Innovation & job creation

The Government is banking on an innovation revolution to play a major part in extracting the country from the economic and financial black hole into which it has toppled so unceremoniously.

In the last few weeks, two leading State groups, FAS and the Innovation Taskforce, have produced major reports suggesting that further shifts up the technological tree can produce major dividends in the area of job creation.

According to the latest FAS Manpower Forecasting Study, the number of employed scientists, engineers, business and IT professionals grew strongly in recent years, with employment in each of these categories at least doubling between 1996 and 2008.

This trend is expected to resume as a recovery in exports, particularly in services, begins to gather momentum.

FAS predicts that there will be 22,000 lab technicians and 19,000 programmers employed in Ireland by 2015, exceeding levels recorded at the peak of the boom.

An Emerging Skills Gap?

It is worth posing the question: how many of these jobs will be filled by Irish people, and how many from among the 440,000 or so currently on the live register?

In recent years, much ink has been devoted to the ongoing problem of falling enrolment in third level science courses and there are as yet few signs that this trend is being reversed.

We are just not producing enough people from our schools and colleges to fill all the new positions that could potentially be created in the next few years.

There is a huge mismatch between available ‘manpower’. Males under the age of twenty five are bearing the brunt of the current downturn.

The task of ‘retooling’ many of the unemployed in order to bring supply closer into line with demand will present a formidable challenge to the authorities.

Educational Shortcomings

Drawbacks in the area of linguistic attainment could also serve to retard job creation for even the better educated Irish people in the emergent areas of the economy.

RTE recently broadcast a report about a group of girls in Loreto College, Bray, who are studying mandarin, with a view to combining this with a business studies degree.

According to the report, this is the only secondary school in the country where mandarin is being taught yet a working knowledge of Mandarin, or for that matter, Arabic, Hindi and Spanish could prove of great importance. Wider dissemination of a real capacity to work in Spanish would surely represent a start.

We can no longer just pick and choose from jobs where English alone will suffice, if a new generation of export-led high-end service companies are to carve out market share in the high growth areas of the world.

Has the Department of Education been really up to speed in responding to the rapidly changing demands of a global economy which has shifted in its axis towards Asia, and away from the old OECD heartland?

Perhaps it is time for the Department to offer double Leaving Cert points for those willing to study not just honours math, but also challenging languages such as Mandarin.

Creating ‘The Knowledge Economy’

The Innovation Task Force talks of transforming Ireland into a “global innovation hub” for Europe.

It is easy to be cynical, yet worth recalling that we managed just this sort of transformation between the mid 1980s and 2000. The Task Force sees the following as critical to the attainment of this objective a second time round:

- Entrepreneurship and enterprise which “must be at the centre of our efforts.”

- The availability of smart capital to “start, grown and transform enterprises.”

- An education system “which fosters independent thinking, creativity and innovation.”

- State encouragement for flagship projects.

- A “sharpening in focus” of the national research system on areas of “potential strategic and economic advantage for Ireland.”

It highlights some indigenous success stories such as Eirgen Pharmaceutical, which four years after its establishment launched an early stage breast cancer drug and has developed a partnership agreement with a leading Japanese pharma company.

The Task Force talks of attracting people to Ireland to start up enterprises and calls for a transformation in the scale and nature of Irish venture capital investment.

Certainly, the low availability of risk finance has been a major problem, here, for many years, with available bank finance being sucked into speculative property.

The Task Force and the authorities in general, need to devote much more attention to the matter of how to secure alternative forms of start up finance and working capital for projects.

There are plenty of would be entrepreneurs and small business ideas but with existing businesses being starved of capital, the whole idea of expanding an Irish enterprise culture appears distinctly hollow in current circumstances.

Clearly, securing overseas projects remains a priority. However, securing a flow of finance from European, North American or Asian financiers interested in backing potentially viable ventures, existing or putative, must also be examined as a matter of urgency.

Denis O Brien has suggested that if he were to start a business now in Ireland, he would start a bank, in view of the current ratio of funding to entrepreneurs.

The Government should – while it seeks to prop up our existing system – explore all possibilities for establishing alternative financial outlets for a business sector in danger of withering away.

Views of the Sceptics

It is worth noting that the Task Force has come in for some criticism in economist circles.

The most withering is provided by the ESRI economist, Richard Tol:

According to Professor Tol, the grand aims are out of line with reality. He suggests that the innovation strategy is in need of a major overhaul. “The Government must subsidise innovation… but at the moment, it is spending money in the wrong fields.”

In a recent article he suggests that the State is subsidising inputs, not outputs in the field of innovation: “Targets are set for things that are easy to measure like the number of PhDs .. university bureaucrats respond to such targets by lowering the standards for acquiring a PhD.

He accuses politicians of “pursuing the technological fad of the day (green energy), these days.”

Policy is led by middle aged men yet world beating companies are often founded “by young men in garages.” He suggests that universities “should act like venture capitalists hiring out staff and facilities to start up companies in return for shares.”

Above all, he calls for an abandonment of the strategy of picking winners. “Predicting winners is hard and politicians and civil servants are notoriously bad at it.”

“The target areas for Science Foundation Ireland do not build on Irish business success stories. We have a number of world beating companies in fields like food, packaging and innovation.

Kim Majerus, MD of Cisco Ireland calls on the country to look at the potential of selling Irish educational services via the Web, using our existing talent in education, IT and the arts.

She, too, expresses bemusement at the current preoccupation with the Green Economy at a time when firms are failing to take advantage of more straightforward opportunities provided by teleworking which inevitably reduces employees’ impact on the environment.

Such questioning voices also need to be heeded and the points they make examined and either refuted or taken on board. Even more, we need to listen to the voices of a growing army of young entrepreneurs who are starting up micro enterprises and occasionally managing to build buoyant sectors ( such as the games industry ) largely off their own collective bats.

Written by Kyran Fitzgerald

Share and Enjoy: