Speech by Tánaiste Mary Coughlan at the Launch of Services Strategy Report
Friday 12th September 2008
I am delighted to welcome you all here today to the launch of “Catching the Wave – A Services Strategy for Ireland”. Today’s event marks the culmination of just over a year of hard work by the Services Strategy Group, chaired by Tony Keohane, who, as with all of the group’s members, has been very generous with his time given his busy role as CEO of Tesco Ireland. I want to thank each member of the group for that time commitment, and also for the effort, experience and insight they have brought to this important report.
Over my time as a Minister in various departments, I have always been keen to ensure that the policies I implement are well informed by stakeholders in the relevant sector. This is and will continue to be my approach, particularly here in the Department of Enterprise, Trade and Employment, as we deal with the realities of our ever-evolving business, trading and employment environment.
One of the most notable developments in that changing environment over recent years is that the services sector has emerged as the key driver for economic growth in all modern developed economies. Over the past number of years many reports and commentators have noted its increasing importance and heralded the advent of a “service economy”. Today, Ireland has firmly caught that wave of change and established itself as one of the world leaders in service provision. It is essential however that we remain at the head of that wave and create the right conditions to capitalise on its future potential. In this light I very much welcome today’s report.
Ireland can only continue to prosper if we seize the opportunities offered by all sectors of the economy. Anything we say today about services in no way diminishes the importance of manufacturing. Manufacturing will continue to be very important for our economic success as was clearly demonstrated in the recently published Report on Manufacturing. However we must recognise the growing importance of services as a key driver of future balanced economic growth, and ensure we have the right policies and supports in place to harness the full potential of services to generate wealth and employment in our economy.
Enterprise policy has traditionally recognised the importance of services exports and I welcome the key thrust of this report, which sets out to broaden our thinking on how services can contribute to our success and identifies three strategic aims for future services policy in Ireland:
Realising the opportunities to further grow and diversify Irish services exports;
Encouraging internationalisation, where Irish service enterprises establish operations in overseas markets;
Recognising the important role of Irish service enterprises that trade locally on the domestic market, and ensuring that these are efficient and productive.
Of course, the term “Services” is a very broad one and covers everything from hairdressing to horse breeding, from underwriting to undertaking and from stockbroking to stocktaking.
Its breadth and importance is underlined by the fact that:
Two out of every three workers in Ireland are employed in the services sector.
Some 35 per cent of workers in the manufacturing sector are engaged in service-type activities.
Services contribute about 63 per cent of the value added in the economy and 43 per cent of our exports. As a result, Ireland is currently the 10th highest exporter of services in the world.
Services provide high-quality employment. Almost 40% of workers in services are classified as high-skill, compared with 35% in the economy as a whole.
The services sector also makes a very substantial contribution to the Exchequer in terms of corporation taxes and to the Irish economy in terms of domestic expenditures. Continued economic progress depends on productivity growth, and while the state has a limited role at firm level, the Government will continue to influence the environmental factors, which can assist companies to improve productivity.
Why We Need a Services Strategy
So, why do we need a Services Strategy? Firstly, the very importance of the services sector in Ireland means that it must be fostered and developed: its future skills needs must be anticipated and addressed;
Secondly, Ireland’s current performance is very heavily dependent on two sectors – ICT and financial services, which together account for 60 per cent of Ireland’s services exports. While it is of critical importance to continue to support these sectors, and to foster their development and growth into the future, there are significant and very real opportunities outside these sectors – opportunities that are becoming more real with the liberalisation of export markets for services and Jane listed some of these areas of opportunity in her presentation.
It is estimated that implementation of the EU Directive on Services in the Internal Market could increase trade in commercial services by as much as 30 per cent. We need to encourage internationalisation of our services enterprises. A limited number of Irish companies have established operations in other countries, in areas as diverse as sandwich bars and software. This is a major opportunity for Irish companies to expand their operations.
Thirdly, services are an essential component of the national economic and social landscape, responsible in their own right for creating considerable wealth and contributing to the quality of life of the community.
Today services are the main driver of the economy, and the most likely avenue to sustainable and balanced growth, continued prosperity and improved living standards in the years ahead. As a result of this report, we will look further at the areas of sectoral development, skills provision, innovation and productivity to develop the services side of the economy.
We are not forgetting about manufacturing. Manufacturing and the manufacturing model has changed fundamentally in recent years. Manufacturing today encompasses a broad range of activities from R&D through design, production, logistics and distribution to marketing and after sales service. In fact many people now refer to the “servicisation” of manufacturing, as production and associated services converge.
Skills
Services have too often been regarded as a residual in our economy providing only low skill employment. This report shows that on the contrary the proportion of high skilled employees in the services sector is actually higher than in manufacturing. Services can accordingly provide high skill opportunities for our increasingly highly educated young people and our education system will produce the required skills in both the humanities and the scientific and technology skills.
Ireland as an ideal location for services
I believe, and the success we have experienced to date verifies, that Ireland can be an ideal location for services to develop and prosper and we already have the fundamentals for such continued development in place. Ireland epitomises the globalised economy.
We have
• Acknowledged “people to people” skills, which are fundamental to success in services alongside the use of English in our business dealings.
• A competitive corporate tax regime for all services enterprises
• Enterprise development agencies that are well advanced in developing their support strategies for both indigenous and FDI services companies.
Some Examples
On Wednesday I announced an eLearning company success in Houghton Mifflin Harcourt (formerly Riverdeep Interactive Learning). This is a good example of a services company expanding its commercial presence in Ireland with 450 new jobs announced. Other examples include, Quinn Insurance (Cavan), Fexco Group (Killorglin, Co Kerry), Globoforce Ltd (Dublin) and Forward Emphasis (Inishowen). Some examples of services companies setting up a commercial presence abroad include O’Briens Sandwich shops and Paddy Power.
Ireland has an international standing for its creative and agile approach to economic development. It is time for services to take their place at the centre stage of our next stage of development. Ultimately it is individual businesses that will succeed in taking advantage of the opening global markets for services but it is my responsibility to ensure that no barriers are placed in their way of doing so and I intend to deliver on that responsibility.
Conclusion
We are all working to the same goal; we know that to meet the challenges being brought about by increased globalisation and technological change we have to accelerate the transition to a more knowledge-intensive economy, centred on higher-value, higher-innovation good and services.
We are in Government to maintaining a pro-business environment that will provide firms with a solid platform from which they can successfully compete on both domestic and international markets. Our economic and enterprise policies have been designed, to promote deeper, stronger and more profitable connections with global markets, and to make Ireland one of the most attractive locations in the world from which to do business.
As a result, I intend to prioritise the implementation of the report’s recommendations and I have today asked my officials to begin an immediate examination of all of the recommendations with a view to developing a formal response to this Report in the coming months.
In conclusion, I would again like to take this opportunity to thank Tony Keohane, all the members of the Services Strategy Group and Forfás for their sterling work and the contributions they have made to this report. Thanks also to Jane Williams for a very interesting presentation.
Last modified: 12/09/2008
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