Archive for the ‘On The Bloch’ Category

More Reasons to Be Cheerful

Tuesday, March 22nd, 2011

I give speeches and courses on all matters to do with careers and employment, and most people have been surprised by the data I provide and the advice that I give… because I’m very positive about Ireland and the future of the country.  Ireland has faced things in the last few years that only a few other developed countries have faced. We have not been helped by policy, or an almost comically negative media. However, our biggest asset remains, and that is the Irish people who have shown courage and determination to win through.  Whatever the ups and downs, in the long run, it all boils down to people and we will not be beaten.

The economy has faced incredible challenges and the debt burden will remain for the foreseeable future. What we have to do is understand and accept that a national debt is here to stay.  No country ever fully repays a national debt, what happens is the debt is managed.  First, we have to get it to a sensible level – and the next 3 years will be a challenge, but then, as the economy grows and inflation occurs, the debt of x billion does not appear so large e.g. your €100,000 mortgage taken out in 1980 is massive, but the same €100,000 mortgage by 2000 is small and manageable.

There are some particularly difficult sectors, but most are now doing fine. In most of the country, property prices have stabilised and this will continue so that some people will be brave enough to buy again and will make good money (have you tried finding a decent property let in Dublin or Cork recently)?! But let’s not get carried away by illusion again, barring the odd test case, there’s no such thing as ‘easy money’ and there never was. Anyone who is successful has to work very hard, and they always did.

The Construction industry is in trouble and there are quality people unable to find work.  However, in almost no other fields is this the case.  There has been a massive pick-up in IT, Accountancy, Pharmaceuticals, Insurance, Supply Chain – even Legal, Human Resources, Retail and Banking have seen a pick-up.  The facts are that the Live Register increased by only 13,000 last year and emigration is expected to be 50,000 to April 2011 (70,000 to April 2010).  Much better than expected and no doubt the next 12 months will be better again. The last quarter of 2010 saw growth in professional employment, so that any employer of white-collar staff is in the same boat as their international counter parts… they face a skills shortage.

Irish business people recognise opportunity and in a very recent survey by Grant Thornton (conducted worldwide), just 21% of Irish businesses are optimistic about the Irish economy, but 73% expect their own businesses to increase, or stay the same in 2011!  In other words, there is a big discrepancy between what people are seeing in the own businesses as how they perceive the whole and this is a nonsense.  If 73% of businesses do the same or better in 2011, then it will be a good year for Ireland Inc!  Indeed, the business confidence index increased to + 13 in Q4 2011 which is best for almost 3 years.

Salaries and remuneration have gone down in Ireland over the last 3 years, but the amount has varied incredibly.  Some companies and sectors have continued to give pay rises – like IT and pharmaceuticals, but most others have taken a pay drop.  The overall drop is about 5%, so while Ireland has dropped 5%, the outside world has risen about 5% giving us a 10% competitive advantage.  What this means is that Irish salaries are now only 20% higher than the cheapest Europeans in NI and Poland, and 20% cheaper than the more expensive Europeans like the English and Benelux.  In some areas, like Legal, a recently qualified solicitor in Dublin will be paid up to €40,000 where in London they can get up to €50,000.  I think Ireland is set about right now, but with salaries expected to rise by only 0.4% in Ireland in 2011 versus over 2% in Europe as a whole, we’re going to need to start paying again soon lest we lose our top talent, which so far has remained in Ireland.

Where everyone was once flooding into Construction and Engineering, they’re now flooding into IT.  The way to address most trends is counter-cyclical.  For example, in the 1990’s with the dot com everyone wanted into IT, then after the dot com collapse in 2000 people moved into other areas… so that by 2009 when thousands in Ireland were losing their jobs, it was reckoned there were consistently over 7,000 unfilled IT vacancies in Ireland.  When I advise a young person what they should study at University, I’m happy to advise things like construction, legal, finance and banking because by the time that young solicitor qualifies, Ireland will be booming again and there will be a dearth of recently qualified solicitors and that young solicitor will be in very high demand!  The only sectors that I would never bet against would be pharmaceuticals (people always get sick), food (people always eat) and IT.  IT is simply going up and up because every country, sector, company et al are ever increasingly using IT.  My only worry with IT is that it evolves so quickly, so that unless you are ready and able to keep up with the rapid changes you can be left behind, and younger people are usually more adept at change than older people.

I would bet my future on Ireland! I read the International Herald Tribune, Wall Street journal and Financial Times and it is interesting to note how differently they view Ireland from afar than we do up front.  They talk about a fundamentally strong economy that has just suffered a housing bubble collapse… leading to banking and national debt.  They differ Ireland’s economy from Portugal, Greece and Spain who have fundamentally weak economies.  Here are a few reminders of the reasons they have confidence in Ireland’s future:

- Number of companies investing in Ireland for the first time up 20% in 2010.

- 9 of the world’s top 10 software companies have substantial operations in Ireland.

- World’s No.1 provider of employable graduates (EU commission study Nov 2009).

- 1st for FDI and Corporate Tax regime (2009 Global Innovation Survey).

