Bernard Durkan (Kildare North, Fine Gael)
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Question 189: To ask the Minister for Enterprise, Trade and Employment if his attention has been drawn to a growing lack of competitiveness in manufacturing industry with resultant relocation to lower wage economies; the steps he has taken to address this issue having particular regard to the number of such manufacturing jobs lost to this economy in the past five years; and if he will make a statement on the matter. [25472/05]

Micheál Martin (Cork South Central, Fianna Fail)
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Competitiveness is an issue of national importance that deserves careful monitoring and corrective policy intervention where necessary, but it must be pointed out that competitiveness does not affect the manufacturing sector alone. An uncompetitive economy will never be able to consistently create employment and increase its citizens' standard of living, as we have done over the past decade.

The Irish economy has consistently created increased levels of employment and improved the quality of living of our citizens. According to the latest data from the Central Statistics Office's quarterly national household survey for the second quarter of 2005, employment increased by 93,000 on the corresponding period in 2004. This means that the total number of people in employment is now a record 1,929,200.

The National Competitiveness Council's recently published annual competitiveness report 2005 shows that we continue to perform extremely well in terms of income and economic growth where we are first out of 15 in terms of GDP and sixth out of 16 in terms of GNP. This is a remarkable performance highlighting the significant resilience of the Irish economy to increasing international competitive pressures from fast developing regions.

As Ireland's economy fundamentally changes so too do our competitive strengths and advantages. We are no longer a lost cost economy, but one typified by high output, high value added, high returns to labour and improving living standards. Clearly, a more attractive cost environment abroad will inevitably attract some firms that are unable to produce in high wage, high reward economies such as ours. However, it is equally clear that we are managing well the inevitable transition to a knowledge economy that is less reliant on low cost, basic manufacturing employment.

The continuing structural transformation of our economy is inevitable and will continue as high value added services and technology savvy products increasingly become the wealth and employment drivers of the future. With this evolution, plant transfers and other adjustments are bound to come, but where relocation has occurred to date, it has largely been limited to relatively low-technology, labour-intensive activities — those least suited to the competitive characteristics of our modern economy.

I recognise that this adjustment process is not without difficulty either for the economy or for individuals whose employment is affected. To offset the competitive threat from lower wage economies, the Government is implementing a series of policies to encourage a move to higher productivity and the use of technology to invigorate enterprise. Ireland's future economic success lies in our ability to create sustainable employment by both attracting and growing companies with higher profitability and operating at the more sophisticated end of the value chain. These enterprises are more technologically advanced and are a better fit with Ireland's competitive strengths.

The enterprise support agencies under my Department have been mandated to adjust their support strategies to meet both the needs of society in terms of high quality employment opportunities and the more sophisticated needs of businesses that generate and sustain those jobs. For example, Enterprise Ireland, EI, is implementing a new strategy to transform Irish industry and increase its profitable connections to the global economy. As part of this determinedly pro-business support environment, EI has launched a €20 million productivity improvement fund to help indigenous firms invest in the very technology, equipment and employee training that will give them the opportunities to win more business and survive against international competition. In boosting productivity this new programme will considerably strengthen the competitive position of Irish enterprise by increasing firms' value added output, making them less susceptible to cost pressures and giving them the capacity to grow and expand against global competition.