Safeguarding Ireland’s reputation as a place to do business will be essential in our pandemic recovery
Some of the most challenging economic terrain we’ve seen in decades lies ahead of Ireland as we navigate Covid-19. But there are reasons for optimism. Our resilience and know-how have come to the fore. In the past decade, Ireland overcame a global recession, created record levels of employment, sustained economic growth and balanced public finances.
In recent weeks, the Department of Finance and other commentators have said the impact of Covid-19 on the economy is less than previously expected, mainly due to the resilience of Multi-National Company (MNC)-dominated exports, particularly in the strongly performing pharma and digital sectors, although the hit to the domestic economy and to jobs has been severe.
Indigenous Irish businesses are critical strategic partners and suppliers to the MNC sector here and the spill-over into the wider economy is substantial. For every ten jobs created by a foreign-owned company in Ireland, a further eight are created in the wider economy and the most recent data available (from 2018) shows that the Irish operations of US companies spent almost €10bn on payroll, over €6.3bn on goods and services and over €5.3bn on capital expenditure.
Since the Covid-19 crisis began, we have learned a lot more about our capacity for radical transformation – from working from home to how we deliver public services – including our healthcare system. The recently launched ‘Living with Covid-19’ plan provides us with the next level of certainty required to deal with the more uncharted territory over the coming months, and it is important that Government will continue to provide certainty and give adequate time for business to prepare for any changes to the levels being imposed.
The good news is that foreign direct investment (FDI) from the US continues to see Ireland as an extremely reliable business location. Ireland’s workforce has once again proven to be our greatest asset. 160,000 people are employed in the sector, contributing every day to essential global supply chains in pharmaceuticals, medical technology, semi-conductors, nutrition and financial services.
Ireland is only 0.06pc of the world’s population, yet we are the world’s 5th biggest producer of Covid-related products from medicines to ventilators. And the value and importance of the trans-atlantic trade relationship is not all one way – its benefits are very much a two-way street with Irish companies responsible for employing over 106,000 people across the US.
Responding to an American Chamber (AmCham) survey in September, 55pc of leaders within our member companies told us they thought Ireland was a better place to invest than in 2015. The same percentage told us they had increased headcount over the past 12 months. It is vital that Ireland continues to safeguard this hard-won reputation as a globally competitive and cost-efficient place to do business, to invest and to create jobs. That starts with ensuring Ireland remains a great place to find, attract and retain talented individuals.
Ahead of Budget 2021, we are calling on the Government to internationally benchmark Ireland’s income, capital gains and corporate tax systems. Do they support job creation, innovation and productivity?
How do they work for employees, startups, small businesses, those who have come to Ireland to build a career, or have been seconded here?
Building on a number of diplomatic wins this year, we are fully supportive of the Government’s Global Footprint 2025 ambitions and reiterate the importance to prioritise resourcing its international economic diplomacy such as the overseas networks like IDA Ireland, Enterprise Ireland and Science Foundation Ireland.
This includes the continued resourcing of strategic authorities like the Data Protection Commission and the National Cyber Security Centre to keep up with the pace of change, as well as the Revenue Commission which has been rightly recognised for its response to the pandemic and its digitisation agenda.
Across the board, Covid-19 has highlighted how critical a strong digitisation agenda is for Ireland and a sustainable future for our economic growth. It is now more important than ever that all those who can, are enabled to work remotely within Ireland, and citizens and businesses can interact digitally across all Government Departments and agencies, both local and national. This needs to be achieved in a way that does not create a digital divide but enables all citizens to access healthcare, education, and a range of other public services at a distance.
Alongside an ambitious approach to digitisation, we must have a robust, consistent and clearly understood approach to data storage and data transfer and AmCham is currently engaging with policy makers on both sides of the Atlantic on developments arising from the recent European Court ruling on international data transfers between the US and the EU.
Sustainable and balanced regional development is the best way to ensure Ireland’s economy recovers together and bridges the urban rural divide, and poor physical infrastructure in parts of the country remains a barrier to business expansion plans.
Given the increased importance of delivering on critical physical and digital infrastructure, we should revisit the assumptions made in the National Development Plan to ensure the maximum delivery of its objectives. And whilst internal and digital connectivity is key, we cannot underestimate the importance of air connectivity, which will continue to be an important consideration for overseas investors.
The public discourse will continue to focus on what the Irish economy will look like post-Covid. It’s difficult to predict precisely how the business environment will change. We take great encouragement from our workforce who have shown great adaptability at this time of enormous challenge.
It is imperative that Ireland’s policy responses continue to support and build on their efforts and safeguard Ireland’s hard-won position as a global leader in attracting inward investment.
Ireland’s workforce has proven to be our greatest asset
Poor infrastructure remains a barrier to business expansion