The post below first appeared in the Irish Times Innovation Magazine on Friday last, 27th May. I was asked to comment on the recent “Jobs Initiative” announced by the new Irish Government…..
“Governments don’t create jobs, entrepreneurs do: the risk takers, the business people, the exporters up and down the country who have succeeded often despite, not because of, Government action”.
So stated the May 10th press release from the Minister for Jobs, Enterprise and Innovation, Richard Bruton, on the Government’s new Jobs Initiative. In presenting the initiative to the Dail, his colleague the Minister for Finance, Michael Noonan, used the word “jobs” 43 times; “enterprise” 8 times; and “innovation” just 4 times. In fact the only time he said “innovation” was when he explicitly referred to the “Minister for Enterprise, Jobs and Innovation”. Note too that Minister Bruton thinks his title is jobs first; Minister Noonan thinks his colleague’s title is enterprise first; and both agree that regardless, innovation is last.
What catalysts does the Jobs Initiative give to the innovation economy ? A partial loan guarantee scheme, to be operational by the autumn, certainly should help company debt financing. A micro-finance scheme for loans to start-ups could also be very valuable. All government bodies – except the semi-states – will be required to pay suppliers within 15 days: I would love to believe that this target would be actually be widely achieved. Removing employers’ PRSI from share remuneration is correct and essential. Allowing companies to claim for R&D tax credits either against corporation tax on profits or against the cost of employing researchers is also very attractive. Increasing public procurement from the small and medium enterprise sector would be wonderful: however in general, of course, the public sector should naturally be a conservative buyer of well-proven solutions rather than take risks with new innovations. Public procurement from riskful innovation is an oxymoron.
More recently, Minister Bruton announced a three person review group of copyright legislation for the digital economy, following a similar (for example) UK initiative. At the Irish Internet Association on the 12th May last, he announced some further publicly funded research projects; a modest increase to 100 high potential start ups targeted by Enterprise Ireland; and a 750,000euro Enterprise Ireland seed fund for life science and green technology start-ups. Additional risk capital, rather than just debt and loans, is welcome even if the amount is very modest.
Standing back from all these announcements, the new administration seems to have parts of the jobs engine, but it is unclear to me at least whether they have all the necessary pieces; it appears uncertain whether the pieces fit together so that the engine is working and ticking over, and still less that it can accelerate from first to second to higher gears.
What is the Government’s vision and strategy to rebuild our economy ? Provide hope and confidence ? Get as many as possible back to work ? Grow overseas earnings, and trust that this will spill over to the rest of the domestic economy ? The tourism sector certainly fits these themes: the Jobs Initiative targets the tourism sector with VAT reduction, air travel tax elimination, and holiday visa waiver scheme common to the UK. More could be done of course to improve the national brand and tourist experience: some simple examples are ensuring that queuing at immigration controls for non-EU nationals is drastically reduced; eliminating tourist intimidation in urban areas such as Temple Bar; and providing an arrivals pick-up lane for the glitzy new Dublin Terminal 2.
The holiday visa waiver announcement could have been so much more. President Obama spoke in El Paso, Texas, on May 10th last: “Look at Intel and Google and Yahoo and eBay – these are great American companies that have created countless jobs and helped us lead the world in high-tech industries. Every one was founded by an immigrant.” What are we doing to encourage entrepreneurial immigrants to found their companies and create jobs in Ireland ?
I fervently agree with Minister Bruton: Governments don’t create jobs, entrepreneurs do. In my view, we determinedly need as many entrepreneurs as possible – our own, and immigrants from elsewhere in the EU and also beyond. Each start-up on its own in general is unlikely to make a material impact on our unemployment rate. Collectively, the impact for jobs could be immense.
A very small number of ventures grow into large companies (like Intel and Google and eBay). Many more are sold before they become large: but each such sale yields experienced serial entrepreneurs, business angels and new aspirant entrepreneurs keen to replicate the success. Some ventures fail, but those involved almost inevitably pick themselves up and try again. Each cycle of the engine generates experience, new business angels and even greater pool of entrepreneurs and ventures. More entrepreneurs and more ventures means more jobs, and more spill-over wealth to fuel the rest of the domestic economy. Do everything to oil the engine once built, and it will rotate faster and stronger, accelerating faster up through the gears – and all for an affordable effort.
Despite the woeful state of our domestic company, in my view the Irish innovation economy is in fact steadily building. We are attracting more entrepreneurs, and increasing the interest of our younger generations in entrepreneurship. We at last have a nucleus of experienced entrepreneurs and business angels investing time and personal money in the next cycle. We have a unique multinational sector, which is now keen to stimulate and benefit from indigenous entrepreneurship.
Our Minister for Innovation (which then leads to Jobs and Enterprise), our Minister for Finance and our Taoiseach have all so far been rather mute on the Innovation Economy. There is much they could do catalyse it, and many actions which are cost neutral and simply organisational in nature. There is more they could do to promote the Innovation Economy: not least personally encouraging entrepreneurs to use Ireland as their base. Most of all, they need to understand and believe in the Innovation Economy themselves.