The Irish Times view on tech sector redundancies: Action required to boost State’s competitiveness

The decision of Meta, Facebook’s parent company, to cut employment worldwide including in its Irish operations is the most important signal yet of problems in the tech sector. It follows major job cuts in Twitter – following its takeover by Elon Musk – in Stripe and in a number of other companies. But Meta is one of the really big players, employing more than 3,000 people here directly and some 6,000 contractors. Where it goes, other will follow.

The sector has grown rapidly over the pandemic years and senior executives, including Meta’s Mark Zuckerberg, now say that they overestimated future growth. This is leading to significant job cuts. In some cases, notably Twitter, the management of the redundancy process was very poor and is only being retroactively managed to fit in with Irish employment law. Laying people off is never easy, but there is simply no excuse for not doing it properly in large, well-resourced, firms.

Labour shortages in some high skill areas will mean some staff will quickly pick up new jobs, though many may struggle to replicate the kind of packages they were on. And it is unclear what the tech jobs market will look like in six or nine months’ time.

The Irish economy is heavily exposed to the tech sector and online services firms such as Meta, Google and Microsoft have been key investors in recent years. The chill winds of international recession are also hitting some manufactures, such as Intel, where news is awaited on Irish job cuts.

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The Government is correct to say that the economy is now diversified and has strengths in a number of sectors – pharmaceuticals and medical devices, for example, remain strong. But the scale of what is happening in parts of the technology sector will have a significant impact on the economy, particularly in Dublin. And lower profits and job numbers will inevitably hit corporation tax and income tax. The Government has put money aside in the budget to account for these kinds of risks, but the impact could still be significant.

Wider reflection is also called for. The economy has had a lot in its favour in recent years, allowing it to get through the pandemic in better shape than could have been hoped for. Now there are some headwinds, too; as well as the tech downturn, interest rates are rising and the global economy is slowing. The Government is working on a new White Paper on industrial policy – it needs to be much more than a box-ticking exercise.

As IDA Ireland has pointed out, the weaker points of Ireland’s competitiveness become all the more important in more difficult times – the housing crisis and questions about wider infrastructure and energy security are the most obvious. Progress on these key structural factors remains sluggish. In an environment of slower economic growth, making progress on these issues becomes all the more important.