INDUSTRIAL restructuring may sound like an abstract concept but it became all too real this week for the 650 employees in Semperit in Ballyfermot, Dublin and the 220 in Tambrands in Tipperary. A further 650 people in Packard Electric in Tallaght found out just five months ago that their jobs were to go. And as the shake out of lower wage industries continues, the only question is who will be next?
The price for Government ministers, never slow to "announce" new jobs, is that they are called in to try to "save" those in danger of being lost. The political response to the industrial shake out is becoming familiar. First comes a flight to corporate headquarters and a meeting with the company president. There often follows the establishment of a task force or inter agency group for the affected area. Then we are told that IDA Ireland, so often the bearer of good tidings for the politicians, will row in and do its best to attract replacement industries.
Laudable though all these efforts are, the deeper problems remain unanswered. They are that thousands of lower tech jobs across the economy are threatened by a combination of high taxes on labour in Ireland, the emergence of new competition from low wage economies and other competitive blocks in the Irish economy.
For years many of these issues have been ignored as job losses always seemed to be offset by a strong inflow of new jobs. For the politicians, it has been a case of "never mind the factory closure, look at all the fancy new teleservices and high tech electronic projects providing welcome jobs".
This is not to decry the value of new inward investment. On the contrary, the "deal" struck by IDA Ireland on behalf of the Irish taxpayer over the years has been a good one. Over 90,000 people are now employed in overseas industry. And with Richard Bruton heading to the US next week, it is a fair bet that a number of major new projects are in the offing over the next couple of weeks.
Irish industry has often been characterised as having a dual structure, with successful bright new industries sitting alongside struggling indigenous ones. But now the break down is more complex.
Many indigenous companies have broken into new products and market areas in recent years, while among the industries facing difficulties have been the longer established multinational companies in sectors such as electronics, engineering and consumer products.
These are the companies most exposed to lower cost producers and to decisions by company headquarters to rationalise in cheaper locations or closer to major markets.
Some of these plants are going to close, no matter what. The long term view of Government may well be that Ireland's future lies in attempting to be a high tech, high skill, high wage economy. But that does not mean that policy should ignore the lower wage producers who still provide thousands of jobs.
A sizeable reduction in employers' PRSI is one of the ways to help such companies, which typically have proportionately higher wage costs than average firms. However, this may not be a priority for a Government keen to woo the voters in the next Budget.
The recent Forfas policy report also recommended a major effort to help firms in low growth sectors to upgrade their skills and production and target themselves towards more promising markets.
If EMU goes ahead on schedule and Ireland enters, then the shake out of lower tech industry may well accelerate, as many would be exposed in a period of sterling weakness. All the more reason now, then, to look at measures such as lower employers' PRSI which could assist these companies.
It is all very well to aim to promote the industries of tomorrow, but policy makers must also try to hold on to jobs in other sectors for as long as possible.
