Economic commentators are generally agreed that the gradual improvement in the economy is unlikely to lead to a reduction in unemployment numbers in 2011.
That may well be the case but it obscures the fact that while jobs are continuing to be lost (Business Barometer July 2010) there has been a significant increase in recruitment in multinational companies since the beginning of the year.
A strong indicator of the upturn in recruitment is the increase in positions being advertised by job boards and an increase in positions being advertised by recruitment agencies.
Irish Jobs in the recently press release on their Q2 results report an 11% increase in the number of jobs advertised in Q2 2010 compared to the figure for Q1 2010. In addition Collins McNicholas is reporting an increase of 43% in Open Jobs in August 2010 compared to the figure for August 2009. Most of these increased vacancies are with their multinational clients with some 50% of them being in the medical devices and pharmaceuticals sectors.
The increase in new vacancies is not evenly distributed however as it has been mainly driven by multinational companies which have recommenced hiring. Unfortunately many indigenous companies and the SME sector in general are still in the depths of the recession. Far from recruiting many of these companies are involved in an increasingly desperate fight for their very survival as they are experiencing ever increasing cash flow problems due to credit restrictions and due to growing cash collection difficulties.
Looking forward I think it is reasonable to be optimistic about the prospects of most multinational companies based here especially as many of these have significantly reduced their cost base as part of their strategy of getting through this recessionary period. In addition there has been an upturn in the global economy which has resulted in increasing order books in multinational companies which is in turn giving rise to an increased demand for professional and managerial staff in these companies.
It is also possible to be reasonably positive about the prospects of seeing more foreign direct investment establishing facilities in Ireland in 2010. Ireland still has many attractions and advantages for companies considering locating here. The low rate of corporation tax is one of the obvious and most documented of these attractions but Ireland as is also well known has a well educated, flexible and committed workforce which compares very favourably with what is available among other European countries competing for this FDI business. Ireland has also become more competitive in the past two years with significant reductions in the cost of doing business here. The most obvious example of this is where many companies have implemented pay cuts and where quoted salary levels for new vacancies are 10 -15% lower than they were in 2008. This increasing competitiveness is helping to make Ireland more marketable to companies who want to establish a presence in Europe.
The prospects for the SME sector are less clear. Those SME’s whose main clients are multinational companies should soon start to see the benefit from the upturn in the multinational sector. However for many SME’s who have little or no involvement with the multinational sector the short to medium terms prospects continue to be very grim. The absence of lending from the banking sector, the increasing difficulty of getting paid promptly and the absence of any significant government initiatives to help this sector are all conspiring to leave SME’s in an ongoing battle for survival. The latest unemployment statistics and the latest statistics on company closures (Business Barometer – July 2010) clearly suggest that unless some immediate and drastic action is taken we can continue to expect to lose over 100 of these companies a week as has been the case for the past two years.
Do any readers have any ideas on how this inexorable reduction in the numbers employed in the SME sector can be stopped? Personally I believe some of kind of significant emergency fund needs to be established immediately which should be made available to profitable SME’s. This fund needs to be created by the government and should have no involvement of the banking sector. It should be managed and administered by a task force of retired successful business people who would vet applications and ensure that the process of applying and qualifying for assistance is simple and transparent.