The real imbalance is in how we treat start-ups and small businesses
There has been much debate in recent days about how Dublin has been swallowing up the majority of new job opportunities, and that a divide is opening up between Ireland’s regions and the capital city (and its surrounding commuter belts).
Launching a €1bn fund for investment in rural towns and villages with a population below 10,000, Minister for Rural and Community Development Michael Ring, TD, admitted that Ireland is imbalanced.
But hold on a minute. It stands to reason that investments by tech giants are going to be skewed in the direction of larger population centres where they can get the talent. The economic war of our time is for talent, and Ireland generally is doing better than most countries. How that plays out once Brexit occurs will be interesting to see.
Investments in human capital follow trends, and one such trend is currently predicated on urban living with big wages, and fancy offices with free food and other such perks.
But be mindful also that there is a grassroots Grow Remote movement, which I believe plays well into a longer-term, more strategic narrative that will benefit multinational companies and SMEs as these hip, young urbanites become parents and begin to value quality of living and education over the stresses of city life. We need to get our regions ready because they will play a vital role in the retention of talent and the spread of wealth.
Regional centres such as Cork, Limerick and Galway have been fighting hard for jobs investments, too. In recent months, we wrote about how Limerick, for example, is focused on a strategy of optimal employment where people are fully employed to the best of their abilities and talents, not just for the sake of finessing employment statistics. The whole country should learn from this.
“Three out of every five jobs that are being created now are outside of Dublin, and I know that employment has increased in every single region, so I am satisfied that everything is being done to create new jobs in the regions,” said Minister for Business, Enterprise and Innovation Heather Humphreys, TD, last week in an Irish Independent report.
If acqui-hiring is a future trend, we need to get ready
The Dublin-versus-the-rest-of-Ireland narrative has been around for decades, however. If you look at how many WeWork offices (six and counting) have sprung up in the capital in just the past year, for example, it is clear the city is a magnet for investment.
I am reminded of this constantly because I live in Meath and not 10km from where I write this, there has been an IDA factory – formerly the NEC semiconductor plant in Ballivor – sitting idle since 2006 when NEC pulled out of the town, resulting in the loss of 350 jobs. Being in the shadow of a big city is little comfort, even if you are nestled in the commuter belt and in easy reach of it.
But we need to be cognisant of the bigger picture and the narrative for where talent will be found in the future. The real problem in attaining regional balance has been the overemphasis on multinationals to generate jobs. These jobs are wholeheartedly welcome but it seems at times as if these giants are the only ones creating roles and that we are forgetting the SMEs as powerhouses of future job creation. They have kept the lights of the economy on for decades. SMEs are the lifeblood of the Irish economy but the favours and supports appear to be skewed towards multinationals rather than small firms. At least, that is how it seems.
Owner-managers of small business are punitively taxed for their temerity to create jobs and take risks. From a policy perspective, and judging from the catalogue of Budget failures in recent years, it is fair to assume entrepreneurs are treated with suspicion by civil servants. Not only this, but how we treat start-ups from a tax perspective is abominable and feckless as we face into the Brexit headwinds.
Last week, Enterprise Ireland CEO Julie Sinnamon admitted that Ireland has fallen behind the UK when it comes to creating an attractive tax environment. The Department of Finance has consistently failed to overhaul the tax treatment of share options and boost capital gains tax relief for entrepreneurs who risk everything to build businesses and create jobs. It is no surprise that there was virtually no uptake of the Key Employee Engagement Programme, which was supposed to help SMEs hold on to talent by offering tax-efficient share options.
Multinational employers and employees don’t have to worry about such concerns. If we want to generate growth long into the future, these imbalances between the rigours of SME life and the apparent cosy treatment for multinationals need to be addressed.
The reality is that jobs investments of the future will be skewed in the direction of acqui-hires, where young companies are bought by bigger firms for their technology and their talent, potentially leading to an influx of new jobs into towns and cities.
One such example is that of Facebook-owned Oculus’s acquisition of Cork start-up InfiniLED in 2016. Another is the acquisition of Waterford’s FeedHenry by Red Hat for €63.5m in 2014. Both acquisitions have yielded new jobs in their respective regions. Another superb example of what I am talking about is how Genesys, a company that acquired Irishman Barry O’Sullivan’s Altocloud for an undisclosed sum, has just revealed plans to create 200 additional jobs in Galway.
If you want balance, you need to ensure that regional firms have the infrastructure but also the correct tax policies to ensure owner-managers and their employees have a fighting chance.
And remember, individuals and entrepreneurs who have received a return on their investment of time, dedication and commitment will most likely invest again and start again.
And that’s how you get balance into the regions.
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