- 1st for investment incentives (IMD 2010).

- 1st for immigration laws that allow companies to employ international skilled labour.

- 1st in Eurozone countries for doing business (Forbes 2010).

-  2nd most globalised economy (EIU / E&Y 2011).

- Plus we have great people… young, well-educated, flexible, multi-lingual and growing.

- One of the most attractive corporate tax and R&D investment rates.

- A pro business environment – for example our employment laws remain flexibly balanced between employer and employee and this remains a massive incentive for US companies who worry about the labour laws in most of Europe.

- English speaking and part of the euro-zone.

Reasons to Be Cheerful

Monday, February 14th, 2011

There are so many ways to write an article and having written so many things that I am proud of, I didn’t want to write another blog that just became more ‘noise’.  Below is some ‘noise’ and then some common sense analysis.

According to forecasters at the Centre of Economics and Business Research, the Republic is set for a second ‘Celtic Tiger’ phase of export-led economic growth which will wipe out its deficit by 2013.  In their opinion the Republic will reap the benefits of lower wages and a boost to exports from a weaker euro and stronger growth in Europe.

According to Ernst & Young however, the Republic of Ireland will show to have contracted by 1.5% in 2010 and will shrink a further 2.3% in 2011… before growth of 2.5% from 2012.

Who do you believe?  Well, this is the key question that will affect the future of the country…

A friend sent me a snippet from the Daily Mail in England (extra significant because he knows that I do not like the Daily Mail and its sensationalist manner).  It said about UK GDP figures: “Yes, the provisional growth figures were an unpleasant surprise.  But was the 0.5% drop in output, during the icy last quarter of 2010 really reason enough to convince most voters in the latest poll that we’re plunging back into recession?  Of course, the pessimists may be proved right.  But shouldn’t we at least draw encouragement from yesterday’s figures, showing the fastest rise in manufacturing since records began in 1992?  To a remarkable extent, economic performance depends on confidence.  And talking down the economy (which of course is Ed Balls’s game) helps no one”.

This same friend is a Liverpool fan and over the last 10 years I have watched as he has, on occasion wanted the team to lose so that the Manager (Houllier and later Hodgson) would be removed.

What’s going on? What do the above have in common?  Well it’s all about being a supporter.

The Daily Mail is a supporter of the Tory party and so wants the economy to do well and thence its team (Tory party) to win.  Can you imagine what the Daily Mail would have written had the UK economy still been under Gordon Brown’s stewardship?

Back to Ireland and the election.  Who do I want to win?  I want to win whoever the media wants to win!   You see, the media has been pretty positive over the last few weeks, with lots to feel good about… until today!  What changed?  Why the avalanche of doom in the papers? Well, Enda Kenny didn’t show for the Vincent Browne debate (tied to RTE me thinks)! And Michael Martin out-debated Eamonn Gilmore and I guess the Irish Independent was worried that Fianna Fail might do the unthinkable and sneak through at the final hurdle!  I hope not… because I hope that whoever the media wants to win, wins… and wins big!  Bring on the positive headlines… give me more and more positivity.  I can never have too much (not after the last 3 years).  Make us feel good, positive and ready to spend our money and lead an export and import, consumer-led boom!

No article from me would be complete without some good news.  Below are a few highlights so far, from 2011:

*Trade volumes up 6.1% at Dublin Port and 8.6% in Cork

*Ireland’s GDP to grow 1.8% in 2011 – IBEC

*International funds based in Ireland up 29% in 2010 to €963bn

*Six of the top 10 funds launched in 2010 were based in Ireland

*Tax receipts rise 1.9% in January

*Ireland services PMI index rises to 53.9 in January

*Irish exports surge to record highs of €161bn in 2010

*Hotel occupancy up 2.9% in 2010

*Confidence edges upward

*Trade surplus hits €4bn

*EMC says Irish future bright

*Ireland ranked as 2nd Most Globalised Economy in the World

*World trade growth almost 5% in 2010 and Merrill’s predict same in 2011

*IDA secures 47 new companies in Ireland in 2010

*Dozens of new employment announcements, culminating in January figures revealing the largest fall in unemployment in a month, since 1967.

*And finally… Brightwater recruitment announces a 40% rise in 2010 Net Sales and staff numbers (you see, a positive attitude really does help)!

Recruitment Industry Update 2010/2011

Friday, December 3rd, 2010

Despite popular misconceptions, recruitment, like many other industries has had a much better 2010, and we expect 2011 to be better still. Below is a short update on the market. We hope you find the information of benefit.

• Last week the EU announced “23 million people are currently unemployed across the EU – 10% of the active population… at the same time, some employers are reporting difficulties in recruiting, especially for high-skill jobs”.

• The Live Register
- In Ireland has dropped from 436,900 people in January, to 429,600 in October 2010, with the biggest falls coming in Managers & Administration at 2.4% and more recently professional and technical (6.5% and 5.4%). Construction and unskilled areas have continued to suffer.
- There has been much talk of emigration, but it hasn’t significantly impacted to date. Indeed from 2004 to 2008 Ireland’s net immigration was 100,000 per year and for the 12 months to April 2010 net emigration from Ireland was 34,500.

