I am very pleased to have been able to accept the invitation to attend the Annual Meeting of the World Economic Forum in Davos.
Your theme for this meeting – The Shifting Power Equation – is particularly timely. The global economy is changing more rapidly, and more profoundly, than ever before. It is incumbent on all of us to understand, to respond where necessary, and above all to lead that change.
For my part, I certainly appreciate the importance of change. Our own economy has changed dramatically in recent years, and this in part is why I was asked to join you today. That journey of change in Ireland has been phenomenal, and of many layers. Across the island, North and South, we have seen the triumph of peace and democracy building on the foundation of the Good Friday Agreement in 1998.
And in a few short years we have seen Ireland change from a largely homogenous society to a truly international, multi-cultural place, with over 10% of the workforce now being from outside Ireland. And perhaps most relevant to this audience today, the Irish economy has been transformed from one of high taxation, stagnant growth and mass unemployment in the 1980s, to one of low taxation, sustained economic growth and virtually full employment today.
For many global companies, Ireland is now a critical international gateway to markets in Europe and beyond; a location of young, highly educated and adaptable employees and an environment that is attuned to the needs of business in the 21st century.
Many factors have contributed to the extraordinary turnaround in the Irish economy. Our young population and our long-standing commitment to their education is a key factor, with seven in every ten school-leavers now going on to participate in higher education. Membership of the European Union, too, has been of considerable benefit.
Ironically, our long history of emigration has ultimately been to our benefit, both in establishing a world-wide community of Irish descendants and, more recently, seeing many of them return, both benefiting from and contributing to the resurgent economy at home.
But perhaps most significant of all has been our strong, perhaps unique, system of social partnership. Since 1987, innovative three-year agreements between Government, unions and employers, have delivered wage moderation underpinned by tax policy, coupled with a commitment to industrial stability.
This combination gave the economy the stimulus it needed. The overall impact was so convincing that new agreements have been negotiated at regular intervals and without interruption since.
More recently, as the economy continued to strengthen, the partnership process has been expanded and deepened. The entire process is characterised by a commitment to shared ownership of problems and a problem solving approach. Robust negotiations, certainly, take place. But the outcome is also robust.
Standards of living are among the highest in Europe. GDP is growing at over 5% per year, and the Government debt-to-GDP ratio, currently around 25%, is continuing to decline. Under the EU’s Lisbon Agenda, Ireland has consistently been one of the star economic performers.
International investment has been both a contributor to, and a consequence of, the transformation in the economy. Ireland is now home to major operations for many of the leading high tech companies such as Intel, IBM, Cisco, HP, Dell, Microsoft and Google.
In the pharmaceutical sector, some 13 of the top 15 companies have substantial operations in Ireland, including Schering Plough, Wyeth, Merck, Pfizer, GlaxoSmithKline and Bristol-Myers Squibb. Similarly, the International Financial Services Sector includes many of the leading international financial service providers.
The turnaround in the economy has been both profound and rapid. We now face the challenge of maintaining the success of the recent past. This, of course, is why the connection with the theme of this meeting – the shifting power equation - is so strong.
Responding to this challenge requires action on many fronts. Earlier this week, my Government launched a new National Development Plan for the period from 2007 to 2013. This plan sets out the investment framework for the next seven years covering key areas of economic and social development in Ireland. The scale of investment provided for, at 184 billion euros, is more than a year’s GDP.
Of this, 20 billion euros is targeted at enterprise, science and innovation, with over 6 billion euros a new Strategy for Science, Technology and Innovation adopted by the Government for the same period. Under this ambitious strategy, we aim to consolidate a fourth level education and research sector in Ireland, doubling our output of Ph.D graduates over the next seven years and building on the substantial expansion of R&D activity in Ireland.
In 2000, we established Science Foundation Ireland, modelled on the US National Science Foundation. SFI supports new Centres for Science, Engineering and Technology which represent a new collaborative approach between industry and academia, such as the Centre for Research on Adaptive Nanostructures and Nanodevices in Trinity College Dublin and the Biomedical diagnostics Institute in Dublin City University.
Building on our strong ICT and pharmaceutical base, we are seeing many leading companies now invest in major R&D operations in Ireland, including in recent months companies like IBM, Microsoft, Bristol-Myers Squibb, Pfizer, Citigroup,and Cisco. These corporations are actively supported by renowned global research organisations located in Ireland, such as Georgia Tech Research Institute and Bell Labs. A new R&D tax credit is helping to incentivise further activity in this area, not only by large corporations but also by small and medium enterprises.
International collaborations are crucial in this new, rapidly changing world. Ireland has established a number of research partnerships with global leaders, particularly in the United States. We are also expanding our long traditions of bringing students to Ireland from other countries around the globe. Just last week, when I was in Dubai and Saudi Arabia, we concluded a new agreement to bring students from Saudi Arabia to Ireland.
A further 25 billion euros will be invested in improving human capital over the seven years of the National Development Plan, across the education and skills development sectors. A major reform programme is under way in our universities and our Institutes of Technology have been brought under the remit of the Higher Education Authority, along with the universities.
A new Programme for Research in Third Level Institutions has been launched to provides integrated financial support for institutional strategies, programmes and infrastructure which will give them critical mass and world level capacity in key areas of research.
In our primary and secondary schools system, we continue to roll-out state of the art ICT infrastructure to all schools, and we have reformed the science syllabus to make it more attractive and investigative for students.
Within the workplace, too, radical changes are taking place. A range of new measures to assist with worker training and upskilling, and greater participation in formal education, were included in the latest social partnership agreement concluded last year. Our new “One Step Up” initiative aims to encourage continual upskilling by employees by giving them access to a full range of skill development opportunities and providing financial support to employers who provide appropriate training.
We are also continuing to examine means to improve the overall levels of participation in the workforce, for example by increasing childcare provision and by introducing child friendly arrangements to enable more parents to pursue their chosen careers and by developing tailored training and development programmes for people re-entering the workforce.
The range of measures I have mentioned shows that we are convinced that skills and education are at the heart of the changing agenda. Whether it is for children in school, students at our universities and institutes, workers and managers in their respective careers or indeed to enable people in general to participate fully in society and to realise their full potential, in Ireland we firmly believe that education is key to how we respond to the Shifting Power Equation.
Equally, we will continue with our social partnership model to ensure that we can have a collective and adaptable approach to change. I know that many other countries have examined our model and while no one model will suit every country I am sure that we can learn much from each other in this important area.
Finally, I and my Government colleagues look forward to working closely with the World Economic Forum during the exciting and challenging times ahead. Thank you for your attention.
ENDS