Monday 7th April 2014
Home-grown entrepreneurs the key to Ireland’s recovery
Encouraging home-grown entrepreneurs is the key to the next stage of this country’s recovery,
The National Competitiveness Council functions as a national nagging mammy, finger-wagging at her basically feckless bachelor son, Paddy, as he starts to sink back into his bad old ways. The council knows that, deep down, Paddy/ Ireland is a lazy lad who likes lie-ins, fried breakfasts, and pulling a fast one on his employer, or customers. It is only when things get really bad, and disaster threatens, that he pulls his socks up and gets the lead out.
Last week, the council was back ticking us off.
It issued a report last week claiming that our competitiveness faces enormous challenges, which “must serve as a major wake-up call for anyone” who thought such issues had been resolved. “Now is not the time for businesses to hike their prices, now is not the time for unions to make wage demands, and now is not the time for Government to take its foot off the pedal in making the structural reforms we need.”
Requesting a union not to submit a pay claim in a time of economic recovery, however modest, is a bit like asking a cock not to crow first thing in the morning. Suggesting to politicians, ahead of a major electoral test, that they lay off on promises is an equally futile exercise.
The council’s message of abstinence risks falling on deaf ears. The core message in the report is that Irish prices are still too high, despite the crash and a period of deflation followed by exceptionally low price inflation.
Consumer prices in Ireland, at the very bottom of the economic cycle, were 13.6% above the European average, according to Forfás. Our island status, being at the end of the distribution line, explains some of the gap, but by no means all of it.
Irish wages remain high relative to the UK, helping to explain our lower employment rate. Wage rates are not everything. In assessing the competitive position of our firms, the key measure for purposes of comparison is not wage costs per se, but rather unit labour costs, which capture overall levels of productivity.
During the bubble years, the rise in our unit labour costs outstripped those of our EU partners. Our economy was overheating as a result of the credit bubble and building boom, and we ended up pricing ourselves out of key markets at home and abroad.
During ‘the bust’, this situation was reversed as real Irish unit labour costs fell by a combined 10% in 2010 and 2011. Such statistics should, however, carry a health warning.
Construction activity, where output per head has remained low, all but disappeared whereas the high-output modern manufacturing sector of the economy held up well.
This in itself put a flattering gloss on the overall figures. One of the problems the council has is that Irish statistics, through no fault of the CSO, frequently mislead, sometimes flattering to deceive.
Think of Google, Facebook, Starbucks, and of the tax arbitrage these highly effective corporations engage in, and then you get a sense of how apparently spectacular Irish service export data can turn out to be more than a little dodgy.
Yet it can be all too easy to draw an inference from this that the country’s burgeoning tech sector is really little more than a puff of tax accounting smoke.
Intel’s announcement that it has invested $5bn over three years in Leixlip is a reminder that real hard cash commitments are being made to the country.
It might be worth attempting to go through that investment with a fine tooth comb.
Nevertheless, it is clear that Intel, 25 years on from its original game-changing investment, has recommitted itself to the country.
Our cool weather and ready access to water may have played as important a role in this case as the tax and labour factors. The company’s former CEO, Craig Barrett, a regular visitor to these shores, has warned, more than once, that Ireland needs to reduce reliance on its corporation tax regime in its effort to attract and retain foreign direct investment.
His argument is well made. Many rival jurisdictions, including the UK, are making a much stronger pitch for overseas investment by reducing their corporation tax rate and offering a wide range of incentives in areas such as research.
A big push is on to change the method of assigning profit for the purpose of deciding where corporation tax should accrue. It is designed to catch out countries like Ireland which appear to facilitate tax arbitrage on the part of global corporations.
In the 1980s, the government’s foreign direct investment strategy was frequently questioned. Many argued too many resources were being devoted to attracting ‘footloose’ multinationals who could shut up shop and move on at a moment’s notice.
The great post-1989 foreign direct investment boom disproved this notion. The country benefited hugely from the arrival of thousands of highly paid, high-quality jobs. Sadly, we could not deal with the prosperity that resulted. The bachelor son hit the booze, big time. But one of the outstanding features of ‘the crash’ was the extent to which our overseas-owned sector stood out as an island of stability.
As the banking sector collapsed, many large corporations who avoided massive leverage, continued to thrive. Despite dramatic changes brought about by the so-called patent cliff, employment in the pharma sector has stood firm.