• Skills Shortage
- 80% of the Irish economy is private sector and many areas have performed well. Indeed, in September Ireland experienced the biggest rise in industrial production in the EU, increasing skills shortages in these areas.
- Some of the areas experiencing real skills shortages including ICT, Pharmaceuticals, Supply Chain, Insurance and regulatory & compliance roles in Financial Services.

• Salary Survey
- Salaries have generally stabilised at a drop of 9% in Ireland, but there has been a big discrepancy on how this has affected people, depending on your sector, role and even company (anything from a pay rise, to a 25% fall).
- Brightwater spoke with hundreds of clients to compile our new salary survey (available from Monday, 6th December) which details all salary changes in 2010 and what to expect in 2011. If you would like a copy, please email: and write “Salary Survey” in the Subject.

Considering the above, recruitment companies have fared better than last year (which was unbelievably bad)! Brightwater is an Irish company and our job flow to the end of November 2010 was up 57% in ROI (64% in NI) and our staff numbers increased by 21% in ROI (67% in NI). We expect 2011 to be busier again as the skills shortage increases.

I hope you find the above of interest to you and your company. Below I have noted a couple of points that I personally feel are important from an economic, jobs and remuneration perspective:

• Unemployment
- In the 1990’s the UK reached unemployment of 3 million under Margaret Thatcher. John Major then changed the way the UK counted unemployment to be more in line with the US and most other economies. UK unemployment was suddenly counted as about 2 million people (despite protests from the opposition Labour party, they didn’t return to the old system of counting when they returned to power under Tony Blair)!
- In Ireland we count unemployment as 13.6% of the population (429,500 persons on the Live Register). However, if Ireland counted unemployment the way the UK and others do, our unemployment rate would be 9%.
- The CSO (Central Statistics Office) states: “The Live Register is not designed to measure unemployment. It includes part-time workers (those who work up to three days a week), seasonal and casual workers entitled to Jobseekers Benefit or Allowance. Unemployment is measured by the Quarterly National Household Survey and the latest seasonally adjusted figure, for April to June 2010, is 284,500 persons unemployed”.
- Ireland’s unemployment system includes everyone receiving any state benefit and as such, even in 2006 and 2007 our unemployment (Live Register) rate was 4.5%. It is important to understand this so that Ireland’s skills shortage can be put into perspective on a global scale where UK unemployment is 7.6% and the US is 9.5% (against 9% in Ireland).

• There are few things more destructive to employment than unpredictability and fear, which is why November was the worst month for employment in 2010 (where we saw job offers cancelled, or put on hold). It also means there are less top quality candidates available, as they lack the confidence to make a career move.

We hope you have a great Christmas and even better 2011, and if you are looking to recruit staff, then please contact us on:
+353 1 662 1000 or alternatively, email me directly at

The Northern Ireland Economy – No Fear!

Thursday, September 9th, 2010

For the past 12 months the economy in NI has improved slowly, but surely, with everything on track… until Westminster decided to address costs in the the public sector, at which point it seemed there was a media frenzy! A media frenzy where anyone prepared to shout ‘The End of Northern Ireland is Nigh’ was given prominence. Let’s be clear, nothing’s actually happened yet! Furthermore, when it does, Northern Ireland is well positioned to deal with it. In 1933, Franklin D. Roosevelt’s inaugural address proclaimed that “the only thing to fear is fear itself”. Of course FDR didn’t live in a media-driven world where fear sells, but then, we’re not in the Great Depression either!

Northern Ireland have come through the Great Recession better than most. House prices dropped, the jobs market tightened, interest rates fell and there were a number of lay-offs, but altogether, the majority have been unaffected and many have fared very well. Unemployment is the great fear, but in reality, employment in NI has grown this year, so that NI’s unemployment at 6.6% is lower than the US at 9.9%, ROI and Germany at 7.6% and the UK as a whole, at 7.7%. Indeed, Q2 (quarter 2) saw a fall in unemployment of .2%, following almost 2 years of steady recovery from the private sector. Below are some recent economic highlights.

In the past 10 years external sales have risen 58% (ROI by 25%), with Q2 showing the biggest jump in sales and confidence in 3 years. CIPS (Chartered Institute for Purchasing and Supply) shows confidence levels at 57.2%, where anything above 50% indicates future expansion. Individual companies are expanding around the world: First Derivatives from Newry have won a software contract with the Singapore Stock Exchange, Randox Laboratories have expanded into the US, Charles Hurst has bought the Audi Centre in Dublin…

The prospects for all NI look strong with Belfast and the surrounds, a hub of private sector growth. One of the biggest areas for concern is the public-sector led Derry, but even here that has been some recent good news with Londonderry recently announced as the City of Culture 2013. Tourism, culture, sports, retail and services will all benefit, with 1,500 new jobs expected from construction alone. Indeed, when Cork was European Capital of Culture it enjoyed a 38% increase in visitor numbers, generating £322m for the local economy.

