From Socialist Voice, February 2007

We continue to be exploited by our dependence on transnationals

During the last few months we have seen a growing list of transnational corporations announcing either the complete closure of their manufacturing plant or the “shedding” of thousands of jobs. It is estimated that in the region of 140,000 jobs have been lost in manufacturing in the Republic since 2001.
     Pfizer is the latest company to announce that it was putting up for sale all its manufacturing plants in Ireland. Its announcement follows those of Creative Labs, Thomson Creative, DDC, Motorola, and Xerox. All have cited high labour costs as the reason for moving to cheaper places, such as eastern Europe, China, and India.
     In its annual report for 2006 the National Competitiveness Council blames increased competition from the ten new member-states of the European Union, as well as India and China, as having a direct bearing on employment and the closure of these plants.
     The report also draws attention to the overdependence on the construction industry as an engine of growth, which poses a serious threat to the expansion of the economy and jobs, particularly those in the transnationals. The report also cites the appreciation of the euro as having an adverse impact on costs.
     Intel—one of the biggest employers in the country, employing 5,500 people—announced a review of its manufacturing structure with the abolition of a hundred jobs at its plant in Leixlip, Co. Kildare, at the same time that it was establishing a high-technology manufacturing plant in China.
     Jim O’Hara, the general manager of Intel in Ireland and president of the American Chamber of Commerce in Ireland, called on the Government to reaffirm its commitment to the lowest possible rate of corporation tax, which now stands at 12½ per cent—one of the lowest in the European Union, which corporations throughout Europe are pushing to have across the board. Low corporation tax was one of the main Government strategies for attracting transnationals to set up in Ireland.
     It is hard to accept the argument that labour costs are the principal factor when we look at the fact that Irish workers work longer hours than their European counterparts, while Irish productivity is one of the highest in Europe. Also, most of these transnationals have hostile anti-union policies and remain un-unionised.
     The Government has placed industrial development and future economic growth in one basket, and that is the transnational corporations. More than 90,000 workers are employed in transnational corporations in Ireland. We have lost many important economic and financial levers to the European Union.
     The rise in the value of the euro as against the American dollar is posing a serious threat. Exports from Ireland to the United States rose from $5 billion in 1997 to more than $20 billion in 2006. This growth was a consequence of two things: a cheaper location, and the fact that the euro was worth less than the dollar.
     Euro interest rates are rising to suit the German economy, the major component of the European Union, not the Irish economy. Some economists argue that if we had greater control over our own int erest rates we could have controlled our runaway house prices as well as maintaining a more competitive edge by floating in relation to both the euro and the dollar.
     As the economy has substantial exports to the United States, many American transnationals that export into the European Union from their Irish base will be increasingly sensitive to movements in the dollar and to the exchange rate between the euro and the dollar, and a strong dollar is more in their favour.
     Transnationals are using global benchmarking for manufacturing costs. But no Irish worker could compete with a worker in India or China in relation to wages. The cost of living—rent or mortgage, electricity, and the whole range of other services and food—is far higher in Ireland.
     Irish workers will never compete on wages: we can only compete in relation to ever-increased productivity—that is, ever-increased exploitation.
     We will see continually increasing pressure for further reductions in corporation tax and growing state welfare for transnational corporations. We will continue to be exploited by our dependence on the transnationals.
     The current round of job losses is reminiscent of the mass losses that occurred in the years following Ireland’s joining the EEC. With the continuing privatisation of state companies and the reduction in employment in those newly privatised companies, the Government is removing what was a stabilising factor in any volatile capitalist economy.
     We are moving back into the economic territory of the 1920s and 30s.

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