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Jobs promises will be very hard to keep


“Government promises 100,000 jobs by 2016.” That is the headline that accompanied a story earlier this week around a new initiative launched by Taoiseach Enda Kenny, Táiniste and Minister for Foreign Affairs, Eamon Gilmore and the Minister for Enterprise, Richard Bruton.
The range of measures announced included support for small businesses, the guaranteeing of loans by the Government, the freezing and reduction of business charges and the appointment of ‘start-up ambassadors’ among other measures.
Speaking at the announcement of the initiatives, the Taoiseach said his administration will “radically improve the way the Government and business interact by cutting both costs and red tape”. 
This is a nice soundbite and it certainly seems to indicate that the Government will be taking a very pro-active approach in its dealings with business but it masks a darker truth. Businesses, when they are searching for a base internationally, shop around and eventually settle in the country that offers them the best deal. The best deal for business basically means the place where they pay the least amount of tax, have less troublesome employment law to deal with and the country where they are faced with the lightest regulation. Small local businesses on the other hand cannot succeed unless people have money in their pockets to spend.
Given the problems we are currently enduring in the Eurozone and internationally as a result of light touch regulation of big business, the wisdom of cutting ‘red tape’, as the Taoiseach put it, must be questioned. Certainly, Ireland is in a desperate situation with regard to unemployment and it is an issue that does need to be addressed. The fact is, however, that Ireland is not alone in this. In the same week that the Irish Government claimed it would facilitate the creation of all these jobs, the British government was trotting out a remarkably similar line. The chancellor of the exchequer, George Osbourne, has been on this particular theme for quite some time and recently defended the culture of large bonuses for those in banking in order to ensure big business still felt comfortable in Britain, where there is currently a massive backlash against the payment of obscene bonuses to those in the banking sector. This industry is worth billions to Britain so the chancellor is working very hard to ensure it stays that way.
The latest figures from Eurostat tell us “23.816 million men and women in the EU-27, of whom 16.469 million were in the euro area (EA-17), were unemployed in December 2011”. Greece, Spain and Lithuania have the highest rates ranging from 15% to 20%. The latest figures also state, “Compared with a year ago, the unemployment rate fell in 14 member states, remained unchanged in Ireland and rose in 13 member states.”
On the face of it, this is reasonably good news for Ireland. Of course, on the ground, the unemployment rate in Ireland is unacceptably high, hence the efforts of the Government to try to address it. But, as shown above, there are plenty of other countries in the EU and the Eurozone who are also desperately trying to lure business into their nation to tackle the politically damaging unemployment rates.
What this means is that international business is enjoying what we might refer to as “a buyer’s market” in the parlance of real estate and investment. With nations scrabbling to draw them in, big business can squeeze the best terms and conditions out of governments to benefit their bottom lines and nothing else. 
It is generally only at election time we are treated to the fallacy of government’s “creating jobs”. The fact is this phrase only applies to jobs in the public sector, where the Government can create posts, pay people and manage them. What the Irish Government has just announced is a plan to attract businesses to Ireland in the hope that they will employ people. If governments could create jobs in the way they claim, they would do it.
In fact, the Irish Government, along with their counterparts in many European countries, is cutting jobs. The International Monetary Fund has long had a policy of privatisation and public sector demolition and now that they have been let loose in the broken countries of Europe they are implementing their policies with alarming zeal. Greece has been forced to implement fresh austerity recently, which, according to BBC reports, is causing such hardship on the ground that children are collapsing at school because their parents cannot afford to give them packed lunches.
Nations suffering externally imposed austerity combined with a stringent ideological policy of public sector destruction will be as lambs to the slaughter when negotiating with big business. Governments will be so desperate to see jobs created within their borders, both to alleviate the suffering of people and to boost their own political currency, they will be forced to offer conditions that will amount to pampering.
Taoiseach Enda Kenny has said he will “personally oversee” the implementation of his jobs initiative and I wish him luck in his efforts.
People need jobs, I am just not sure they need political grandstanding and overblown announcements about hundreds of thousands of posts. This is a time for pragmatism rather than false hope.
If the jobs are created, then let the Government announce them, as they are always quick to do, as it stands they are announcing good intentions.
We are told that a fifth of the 100,000 posts to come by 2016 will be in manufacturing. Given the cost base in Ireland and the inability of the Government to hold on to jobs in this sector already, it will be interesting to see how Ireland can be made more attractive to companies than countries where people’s time and energy can be bought for what amounts to a pittance.
The Government succeeded this week in its aim to grab the headlines with its grand announcement. If they succeed in their objective, it will be interesting to see at what cost the goal is achieved. If they fail, we can expect this grand plan to fade quietly into the background, like so many others before it.

 

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