Northern Ireland exists in an international world and it is not just our exports that will gain as a result of world growth. Tourism will grow, where currently 40,000 people work in tourism and bring in £529m annually, that number is expected to double in the next 10 years. Companies will move their headquarters to NI, specialists will be attracted by competitive wages, costs, education, demographics, language and lifestyle. International Good News includes Japanese exports rising 23.5% in July, Switzerland posted record trade surplus in July, German GDP rose 2.2% in Q2 improving the whole EU. Asia continues to boom and most importantly, the US continues to post encouraging data.

There is plenty of good news out of the mainland with the CIPD/KPMG net employment index revealing more companies planning to hire, than cut staff with the most dynamic areas being in manufacturing and IT. UK banks posted bumper mid-year profits of £15.5b. UK GDP growth again exceeded expectations in Q2, recording the fastest quarterly growth since Q1 2006. Even in the public-sector, construction-repressed NI market, growth in 2010 is expected to reach up to 1%, with GDP growth of 2% in 2011.

The above article is not written with blinkers on. BrightwaterNI has suffered as a result of the slump, but having recorded 5 quarters in a row of increased sales, we expect that to continue. Many of our Clients feel positive and are enjoying real growth. If you want the bad news you can find it elsewhere because like FDR, I feel realism is essential, but sensationalism is not. FDR’s full quote says: “let me assert my firm belief that the only thing we have to fear is fear itself – nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance”.

Ireland Inc – Getting Better

Tuesday, September 7th, 2010

Things are looking better and better for Ireland. Slowly, but surely we are moving in the right direction and all the bases are being covered. The only actual threat to the good times ahead is another worldwide collapse, but what’s the point of focussing on that? If that happens, we’re all toast!

Altogether, things are improving, and the recovery has been slow but steady. There are clearly areas for concern and areas that haven’t recovered yet, but I won’t be discussing those below. There are others who delight in the negative, but I’m not one of those because I know that negative people achieve nothing in life. They believe that in being negative, they are somehow being more realistic, more sage and somehow more profound than those who are positive. This is patently untrue and is a cowardly way to approach the world. So here goes…

International Good News includes Japanese exports rising 23.5% in July, Switzerland posted record trade surplus in July, German GDP rose 2.2% in Q2 improving the whole EU. Asia continues to boom and most importantly, the US continued to post encouraging data.

In Ireland, almost every single index is up (they’re not all in positive territory yet, but are all on the way back up): GDP, GNP, PMI, Exports, Industrial production, Personal expenditure, retail sales volumes, retail sales expenditure, consumer confidence, house prices, construction output, employment, CPI, HICP, Tax revenues, Government deficit.

GDP (which includes all companies based in Ireland – either national or international) was up 2.7% Q1 (quarter 1) 2010 on Q4 (quarter 4) 2009. Real growth in Ireland has commenced and Q2 should show continued growth leading to real expansion in the economy. Our balance of trade is astonishing with May showing exports up another 8% and imports down 14% bringing our balance of trade surplus to 41% (best in 3 years). Ireland’s Q1 industrial output increased by 7.7%. Retail sales for Q2 are out and it shows the volume of retail sales up 6.9% on Q1 and 3.3% up on last year. Unemployment has stayed steady for almost a year at about 7.6% (US unemployment is about 9.9%, UK 7.7, the mighty Germany at 7.6% and even the shining beacon that is Australia stands at 5.3%). NB. In case you’re not clear yet, Ireland is the only country that portrays our Live Register figure as our Unemployment figure. Our Live Register stands at about 13.7% (including part time workers, maternity leave, sick leave, casual workers etc) and if the US counted it the same way, their Live Register would be about 17%. Unemployment stands at 7.6%!

Debt! Debt! Debt! The National Debt is not a thing to be proud of, but on a daily basis it should not intrude on our lives as it does because the country is growing, and our debt burden is not as high as many (including the leading lights of France, Germany, Japan, Belgium and others). Our debt may even reach 100% of GDP, but that’s still below many of the above – and well below the likes of Greece! More importantly, our debts are one-off, non-recurring (bank funding) debts. Furthermore, Ireland is very well capitalized with the exchequer retaining a cash balance of €20.5 billion at the end of June (enough to fund us for another 12 months) and €24 billion sitting in our National Pension Reserve Fund. The balance sheet looks steady and our prospects look good.

Negativity isn’t helpful. Indeed, our negativity has not only crippled growth by instilling fear, it has cost us dear on the international stage where countries with higher debts and worse prospects than Ireland, pay interest of up to 2.6% less than us. The good news is that there is a solid platform of support for Ireland around the world, which has meant that when the Irish Government sells bonds there are buyers, companies continue to move their operations to Ireland, the IMF, ECB and a raft of other brilliant people have total faith in the country and constantly speak up for us when we refuse to speak up for ourselves. For example, if you were to just casually read the Irish Times today, you’d see a report explaining that “Exchequer Tax take in August declined by 9%”, but of course, if you read through to the third paragraph you’ll notice that while income tax was indeed behind target, corporation tax, excise duties and VAT were all above target… and altogether we’re ahead.

The future looks even brighter. Real GDP growth expected of 3% next year (even domestic growth), deflation ending with Ireland in a much more competitive position… and if construction and housing returns (as it will soon enough), then wow! Unemployment will drop and even the national debt will begin to reduce. What we have to maintain is the right mentality. A mentality that is positive so that a pattern of growth can be resumed. Where people are thinking grow, not shrink, where they look for opportunity, rather than freeze in fear.

Finally, Brightwater had the worst year imaginable in 2009, but 12 months on our sales have doubled. I am looking to double again by this time next year and I will maintain a positive attitude all the way. Those that aren’t positive will be left behind, but we’ll all move quicker if we do it together… let’s rock!

Ireland’s Economy… Without the Spin!

Thursday, June 3rd, 2010

I was really hoping to be writing my blog about something different, but it still seems necessary to set the record straight. It’s necessary because the Irish economy, and Irish jobs depend on it. We have seen a direct correlation between super negative reports and employment e.g. the day after such reports, jobs are pulled, or recruitment is put on hold. SMEs in Ireland are suffering exponentially because most SMEs service the domestic market and while Irish people are too nervous to spend (saving 13% against an OECD average of 7%) they will continue to suffer. The multi-nationals based in Ireland rely much less on the Irish domestic market for their income and so are less affected by the negativity… so thank goodness the multi-nationals are here!

Last week the media headlined some ridiculous reports that were completely misleading. People say that bad news sells, and perhaps they’re right, but they’re causing real damage to Ireland Inc by their cavalier attitude. The media’s constant excuse for their negative reporting is that in 2006 & 2007 they failed to highlight the impending fall, so now they’re going to hit us with everything… but they’re making exactly the same mistake! News is news. It shouldn’t be biased, it shouldn’t have an agenda and it’s not opinion-based (besides, even if the Irish housing bust could have been forecast, nobody could have forecast the simultaneous global economic collapse).

There’s a correct place for opinion and commentary, but it must be addressed as such. News should be balanced and without agenda. Frankly, to admit that you have an agenda “we’re not going to make the same mistake again so we’ll headline all the bad news / warnings” is shocking and incredibly irresponsible. Furthermore, I don’t think the newspapers in particular, are aware that they have lost credibility. We read the articles and we don’t believe them. We question and doubt what they have to say, but we have no choice but follow the stories (if we want to know what’s happening in the world) and we try to disseminate fact, from fiction. But make no mistake; even a story can affect you, particularly if it taps into your deepest fears (e.g. your personal or business finances). So below are a few facts, with a David (positive) commentary in an attempt to allay some of your fears and to set the record straight!

Today’s News (June 2nd): I’ve just read the Irish Times and the economic Headline says “University heads told courses and jobs at risk in funding cuts”. Page 18 has all the economic news, good and bad including: “Rise in output last month… Irish manufacturing output rose last month as employment in the sector increased for the first time in more than two years and new orders continued to grow… / Ryanair records €319m profit… / Unemployment to remain a significant problem… Ireland will return to growth next year, but… / Irish Consumer confidence steady / Insolvencies fall for third month in a row / Ratings agency says property in Ireland could be undervalued…” and on page 19 “Two firms to create 55 jobs in Tralee…”. So the news is pretty good, but the front page headline not… you have the idea!

Northern Ireland: While there are some significant worries in the North about the British Governments plans to cut public sector spending, it still seems that “Small firms are showing signs of steady growth…” Despite concerns of slow growth, I have been very encouraged by Northern Ireland’s new Secretary of State Owen Paterson’s 25 year grand plan. The nub of which is to make Northern Ireland an independent and successful business centre “I would like to see Northern Ireland as the most business friendly place in Europe”. I met with the INI (Invest Northern Ireland) a month ago and if they’re anything to go by, I’m sure it will happen.

Debt: Ireland going bankrupt? Has anyone really taken that seriously? Because if Ireland goes bankrupt then the whole of the single currency, the EU and most of the planet are finished and we might as well pack up now! Ireland’s debt to GDP ratio is still lower than the EU average… lower than France, Germany, Austria, Belgium… Canada, UK, Singapore, Japan… Exchequer returns for April show tax returns of 11.4% more than a year ago. However, to really make a dent in the debt we have to start growing again. In a recession tax receipts go down and welfare payments go up (ergo, debt)! But in a growing market the converse happens and you can repay your debts.

GDP: It seems we really are growing again, indeed the EU Commission, The Central Bank, the ESRI and others are predicting growth of 3% in Ireland next year, twice the EU average, and the 2nd highest in Europe.

Budget 2010: The Government concentrated on controlling public spending, rather than on raising taxes. This is smart, effective and frankly, is the envy of many. The fact we can control our expenditure sets us apart from so many, including Greece and the UK. Credit to the Irish people for their selflessness, and perhaps here the advantage of being a smaller country / community has helped.