The experience of this sector may provide comfort to the Government amid talk of fundamental change in the calculation of taxes across international frontiers, with a move to taxing in the place where the product is sold/consumed.
The concern is that a key, if not the key, pillar of Irish competitiveness when it comes to foreign direct investment could begin to crumble.
The Barrett message is that Ireland needs to grow its own entrepreneurs.
One might add that the country needs to use its tax system more effectively to draw on the increasingly large pool of Irish-born managers, skilled professionals, and entrepreneurs working overseas.
Many with young families tend to be drawn back home. However, they will also want to be assured that the education system remains in good order, hospitals are safe and efficient, and that property is available to rent or buy at a reasonable price.
Michael Smurfit, launching his memoir last week, alluded to the need to create an emerging generation of entrepreneurs running into thousands.
Hardly surprisingly, the Monaco-based businessman views businessmen in a positive light. He may not recognise that capacity of rent seeking business people to capture state resources as has happened too frequently, but the idea of a burgeoning Irish entrepreneurial culture is beguiling and lies at the heart of our future competitiveness.
The National Competiveness Council does not touch on this key consideration. However, its report does home in on flaws in the system that threaten to hobble our recovery.
Take the cost of credit, a critical consideration. It is sobering to learn from the council that new business loans of up to €1m — a proxy for SME loans — in Ireland are over 31.5% more expensive than in the eurozone, as a whole, while for those over €1m, the gap is 27%.
Bank charges here remain relatively low for ordinary consumers, but SMEs complain of heavy and rising charges on top of these high loan rates.
Even firms not saddled by the huge legacy debts from the boom years are being forced to pay for the folly of the bubble bankers by institutions now embarking on the long and painful process of balance sheet rebuilding. We should find out how lengthy and expensive this process could be once the Europe-wide bank stress tests have been completed later this year.
Michael Noonan, the finance minister, has been busy wooing foreign capital as the Nama loan book is run down. One can only hope that, in the process, investment both in our capital-starved banks and in non-bank finance can be stimulated and that this can help to jumpstart investment in new homegrown businesses or international partnerships.
The Irish recovery will not be jumpstarted by clamping down on wage increases. It would help a lot, of course, if senior managers showed restraint. It would also help if the State cut back on the high level of hikes in the price of its own services, hikes which certainly do nothing to boost our firms’ competitiveness.
Irish Grandparents urged not to spoil children with goodies in a “prevent obesity campaign”
Irish Grandparents will be urged not to overindulge their grandchildren with treats as part of a new TV campaign to tackle childhood obesity.
The ‘granny factor’ is worrying health experts who see evidence of grandparents routinely “spoiling” youngsters with gifts, sweets or chocolate.
International research has shown that children minded by their grandparents are more likely to be overweight, in a link that holds up across all social classes.
And healthy eating body Safefood said that in its focus groups parents repeatedly raised concerns about grandparents giving too many treats to kids.
Now Safefood is planning to highlight the issue in a TV advertising campaign later this year.
It will advise against overdoing the treats, and urge parents to have a frank and open discussion regarding healthy eating aims with grandparents.
Safefood director of human health and nutrition Dr Cliodhna Foley-Nolan said the organisation wasn’t blaming anyone for children’s weight problems, but instead wanted to encourage what could be a delicate conversation between the generations.
“It was something that was repeatedly raised by parents as a concern in our focus groups,” she said.
It had come up very frequently during research for their current anti-obesity campaign, which is aimed at encouraging families to eat more healthily and become more active.
Parents reported that grandparents often saw it as their role to “spoil” the children. They said it was a challenge to ask them to cut back, given sensitivities around the topic and the fact that parents often weren’t present when treats were handed out.
Grandparents naturally enjoyed giving treats as they had grown up in an era when they were a much rarer occurrence, said Ms Foley-Nolan.
But nowadays children are given high fat and sugary foods everywhere they go, while getting fewer opportunities for outdoor play.
Safefood wants to encourage parents to discuss reasonable limits with grandparents and other minders in the same way you might try and avoid smoking around someone who was giving up.
“An element of indulgence is reasonable and healthy, but we’d encourage grandparents to also do other things – such as playing games with children, or cooking with them,” she said.
Parents should also factor in treats given by grandparents and at friends’ houses and make sure they weren’t doubling up on these by giving children further treats at home the same day, she said.
