THERE was a two-part TV show on RTE television in the past two weeks that made compulsive viewing. It was a sort of reality show with the emphasis on real reality, the kind of mundane reality that other TV reality shows don’t do. It was called Where’s My Job Gone? The idea was simple. Take a few of the many people who have lost their jobs in manufacturing in Ireland recently when the multinationals they worked for moved on or downsized, and follow the trail to see where their jobs had gone.
The first show featured two people, a woman who had worked for the international pharmaceutical giant Proctor and Gamble in Tipperary, and a man who had been a manager for the electrical switching control multinational Schneider Electric in Kildare.
The stories they told were similar — years of service, up-skilling as their careers developed, their plants making profits for the mother company, doing everything they could to ensure the success of their factories. And then the devastating news that, after all that effort and loyalty, their jobs were going to lower cost countries in Eastern Europe.
What followed was fascinating, as the two people featured got on planes and went to Poland and elsewhere in Eastern Europe to see exactly where their jobs had gone and who was doing them now. There was little bitterness involved, just a sad acceptance of the new reality.
They met the individual workers who were now doing the jobs they had once done in the plants in Ireland. They were invited into the workers’ homes for dinner and a discussion over a few drinks.
The people now doing the jobs were good people, but their standard of living was way behind that in Ireland and their cost of living was low. So even though they were being paid about a third of what the Irish workers had been earning, they were delighted with their new jobs.
Both Irish workers emphasized that it was not a case of their companies losing money in Ireland and being forced to close. Both companies were profitable.
But they would be even more profitable in Eastern Europe, which would mean bigger bonuses and share options for the managers as dividends to shareholders continued to climb.
It’s happening every other week here now, as multinationals that have been operating plants successfully in Ireland for the last 20 or 30 years (or more) decide it’s time to start downsizing and shifting to cheaper locations in Europe, in Poland, Hungary, the Czech Republic and so on.
As if on cue, a few days after I had watched the first Where’s My Job Gone? program, the computer giant Dell announced plans to lay off 250 workers at its operations in Dublin and Limerick over the coming months.
Dell is describing the lay-offs as “organizational changes to improve competitive advantage and long-term profitability.” Right. The fact that they have an enormous new plant in Poland is the concrete reality behind this management speak, and has direct relevance to what’s happening in Ireland.
The company currently employs around 4,500 people in Dublin and Limerick and is implementing a plan to cut thousands of jobs worldwide. How many jobs will ultimately be lost in Ireland is unknown. But as well as cutting overall global numbers, Dell is cost cutting and shifting manufacturing into lower-cost economies.
This is the harsh reality here now, with the heady days of the boom behind us. Factory closures and lay-offs are a depressing staple on the nightly news as multinational companies announce they are moving their manufacturing elsewhere, going east where the cost of production is cheaper and still staying within the enlarged European Union with all the trade advantages that brings.
The single European market of 27 countries is a great idea and we have all been in favor of the closer ties that the enlarged EU has brought, making Europe a world class power block and making internal conflict in Europe impossible in the future.
But only now are we in Ireland really waking up to the painful cost of creating this new European Union with its single market. Job migration is part of it and there is little we can do about it.
The usual solution prescribed for this problem is more education and continuous up-skilling. But we in Ireland have a tendency to presume that other countries are not doing the same and are way behind us because they work for low wages.
The second part of the Where’s My Job Gone? program focused on that, and showed what a mistake it is to assume that the knowledge economy only exists in the developed countries like Ireland. Some parts of Eastern Europe have a savvy, IT-smart young workforce who are also cheap.
And outside Europe, it’s the same. To find out how Ireland compares with India the program went to the Indian IT hub of Bangalore, and what it discovered is chilling for those who think that IT multinationals in Ireland cannot not get the same work done over there and for a lot less money.
All of this accelerated flight to the low cost countries is being driven by the global slowdown, which is making international companies tighten their belts. And it’s making the slowdown that has started here as the Celtic Tiger goes to sleep a lot worse.
Last week, new unemployment figures showed that the number of people here out of work had now reached 5.6% and continues to climb rapidly.
If the jobs figures for April were bad, the figures for the economy in April were equally depressing, showing a slide in state revenue of 6.5%, or €927 million, for the first four months of the year. And revenue — the amount the government gets in taxes, etc. — is a clear indicator of the level of economic activity.
All of which explains the cartoons that appeared in Irish newspapers this weekend, Bertie Ahern’s last weekend in office as taoiseach (prime minister). They varied slightly, but the drawings of Ahern leaving his office and the message were the same — would the last person to leave turn out the lights?
In a way the situation we face has been made worse here by the remarkable success we have had in recent decades in attracting some of the biggest companies in the world to open plants in Ireland.
By their very nature these multinational conglomerates are mobile, ruthless and sensitive to any lack of competitiveness. And when an international downturn starts they react quicker than anyone else.
To reposition ourselves in this market won’t be easy. It will require a combination of cost cutting, up-skilling and extra hard work.
The comfortable life we have become used to as the Celtic Tiger turned carpenters, plumbers, electricians and block layers into workers who would not get out of bed for less than €300 a day is over. From now on it will be blood sweat and tears. There will be no cushy numbers, no cozy holes.
The first step to getting back to where we should be will be an acceptance by the unions that there must be minimal pay increases in the new national pay talks which are now beginning.
The unions are already pointing the finger at CEOs and senior managers with their million a year salaries, and saying they must lead the pay moderation by example. But, however desirable that might be, the critical factor for companies is the cost of employing hundreds of thousands of people who are the line managers and ordinary workers. That’s what makes the difference in terms of whether the jobs stay here or go elsewhere.
That’s the big challenge now facing the incoming Taoiseach Brian Cowen. He will need to begin by limiting the pay increases being sought by the vast army of state workers if he is to make any headway with workers in the wider economy.
With their jobs for life and index-linked pensions, state workers in Ireland are now the envy of workers in private companies who face the uncertainty of the global business world on a daily basis, and Cowen needs to make the state sector more aware of that.
Trying to get pay moderation is only the beginning. There are huge issues to do with productivity and competitiveness that also have to be addressed.
The alternative will be more announcements from companies like Dell. And a line of people volunteering to go on TV shows like Where’s My Job Gone?
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