Retail Sales: For the first time since June 2007 retail sales grew in February… and have continued to grow month on month.

Confidence: Confidence is returning with the confidence index remaining over 63% despite the recent stock market wobbles. The importance of confidence cannot be underestimated. Confidence creates sales, employment, wealth and security for people and countries.

Unemployment: Ireland’s unemployment is less than the UK, USA and most of Europe and it has gone down a bit since January. In real terms it has remained about 7.6% since August last year (not the 13.4% Live Register figure that we bizarrely pretend is the same as unemployment (see previous articles).

Cost of Living: Has come down to early 2007 levels which in competitive terms (versus other countries) means a significant drop and helps to restore Irish competitiveness NB The weakened Euro also helps us compete internationally.

Employment Growth Sectors: Brightwater’s job flow has increased dramatically since the 2nd half of 2009 with growth areas including: IT (particularly at the senior level), Pharmaceutical (Quality & Regulation), Supply Chain (all areas as process improvements lead to cost reduction), Banking and Financial Services (especially regulation & compliance) and Insurance.

I could go on, but suffice it to say that the truth is that Ireland has dealt with the crisis in an incredible and impressive way. The world is watching and indeed, copying Ireland. If we can keep working, fighting and being brave over the next 12 months, I think it will lead to an incredible future for Ireland. I think everyone in the country (barring the few… bankers, media and a few economists to be sure!) can be really proud of the role each and every one has played in surviving the worst recession in modern history. Few countries (perhaps none) could have coped better.

Where’s Our Social Policy?

Wednesday, May 5th, 2010

Last week I attended an ACCA debate on employment, jobs and the general economic outlook in Ireland, with specific emphasis on the SME sector. Mairead McGuinness (Irish MEP), Fintan O’Toole (journalist) and Patrick Delaney (IBEC) all made their points. The ACCA members made their points. All of them had valid points, but again they missed half the problem… they were passionately arguing economics, but none of them sociology.

How many times have we heard the economic arguments? Politicians, journalists and now-famous economists all have their views. In other Western countries it is well understood that economic and social policy must go hand in hand to achieve profound results, yet in Ireland, how often have we heard from the social scientists?

Much information, facts and figures were doled out by the experts. For example: (1) It seems that Irish people are saving double the OECD average at the moment (13% of their income), (2) It seems that the SME sectors across Europe and the US have picked-up to pre-2009 levels, but not in Ireland or Eastern Europe, and (3) the experts acknowledged that entrepreneurs rarely start their businesses for financial reasons, yet the SME’s are crucial to the economy. So what is going on? What is it that ties these points together? We need to address these issues because it is the people of Ireland who own the SME’s (the multi-nationals are mostly foreign owned) and they’re in trouble.

For most of the 20th Century, Ireland was a poor country on the periphery of Europe. In the 1990’s the Celtic Tiger arrived and Ireland enjoyed a boom like never before. Economic booms had been enjoyed in the rest of the OECD and beyond, including the US, UK, Holland, Belgium, Luxembourg, France, Germany, Finland, Australia etc. The centre of the boom was Dublin, with the wealth slowly spreading out to the rest of the country. When the bubble burst the headlines declared “it’s all over!” RTE ran programmes titled “How we blew the boom!” This tapped into the long history of Ireland as a poor, peripheral country. People began to believe it was all over and in fact, we got what we deserved. The people accepted redundancy and pay drops with barely a whimper. Blame was apportioned all round. Many of the people who had never enjoyed the fruits of the Celtic Tiger, many who had felt marginalised by the boom declared ‘I told you so’. Good news and positive aspiration were not acceptable news items. We had to get back in our box! The Irish SME sector is still suffering from the social consequences of decades of self doubt (just like the Eastern Europeans). We don’t believe in ourselves enough – and we’re hoarding our money, too afraid to spend.

So how do we get out of it? Well the first thing that needs to happen is that people need to understand ALL the reasons Ireland has suffered so badly; (1) property got too dear and a correction was inevitable, (2) at the same time the world economy went into melt-down and (3) our closest trading partners (the US and UK) were able to devalue their currencies… thus forcing Ireland that has no currency control, to cut costs to compete. Next, we need leadership. Not just the generally good economic policies of Brian Lenihan, we need the social leadership that a strong and charismatic leader brings. A leader who tells us that Ireland is still a great country, that it’s not all over for the country and that in fact, the future of Ireland is incredibly rosy.

The turn-around is already happening in Ireland, but it is led from Dublin. This isn’t unusual with so many businesses based out of Dublin, but it isn’t the only reason. The key social reason for Dublin’s return is the capitals self belief. Dubliners had many years of boom and retain some self confidence, and there are also very many OECD people living in Dublin who retain the self-belief of British, Americans and Australians that we are simply living through a cycle.

Ireland has to look at social & economic policy together. What are the social consequences of the recession? NAMA? Tax rises? Quinn? etc. If Quinn had been put into administration in September 2009 what would the social consequences have been? What if it was put into administration in December? January? Before NAMA? after NAMA…? How is the news delivered? When a CEO makes a decision that affects their company they consider the social consequences of the decision – the timing, how it is explained and what the consequences will be on its staff, short and long term. We need to start heeding social policy as much as economic policy. The short and long-term well-being of Ireland depends on it.

