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Brendan Keenan: Secret of Scandinavian model

THE saddest story I have heard since the curse of emigration returned concerned a young man at the barbers who was heading for Australia. When asked what he felt about it, he just began to weep.

Not surprisingly, jobs are central to the election campaign. Ireland has form where unemployment is concerned, but it is easy to forget how difficult it has been for advanced economies, especially in Europe, to provide jobs.

There is a wide difference, with high participation rates and low unemployment in the Nordic countries most of the time -- and the opposite in Mediterranean countries almost all of the time.

In the case of Italy and Spain, the high averages conceal even worse unemployment in some regions. The Nordics, though often large geographically, have small tightly clustered populations and fewer variations.

In the past, we have looked to the Danes for hints on how to cut budget deficits, and recently the Swedes on how to rescue banks, but there seem to have been only aspirations to try to emulate their successes. In particular, their recent market reforms, involving outsourcing of public services, and tougher welfare regimes, have found no echo in Ireland.

It would be wrong to say that anyone -- even the Nordics -- really understands the mechanics of job creation. There appear to be two parts: a productive economy and a labour market/social welfare system which encourages work.

Irish election debate tends to concentrate on the first bit -- the direct creation of jobs through more output. There has been a flurry of interest in the more traditional businesses, such as a recent report on tourism.

Its plan, which is meant to increase employment by 20,000 over the next four years is essentially a call for better marketing.

Tourism marketing has been inadequate for the past 20 years. It is driven by government and producer interests -- never likely to be a recipe for success.

What makes tourism different is the collapse in prices in hotels and restaurants. It is competitive, but often unprofitable. The test for it, and for the rest of Irish business, is to become profitable at current prices. That is where the conditions to support employment come in and creating them is where the State should play its role; not in marketing products -- not even tourism.

One can see the political parties wrestling with this old Irish conundrum in their policy statements. Fine Gael has adopted Fianna Fail's mantle as the party of the cranes, with its multi-billion construction programme -- although one can sense the party getting more wary about the idea.

But the party has also recognised that the conditions need to be right. It is trying to keep down taxes on work and has recognised that this means higher VAT and more spending cuts. There is even something Nordic about its ideas for college interns and second-chance education.

Recognition is one thing, implementation another.

Government spending is a key question for more successful job creation. As well as taxes on work, there is the bloated cost of government services to business and the sometimes even more bloated costs of private services.

Hoteliers have been forced to slash costs and must now figure out how to make profit on those prices, or go out of business. They want lower costs and less rigid employment rules to avoid that fate.

At the time of writing, I have not seen Labour's full employment policy, but I was less than impressed by the one line given in its financial policy to the internal costs in the Irish economy, public and private, which are often quite extraordinary by European levels.

Despite all the brave talk, when it comes to a choice between possible job tomorrow, and definite income today, Irish politicians know where they stand.

Sunday Indo Business