Research published in the International Journal of Obesity found young children had a 34pc higher chance of being overweight if they were minded full-time by their grandparents.
That study analysed 12,000 three-year-olds in Britain and found that the risk of being overweight was 15pc higher if they were minded part-time by their grandparents. It found that the increased risk was most evident in children from more privileged backgrounds.
However, there was no increased risk of being overweight if they were minded in a creche.
One-in-four Irish children is already overweight or obese by the age of three, and this has very serious health implications later in life with increased risk of diabetes, heart disease and stroke.
Safefood has been running a hard-hitting campaign for the last six months to promote practical steps for parents to ensure their children maintain a healthy weight.
This includes giving them child-sized portions rather than adult ones, limiting treats and sugary drinks, reducing screentime to two hours a day, doing plenty of physical activity and getting enough sleep.
Irish charities in crisis as 400,000 people stop donating after the recent scandals
New study shows hows just 33% of people think senior management should receive similar pay to those in companies in the private sector
Charities are in crisis as 400,000 people have stopped donating following recent scandals.
Following revelations from the Central Remedial Clinic and Rehab, the numbers of people giving cash has plummeted.
The survey for Behaviour & Attitudes also reveals 70,000 fewer people gave to a Christmas charity appeal last year when compared to the same period in 2012.
And over one third (35%) of donors during the holidays contributed to St Vincent De Paul.
The study also shows one in five people have given to a local charity over the past three months. However, it was not all bad news as €200,000 has been raised by the public this year.
There have also been increases in donations to international emergency appeals, overseas humanitarian aid and development agencies.
And when it comes to parting with cash, men are more likely to stop giving money than women, with 13% of lads stopping their contributions compared to 11% of ladies. The data also reveals a 2% fall-off in traditional collection methods such as church and street collections.
It also shows just one third of people think senior management should receive similar pay to those in companies in the private sector.
Along with this, only 35% of people agree that charities need to pay competitive wages to get the best people.
Fundraising Ireland’s Tim O’Dea said he is concerned at the drop in contributors and said all charities have suffered from the ongoing revelations about a small number of organisations.
He added: “It is a big concern there has been such a fall-off in the numbers donating to charities.
“This presents a serious challenge for all charities in the longer-term as the pressures on our services continue to increase.
“The survey also has many positive aspects in that it indicates that a significant percentage of Irish people remain generously committed to the work of charities.”
The eXPiration date of Windows XP is here
One of the most popular and widely used computer operating systems is about to expire.
Microsoft Corp. on Tuesday plans to stop maintaining the 13-year-old Windows XP, which by some estimates is still running on nearly one in three personal computers in homes and offices around the world, along with some bank ATMs and other commercial systems.
Computers and devices with XP will still work past Tuesday. The only caveat is that Microsoft will no longer try to keep it up to date with patches, many of which are to fix security vulnerabilities.
Security experts say XP machines will become more vulnerable to viruses, spyware and other malicious hacks once Microsoft withdraws its support.
“The bad guys just have to monitor the security releases for (Windows) 7 to learn where the vulnerabilities are in XP. It makes it much more susceptible to future issues,” explained Brian Barnette, the interim Chief Technology Officer for Georgia Regents University.
The university, which has known about the support expiration, will still have a “significant” number of computers operating on XP after the deadline, Barnette said. Fixing the problem is not as simple as upgrading everything to either Windows 7 or Windows 8.
Barnette said there are machines that have software that relies on XP for certain tasks.
”Some of the software we run only runs on XP. Healthcare has a lot that is coded to work under XP,” he said. “There are pieces of clinical equipment that are based on XP and the vendor has to go through significant effort to get that certified for a different operating system.”
Barnette said there are also older computers that don’t have the guts to handle the requirements of running Windows 7. That would put the university into a situation of a capital outlay to replace those machines.
Microsoft started selling XP back in 2001. At the time, home computers used either Windows 98 or ME (Millennium Edition). Business computers were likely to be running Windows 2000, the successor to Windows NT.
Barnette said XP’s popularity stems from being able to run on both home and business machines.
“It combined them and gave them one code base to support. From that perspective it was new for Microsoft. People grew accustomed to having the same look and feel at home to that they had at work,” he said.
Barnette said moving to the common code base was also good for Microsoft. And XP lasted longer than Microsoft probably expected because of the “epic failure” called Vista.