David Bloch – MD, Brightwater

Are Trade Unions Obsolete?

Thursday, April 1st, 2010

In the 19th Century, Trade Unions were established to help protect workers from ruthless and unscrupulous bosses. The new Union leaders united the workers into cooperatives. These cooperatives received money from the workers who invested a small amount of their income into a central fund. This central fund was then tapped into in times of dire emergency. Together the workers were stronger, and together they protected the whole from the threat of intolerable conditions, redundancy, sickness, bullying etc. Today, there is a case to say that trade unions are obsolete…, because they’ve won!

If workers in the 19th Century had no power to protect themselves against unscrupulous companies, then in the 21st century companies have no power to protect themselves against unscrupulous workers. For example, what can Willie Walsh at British Airways do? He is running a loss-making airline in the worst recession in almost 100 years and has come up with a package of measures designed not to line his own pockets, but to save an ailing company and thousands of jobs. He has lowered his and all senior executives’ salaries.  He has cut every cost he can find. He can’t fire staff (illegal), he can’t reduce their salaries without their agreement (illegal), and he can’t make mass redundancies as you can’t run a company without staff. Are Willie Walsh and British Airways the bosses in Oliver Twist’s London?  No!  In fact, as I listen to Willie Walsh and then listen to the union leaders I wonder whether it is now the union leaders that have become the bullies, treating their employers without consideration, respect or understanding – and I don’t believe they’re doing either British Airways, or their employers (certainly not their customers) any favours.

British Airways has no recourse against the staff, or unions that may bankrupt the company.  Workers though, if feeling at all aggrieved have the right to advice, employment tribunals, equal opportunities, race relations, health & safety etc And all of this aid is free for any employee… none of it is free for the company. I think it’s high time trade unions reinvented themselves because the mentality of “us against them” and “workers unite against the tyrannical companies” is obsolete.  We need to work with each other, not against each other lest we all lose in the end. For example, here in Ireland, one of the worst hit countries in the recession, there is a genuine recognition of the need for reform. Government and unions have reached a tentative agreement on public sector reform and pay without any major disruptions to the public.

My heartfelt sympathy goes out to Willie Walsh and all those fighting to save British Airways.  If trade unions are to fulfil a useful function then they will have to reinvent themselves, because as they are, I believe their usefulness is over.

The Trouble with Statistics

Tuesday, February 23rd, 2010

It is my belief that the recession has given the Irish media their best story in decades.  They have explored the horror from every angle.  The story is so powerful:  A poor country that rose high and like the Greek character Icarus, believed in their own hype, got too close to the sun and tumbled down to earth.  That’s the story; all you need now are a few statistics to “prove” that it’s true.

Every day new statistics are released, whether it’s the CSO, IBEC, the ESRI, innumerable stockbrokers, economists, company accounts, stock markets, international markets… there’s always a statistic to be found that “proves” your story.  The media are the storytellers of Ireland and they have unashamedly told their story and still do.  The trouble is it’s just not true.  Ireland is a well respected country that has continually outperformed its competitors.  Even through the recession, Irish Government bonds were snapped-up by international investors who recognised the underlying strength of the Irish economy.

Every week I read the International Herald Tribune, The Wall Street Journal and The Financial Times and there’s barely a mention about Ireland, except in praise.  So let’s be clear, the trouble with statistics is that they mean nothing.  It is the story that gives the statistics meaning and its past time the media found a new story, lest they lose the last shred of credibility they still hold with the people concerned with Ireland Inc.   What’s that saying? “You should never let the facts get in the way of a good story”?!  Below is a tale by William Bastland that illustrates my points exactly:

“Once upon a time, Orkney had one of the highest teenage pregnancy rates in Scotland. Scotland itself is high in the international league. So health workers in Orkney tried something new. They began talking to young people about sex in terms of relationships, not only mechanics. They also made condoms easily available because in a small community the shopkeeper might just be your auntie. Then came data showing that Orkney’s teenage pregnancy rate had dramatically halved.

All this was widely reported last summer. Convinced of the happy ending?

Let me introduce you to a radical and highly complex, story-wrecking mathematical insight. Ready? Numbers go up and down. All right, I lied about the complexity. I also lied about the maths. This is not really mathematics, it is everyday life. In life, things do not happen with perfect regularity. Some days, or years, there are more, sometimes fewer. And it’s not radical either. Everyone knows it. Until then they tell themselves stories. The truth in the Orkney case is that the number of teenage pregnancies goes up and down, and ups and downs may have nothing to do with the stories told to explain them. When new data came out since last summer, it was not reported. Or at least I can’t find any reference to it. Perhaps it didn’t fit the story. Here is the data in a little more detail.

