Government’s Jobs Initiative

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.

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About chrisjhorn

https://chrisjhorn.wordpress.com/about/
This entry was posted in Dail, economy, Enterpreneurship, innovation, Ireland, Irish Times. Bookmark the permalink.

4 Responses to Government’s Jobs Initiative

  1. Derek Scully says:

    I absolutely disagree with your comment/view that entrepreneurs create jobs. You totally miss the point along with so many others and proof of this is the country is financially broke, theologically drained, spiritually dead and with only a handful of businessmen that nobody listens to anyway.
    An example of one of the best on offer is Michael O’Leary Ryanair.
    A humanoid stated on Rte1 last week that when Garret Fitzgerald left Aer Lingus it took 4 others to do his work. The truth is Garret helped enslave the Irish by charging in the region of 1000 euro for the same flight to UK when managing a communistic state airline that can now be purchase for 99 cent through Michael O’Leary’s Ryanair.
    That makes Michael O’Leary GOD! The creator of aviation as we now have, lets build a cathedral and pay due homage to him for liberating us by creating affordable passage to the gateway of the world.
    Business people or entrepreneurs should know and recognise the value of an innovative idea and the risks involves. They are NOT innovators no more than innovators are necessarily entrepreneurs. 99% of these Paddy’s in business broke the one cardinal rule that is you don’t put all your eggs in one basket. They did so stupidly and into the Pyramid Property Basket at that. Now they’re broke, the country is without financial resource needed for real creativity and from that lesson we now know they weren’t business people to begin with only chancers and they needed to be burnt.
    Innovators still require the necessary supports not only financial that creates the enterprise that in turn engenders manufacturing especially if for export.
    There is no state organisation available to support this end simply because those that do exist have now become intuitionalist and defunct that still cost real taxpayer in excess of 27 billion annually.
    In relation to 20000 job creation, this is a glorified excuse to increase state employment at a time when the real taxpayers of Ireland should be calling for closure of as many state companies as possible to reduce costs and ancillary taxes like water charges etc.
    Yours
    Derek Scully
    Ps Would Michael O’Leary please stand to the fore and take initiative for all our sakes!

  2. @BriMcS says:

    Chris et al,

    A good analysis of the new Gov’s cart-before-horse growth strategy – thanks.
    The thesis that innovation fuels employment growth has supporting evidence.
    A pertinent study shows that “there is no systematic relationship between firm size and growth” & that it is startups that “contribute substantially to both gross and net job creation” (ref: http://goo.gl/Eq2gZ).

    Source article: http://goo.gl/7y5QM “To Create Jobs, Nurture Start-Ups” (NYT).

    Regards,
    @BriMcS

  3. cpuguy says:

    I haven’t read the details of this new scheme, but superficially it appears to be a repackaging of the FAS work-placement program WPP with the addition of €50/week in expenses. Incidentally when I inquired about the WPP I asked if employers could pay expenses for lunch and transport and I was told yes. We decided to pass on WPP because the quality of the applicants was poor in the IT category. In any case it appeared to be a poor fit for SMEs and a better fit for larger companies as one WPP place can be created for every 10 employees approx. In my opinion the scheme is open to abuse by displacing experienced employees by cheaper ones and I understand from contacts in the IFSC that this may already be happening in the financial services sector.

  4. Tony Owens says:

    Chris you wrote:
    “Despite the woeful state of our domestic company, in my view the Irish innovation economy is in fact steadily building”

    I’ve had some opportunity to think about that during some jetting around I’ve had to do over the last year – Mumbai, Bangalore, Ahmedabad, Rochester and most recently Toronto (courtesy of the Canadian trade commission). In each case these business trips had to do with ‘hands across the sea’ – exploiting links with business people in those towns and getting to know new ones a little. What has changed in Ireland post- bubble in my view is introversion –> extroversion, and smug monetization –> collaborative exploration.
    Quality networking with capable businesspeople in old and rising states around the globe is fundamentally important for Irish business because our small island has so few actual residents with deep experience of building tech startups and scaling them, not to mention quality prospects with money to buy the services we offer. My own business colleagues and myself have embraced a semi nomadic existence to do what we need to do which seems a small price to pay for the privilege of keeping our families embedded in Ireland.
    Ireland is very very small. But as a business base location for non-manufacturing-related enterprise it’s pretty good – provided we assiduously keep our business networks alive and our air and sea links functional and affordable.

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