Indigenous companies shed 16,338 jobs last year, resulting in the first net decline in employment by Irish-owned businesses in a decade, writes Edward Power
Despite a 2 per cent increase in exports by Irish-owned firms to €11 billion and the creation of 12,300 new jobs, a string of lay-offs led to a 4,000 decrease in numbers working in domestic industry, Enterprise Ireland said.
Citing a difficult international trading environment and diminished competitiveness in the Irish economy, Enterprise Ireland said employment contraction was in line with predictions and warned that stagnation in global markets represented a serious challenge in 2003.
The agency's annual report confirms that 2002 was one of the bleakest years for job creation since the early 1990s. The latest national quarterly household survey, deemed the most accurate measure of unemployment, shows the jobless rate running at 4.8 per cent, a half point rise over 2001. Some 23,556 jobs were lost in the 11 months to December, a 22 per cent year-on-year increase, Government figures reveal.
Enterprise Ireland cautioned against searching for "quick fix" solutions, stressing that sustained investment in researching and developing high-value products is the most effective means of guaranteeing domestic companies' long- term viability.
Yesterday's sombre assessment follows a warning by small business organisation ISME that spiralling overheads pose a severe challenge to domestic industry and will cause further redundancies.
Closures accounted for a quarter of indigenous job losses with cost cutting responsible for the remainder, the agency said.
But the outlook was not entirely gloomy. Although lay-offs outstripped jobs created, exports were buoyant, representing 45 per cent of output. Investment in R&D gathered momentum, encouraging Enterprise Ireland to predict 60 start-ups this year, a 20 per cent rise on 2002. It identified niche sectors such as biotechnology, functional foods and medical devices as key growth areas for 2003.
Cooling in the US economy harmed large firms but did not seem to hamper smaller businesses, many of which secured significant deals, the agency reported. Brisk business was recorded in the e-learning, healthcare and financial services software sectors.
Trade with Britain - accounting for 48 per cent of exports by firms with Enterprise Ireland backing - was robust and is expected to remain strong.
Exports to Europe were down but EU accession is likely to throw up new opportunities in the former soviet block. Asian markets offered strong potential, particularly in IT and infrastructure services.
Future growth hinged on companies' ability to win export sales, said Enterprise Ireland chief executive Mr Dan Flinter.
He added: "Despite the difficult global economic conditions, if our companies can maintain and increase their export-driven momentum we will see a recovery, in some measure, of jobs."