The figure reported last summer, the most recent then available, really was lower than in 1994. But it’s clear that the numbers go sharply up and down, much more so in a small community than the larger one of Scotland as a whole. What happened when more recent data came out? This:

The same as usual. What had gone down, briefly, went up, just as what sometimes jumps up often tends to come down. You can talk about life, relationships, morality – and so we should. But there’s another knowledge of life that statistical thinking sees and other mind-sets often miss. This second kind of thinking relies not particularly on maths, but imagination, imagination for what can go wrong with narratives that describe the way one thing leads to another. This is the best kind of story-telling; story-telling wise to the ways that stories might mislead. I’m quite sure that no-one lied in telling the story in Orkney. I think they were just wrong. I suspect that all concerned, including journalists, found the story of relationship advice and condoms plausible enough to convince them that the numbers they looked at in those two salient years – a beginning and an end – told them something important. And the data does not prove that their new approach to sex education is wrong. It might have benefits that these statistics don’t capture.

Nevertheless, a plausible explanation for change helps convince people that the change really occurred. A plausible story for why it happened persuades us that it did. The explanation becomes the story. But “it happened because…” can disguise the fact that it didn’t really happen at all, or at least not the way we think it did. The truth is that we still don’t really know if there is an underlying change in the pattern of teenage pregnancies in Orkney. There might be. But it’s not evident yet. Another recent example appeared in an editorial in a serious national newspaper – which had better remain nameless – about the revival of marriage, with a reflective account of why this had happened deduced from a short run of recent data. Five weeks later the same newspaper found itself reporting that marriage had in fact, according to new data, fallen to its lowest level in one hundred and eleven years.

Horizontal tennis

Another is the way that both sides in the climate change argument have seized on single-year fluctuations to the extent of arctic sea ice as “proof” that trends are going further, faster, or in the other direction, or whatever. Anyone might guess that such numbers go up and down. But even serious people ignore or forget this in the haste to tell a story. The real difficulty in almost all these cases is to work out how long you have to look at the data before being confident that change is sustained.

Observing the excitability at life’s natural yo-yo, you might wonder if parts of politics, journalism, even sometimes science, resemble nothing so much as an insane commentary on a game of (horizontal) tennis, in which it is assumed that whatever just happened tells us all we need to know, as if whoever just hit the ball must be winning. The underlying trends and often slow nature of real change are lost in a frantic effort by all sides to grab at any short-term snippet of data and claim support for their beliefs or policies, to tell stories with an instant moral”.

I call on the Irish media to start telling us a new story (you’ll find plenty of statistics to back you up), because I’m really tired of the Icarus story!

We’re out of recession… honestly!

Tuesday, January 19th, 2010

Last week I was on TV3’s Ireland AM, on the couch with Jim Power (economist with Friends First).  The thrust of the session was where Ireland’s economy was now, and where it was going.  The interesting thing was that Jim Power’s somewhat negative attitude on-air was completely different from off-air.  Jim was realistic and balanced off air, but seemed to feel it was required that he should repeat the litany of errors and threats to the economy, ostensibly because he missed it first time around.  Jim is a famous “Bear”, where I’m a less-famous “Bull”!  But in short, we agreed that Ireland came out of recession Quarter 3 2009, that 2010 would be a tough year (though better than 2009), 2011 would be better again, and that by 2012 we’d be rocking!

It’s time to grow again.  When Jim and other Bears start spouting the whole mantra – Debt, GNP, unemployment et al, it’s time to switch over!  Blame is silly.  Ireland was caught in “the perfect storm”.  Not only did our property bubble burst, but we were caught in an unprecedented global recession.  Then our exports struggled against a devalued dollar and pound (this problem still remains and Ireland’s cost structure has had to come down to compensate).  All our mistakes were magnified…, but the world is moving forward again, the Irish economy is moving forward again, I’m moving forward again, and if people like Jim (sorry for the example, because he was a really decent man) don’t start moving forwards again, they will be left behind.  Put simply, we fell off a cliff, but some of us have started the long climb back to the top.

My key argument was this, the economy is growing again, unemployment has stabalised (432,000 on Live register July 2009.  423,000 on Live register December 2009).  Brightwater has suffered 7 quarters of shrinking sales from Q1 2008 to Q3 2009.  Q4 2009 our sales rose, and I expect that to continue.  Ireland’s exports are getting stronger, and every area that pulls out of recession has a knock-on effect on the next sector and the next.  I understand that property prices have stabilised.  I understand even car sales are improving… in short, people are beginning to look forward again.  My experience tells me that we’re in a race and those that set off hardest and fastest will eventually win the race.

No doubt the Bears will be blaming, warning and doom-saying for many years to come.  Certainly it is worth listening to their warnings because after every boom, there is always a bust, and one eye must always be kept on this fact.  We ignored the Bears before, to our cost.  However, it takes more courage to be positive than to be negative.  What we’ve recently found are individuals and companies just beginning to take the first tentative steps again.  Clients are planning for the next few years, and they’re planning to grow.  So let’s stop asking “when will Ireland get out of recession” because we’re already out.  Now let’s start planning for the future, because there’s a lot of work to do!