Tuesday, 10 December 2019
OECD Report on SME and Entrepreneurship Policy in Ireland: Statements
Before I start, it would be useful to set the scene by explaining the rationale behind the OECD review and the Government's focus on improving SME productivity in our whole-of-government plan, Future Jobs Ireland. As we know, the financial crisis tested our people and businesses, sometimes to the limit of their endurance. However, our country has made great strides since the dark days of the recession. Through resilience, talent and determination, we overcame enormous challenges. Unemployment has fallen from 16% to 4.8% and there are more people working in Ireland today than ever before. Exports by Enterprise Ireland companies increased by 6% last year to €23.8 billion. According to the IMD business school, we are the seventh most competitive economy in the world and the second most competitive in the euro area. Today, the UN has ranked us the third best country in the world for quality of life.
Nevertheless, with global challenges facing us, there is no room for complacency. Every generation needs to shake up its enterprise and jobs model, otherwise it falls backwards. Through Future Jobs Ireland, the Government wants to nurture entrepreneurship and support our businesses and workers to prepare now for tomorrow's world. Some 70% of our workers are employed by an SME, which highlights the crucial importance of Ireland's indigenous businesses to stability and growth in every region. That is why I commissioned the OECD to undertake a detailed review into Ireland's SME and entrepreneurship policies in March 2018. That review, which I published on 31 October last, is about looking to the future from a position of strength and deciding what we can do better. The OECD review has provided a very useful contribution to the policy direction of my Department in the vital areas of SMEs and entrepreneurship. We have always supported Irish businesses and we have excellent agencies like Enterprise Ireland and the local enterprise offices, which work hand in glove with thousands of indigenous small firms to help them scale and grow.
Our strengths include the whole-of-government approach we take to SME policy and how actively we involve stakeholders in decision-making. We now need to bring all of those supports, policies and programmes together and drive forward one comprehensive unified framework for Irish businesses.
The OECD's recommendations will not sit on a shelf. Instead they will form the building blocks of an ambitious new national SME and entrepreneurship strategy, which I intend to bring forward in the coming months. That strategy will set out key targets and performance indicators across a range of areas such as targeting a 50% increase in the number of SMEs exporting, achieving a step-up in financial skills and knowledge among our SMEs, ramping up supports so that Irish businesses can embrace the digital revolution, simplifying the process for accessing the R&D tax credit so that more SMEs can benefit and supporting our small firms in the transition to a low-carbon economy. It goes without saying that SMEs are fundamental to regional development. That is why we will also broaden the remit of the local enterprise offices, LEOs, to ensure that no ambitious Irish company is left behind, because they find themselves falling between their LEO and Enterprise Ireland. It is also why I launched nine new regional enterprise plans earlier this year and it is why I have announced €60 million so far under the regional enterprise development fund to foster a collaborative approach in each region. Indeed, the OECD has specifically identified the example of the go-cluster initiative of the German Federal Government which focuses on the development of local clusters. The Boyne Valley Food Hub, which received support through the regional enterprise development fund last year, is a great example of the strong local networks that we want to develop. That kind of regional dimension is vital to our enhancing the capability of SMEs across Ireland.
I hope to support more projects like that under the next round of the fund which I hope to announce in the coming weeks. Typically in Ireland our foreign-owned firms are highly productive while our indigenous SMEs lag behind. The Government wants to close that gap and strike a better balance. I absolutely value the crucial role that foreign direct investment, FDI, plays in Ireland's economic success and how indigenous companies can leverage that investment. For every ten jobs that are created in FDI firms, there are eight spin-off jobs in other companies here. For that reason, the question should never be about FDI or indigenous, but rather how we can maximise the benefits for both. There are many great examples of partnerships between domestic companies and foreign multinationals to everybody's benefit. This is something I want to see more of into the future and it is why I have made SME involvement a prerequisite when applying for the Government's €500 million disruptive technologies innovation fund. I am acutely aware that our indigenous Irish companies are the engine of our economy and I want to ensure we are doing everything in our power to support them. In the past, smaller firms have sometimes felt overlooked by governments and I want to change that narrative. Abraham Lincoln said "the most reliable way to predict the future is to create it". Our new SME and entrepreneurship strategy will focus on creating the future we want by ensuring that Irish SMEs are given the red carpet treatment they deserve.
Again I thank the Business Committee for the opportunity to speak on the OECD review and roadmap. They are excellent documents which include best practice examples from countries facing similar challenges to Ireland's, whether Malaysia's masterplan for SMEs and entrepreneurship or Germany's go-cluster initiative, which increases collaboration between mittelstand companies and research institutions. I look forward to hearing the views of all Deputies on what they feel is working well and what we can do better as my Department and the Government works to develop a robust and enduring framework for Irish SMEs.