Minister Heather Humphreys. She cited Brexit, weak eurozone growth, geopolitical instability and trade tensions as challenges facing Ireland in 2020.

"We must focus on what we can control domestically," she said. "We need to constantly evolve to remain competitive."

The last time EI-backed firms recorded such a small net gain was in 2012, when its portfolio of SMEs added just 3,338 jobs. And the number of lost jobs nearly matched the 2013 mark of 12,591.

Ms Sinnamon cautioned that EI's job loss figures were not, in reality, all job losses.

She said more than 1,000 jobs removed from EI's client books in 2019 still exist, but they have moved outside Ireland or into IDA Ireland's portfolio, as clients expand into foreign markets.

She added that, because of competition for scarce labour, many EI-sponsored firms that previously offered more part-time roles - particularly in agriculture - had chosen to employ fewer people "in better, secure, full-time roles".

Economists said EI's slumping figures reflected the environment of high employment combined with skills shortages in premium tech roles.

"With the public sector hiring again and the FDI [foreign direct investment] market flourishing, the competition for labour is as tough as it has been since the last boom," said Neil Gibson, EY's chief economist for Ireland.

Irish small firms were experiencing higher levels of job loss as "technology creates new types of jobs while making others obsolete", he said.

"The pattern of greater flux in the SME economy is likely to remain a feature of the Irish economy and does not reflect any systemic failure in the Irish SME market. It says more about the prevailing levels of competition and transformation."

Independent economist Alan McQuaid noted that the latest unemployment figures, published yesterday, did show modest gains in the total number of people out of work since October, and this "may suggest the labour market has peaked".

He added: "But I think it has more to do with a lack of suitably qualified candidates, particularly in the IT sector, where the main growth opportunities lie. It is no surprise that the food sector is under pressure, as this is the most vulnerable to Brexit."

Ms Sinnamon said nearly two thirds of the jobs created last year were outside Dublin.

She said growth in employment was strongest at EI-aided cleantech firms, up 9pc from a year ago. Jobs grew by 6pc at life sciences and fintech firms, and 5pc at electronics firms.

But Enterprise Ireland said its core food sector - home to more than 63,500 EI-backed jobs, over a third of its 222,000 total - laid off nearly as many workers as it hired last year.

Feared Brexit disruption to Irish food exports to the UK was cited as a key reason why.

Ms Sinnamon said continued jobs growth in a tight labour market required "an increase in investment in innovation", including in more recruitment of foreign-based expertise to Ireland.

"Our research shows companies that invest in research and innovation generate 67pc more in global sales," she said.

Despite the trend since 2017 of narrowing net job growth within EI client companies, Ms Sinnamon said she does expect to keep growing the agency's headline total of jobs supported this year, at an estimated cost per head of €3,400.

"The success in contracts we've signed this year suggests we will continue in a positive vein," she said.

"I don't have a crystal ball but I certainly expect that we will have a positive figure."

Irish Independent

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