Eamon Gilmore (Dún Laoghaire, Labour)
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Question 19: To ask the Minister for Enterprise, Trade and Employment his views on the figures showing a decline in business activity in the services sector in the first three months of 2008, especially having regard to the potential impact on employment; if he will take steps to ensure that this trend is reversed; and if he will make a statement on the matter. [16552/08]

Micheál Martin (Cork South Central, Fianna Fail)
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The recent data published by NCB Stockbroker's Services Purchasing Managers Index (SPMI) showed that business activity in the services sector experienced a slight decline in March — the first such contraction in 56 months. More specifically activity increased in the Business Services and Financial Services Sectors while decreases in activity were recorded in Transport, Travel, Tourism and Leisure. Any slowdown in services activity must also be placed in the context of a global economic downturn. In fact, the Irish services sector has been a stellar performer over recent years and continues to perform strongly vis-À-vis key competitors.

Within the services sectors, financial and other business services have been the primary drivers of employment growth. Employment in this sector grew by 21,000 in 2007. This reflects a longer-term trend — the sector experienced growth in employment of 68 percent over the past decade. The overall employment picture also remains quite strong with staffing levels in the Irish service sector continuing to expand. This mirrors the findings of the CSO's QNHS which recorded an increase in services employment from 1.37 million in Q4 2006 to 1.45 million in Q4 2007.

Amongst the developed economies the service sector is becoming increasingly prominent and Ireland is no exception — employment in services increased by approximately 480,000 between 1997 and 2007. Recent figures have shown that services now represent approximately 67 percent of total employment in Ireland compared to 62 percent in 1997.

Ireland has been one of the leading countries in terms of services exports and Ireland is now ranked as the 12th highest exporter of services in the world. Between 2000 and 2006, the contribution of services to total Irish exports increased from 21 percent to 39.7 percent.

Recognising the increased importance of services worldwide and for Ireland, as well as the increased international tradability of services, Forfás established a dedicated Services Strategy Group. From the work of this group we intend to prepare and position Irish enterprise to adapt to the globalisation of services with the aim of achieving sustainable and competitive services enterprise in Ireland. The report, which is expected to be finalised shortly, will outline a vision and strategy on how to achieve sustainable and competitive services provision in Ireland based on three strategic imperatives:

(i) Increasing Ireland's services export base;

(ii) Growing a cadre of Irish services companies that can expand into international markets (Overseas Direct Investment); and

(iii) Developing productive and competitive locally traded services including their globalisation potential.

In considering the problems impacting on economic activity, be it on a sectoral or global basis, the ability to compete is recognised by all as being central to any strategy for future success. Innovation and the productivity gains that flow from it are the new foundations for that competitiveness. "The Strategy for Science, Technology and Innovation" is clear about the types and levels of support that must be given to the most significant drivers of our economic well being, namely manufacturing and internationally traded services firms. Whilst different challenges face enterprises in both sectors, our development agencies are committed to bringing about a transformational change to company attitudes to R&D and we are focussing on an ambitious target to grow business expenditure on R&D to €2.5bn by 2013.