“Had Vista been successful, we wouldn’t be lingering on XP,” he said.
Vista came in 2005 and was replaced in 2009 by Windows 7. Barnette said Vista was so troublesome that people skipped the upgrade from XP. Then people skipped Windows 7, which is why XP is still so popular 13 years later.
According to research firm NetMarketShare, XP powers nearly 30 percent of all personal computers worldwide. Others estimate 200 million or more XP users.
“XP is a solid operating system. People are used to it. They’ve got other software that’s compatible with it. And all their stuff is on it,” said Kevin McGuire, who owns the Bay Area Computerman repair shop in San Jose, Calif. “I still have computers running XP in my shop.”
Computers running XP “will be an easy target for hackers” and could even be taken over by bots, or automated programs that disguise their malicious nature to infect other PCs running newer operating systems, Ondrej Vlcek, chief operations officer at antivirus maker Avast, said in a recent blog post.
Though McGuire is skeptical of the more dire warnings about XP, other experts say there’s reason to be concerned. Several makers of antivirus programs and other security software say their products will continue to work with XP, but they might not provide full protection.
Security programs can detect and neutralize malware, but they don’t repair vulnerabilities in the underlying operating system, said Gerry Egan, senior director of product management atSymantec, which “strongly recommends” that XP users upgrade to a newer operating system.
Microsoft, of course, hopes people will buy the latest version, although Windows 8 has a drastically revamped interface that longtime XP users might find confusing. It also requires more memory and processing power than some older computers can provide.
Windows 7 is a closer cousin to XP, but it was first sold in 2009 and is getting hard to find. Amazon, for example, sells Windows 7 only in a kit that must be installed on a new hard drive or one that’s been wiped clean — a tricky process beyond many consumers’ expertise.
Given the cost and trouble of installing a new system, some XP users might opt to buy a new PC, with modern hardware and software already onboard. Though many retailers promote the latest models running Windows 8, some stores still have machines with Windows 7.
Strong heart the key for high-flying birds like the geese
A study of the world’s highest-flying bird has shown how it manages to survive at extreme altitudes as it soars above the Himalayas.
The bar-headed goose literally puts its heart into the challenge of breathing air consisting of just 7% oxygen, scientists found.
Available oxygen is channelled to the bird’s heart, which beats fast to pump oxygenated blood to the rest of its body.
In this way, the bar-headed goose is able to cross the Himalayan mountain range on its migratory flights between India and China, reaching heights of almost 24,000ft.
At this altitude, the oxygen level of the air is only a third of what it is at sea level. Most people exposed to such conditions would quickly pass out, and may even die.
Scientists believe lessons learned from the bar-headed goose could help prevent heart attacks and strokes in humans.
Lead researcher Dr Lucy Hawkes, from the centre for ecology and conservation at the University of Exeter, said: “It all seems to come down to how much oxygen bar-headed geese can supply to their heart muscles. The more they can supply, the faster they can beat their hearts and keep the supply of oxygen to the rest of the body going.
“This suggests that other species, including humans, are limited more by what our hearts can do than by how fit the rest of our muscles are at altitude.”
She added: ” The wider implications of these findings are for low oxygen medical conditions in humans, such as heart attack and stroke – suggesting what adaptations might help prevent problems in the first place and learning how animals have managed to cope with really extreme environments.”
The scientists tested bar-headed geese by getting them to run on a treadmill inside a box with oxygen levels similar to those found on Mount Everest.
The geese had an astonishing tolerance of low oxygen conditions, both at rest and when exercising for 15 minutes at top speed.
Other experiments with barnacle geese, which migrate at sea level, showed they did not have the same ability to cope with lack of oxygen.
The research is reported in the latest edition of the online journal Public Library of Science ONE.
Bar-headed geese have been shown to possess a number of physiological adaptations that may assist their survival in low oxygen conditions.
In particular, their heart and locomotor muscles contain extra blood vessels.
Altitudes above 8,000 metres, or 26,000ft, occupy what climbers call the “death zone”.
Mount Everest is 29,000ft high, well within the zone. In 1978, Reinhold Messner and Peter Habeler made the first ascent of the mountain without additional oxygen.
Since then, the feat has been repeated by a number of climbers. But all were specially trained and acclimatised, and none stayed on the summit for long.