14 Feb Interview with Dara Calleary, Minister of State for Trade Promotion, Digital and Company Regulation, Ireland
Business Focus: Ireland has done extremely well over the COVID-19 pandemic, being the only economy in the EU to grow in 2020 and having projected GDP growth of 10.1 % this year. To begin the interview, I’d like to talk about Ireland’s economy as a whole. What are the key factors behind Ireland’s recent economic success, and what kind of impact is it having on local industries and citizens?
Dara Calleary: There are a number of factors there: firstly, agility and resilience.
Irish businesses came into Covid on the back of Brexit and on the back of preparing for Brexit. Brexit was one of the most fundamental changes for us so for the first time we were going in a very different direction from our nearest neighbor, the neighbor that we share the island with. Businesses had to make a lot of plans for change and adaptation between 2016 and 2020 anyway.
Secondly, during Covid we found that businesses pivoted very quickly. We found ourselves very much at the heart of the European response to Covid: our life science sector, our med-tech sector, they all pivoted overnight. They showed agility. Government put in place quite a range of supports for business to maintain employment which was very important.
It was that resilience, that agility, when we came out of the Covid lockdown phase, we were in a position to grow, and that continued to 2021 and through 2022. Obviously, the tech side of things was important. There was quite a large expansion in the tech sector during Covid, that’s having certain repercussions now, but we’re confident that we can overcome those. Our life science sector, our med tech sector, our food sector, all have grown through this period. Based on a resilient enterprise ecosystem, a resilient work force, a very educated workforce, it is these key aspects of our country that have helped our economy through such an unprecedented time of consecutive challenge. .
2023 is a very significant year as we mark 50 years of EU membership and 30 years of the Single Market. We’re now the dominant English-speaking member of the EU. We might be at the edge,we are very much at the heart of Europe. We are at the edge geographically, but we are at the heart from a business point of view, from a culture point of view, and we’re also a very good bridge between the EU and the United States of America: economically, politically, and culturally. We have all those strengths and those strengths have gotten us through the challenge and change of the past number of years.
Business Focus: Recent crises such as Brexit, the pandemic and now the conflict in Ukraine have changed the landscape of Irish trade. How has Ireland reacted to these recent large shifts, and what kind of new opportunities are now opening because of them?
Dara Calleary: Our biggest strength I believe was our ability to react with agility and resilience -you will hear a lot of resilience during your time here. Perhaps most importantly, we also stood back to look at the wider picture because there are other challenges. There was the immediate challenge of Brexit, then we went into the pandemic, now we have Russia’s war against Ukraine, an energy crisis and cost-of-living crisis. You also have the ongoing challenge, though, of climate change and the need for businesses and economies to adapt and respond to that. That is the major challenge that cannot be sidelined. Another major challenge for businesses that cannot be underestimated is the need to embrace digital in their business operations. And throughout it all, we have been working with business.
We have commissioned a new white paper to lay out the principles of Ireland’s enterprise policy between now and 2030 [Published in December, post -interview]. It focuses on a number of key pillars; to take into mind not just the challenges and the opportunities of climate transition but also the challenges and opportunities of digitalization, and we’re looking at a number of ways that we can adapt Irish businesses to be at the forefront of those challenges.
We have a strong digital economy, and we are always seeking to invest in it. For example, we are rolling out a national broadband plan to assist our citizens and small businesses. We have a national digital strategy that we launched in early 2022. There are a couple of aims for our smaller businesses, not just to equip them on the digitalization journey but to change their culture so that they see digitalization as a benefit to their business. However, what we hear often from business, it’s not just the challenge of keeping yourself open, the challenge of growing that business, it’s the time to look at all the strategies and the initiatives and supports available. How do we make it easy for businesses to seize new opportunities? How do we take down the intimidating wall that is there in accessing digital technologies, in addressing the sustainability challenge while at the same time growing business, keeping it open through a once-in-a-century pandemic, through once in a generation inflation crisis. That is why we took the time to review and refresh our enterprise strategy. The white paper sets out an ambitious vision for Ireland’s enterprise policy, to protect Ireland’s strong economic position, and respond to challenges and opportunities and provides for a sustainable, innovative and high-productivity economy.
Business Focus: Ireland’s tech sector is impressive, with the market being the second largest exporter of ICT and IT services in the world. Big names such as Google, Microsoft, IBM, Apple and Facebook all have operations in Ireland. Why is Ireland such an attractive place for tech companies, and what has the government done recently to support the growth of its tech sector?
Dara Calleary: We have always been ahead of the curve when it comes to digital. As mentioned we launched a digital strategy in 2022 Harnessing Digital, the digital Ireland framework. We are the fifth most advanced digital economy in the EU. Within the island, we have a very advanced digital culture, but we’re ambitious, and we want to be the most digitally advanced economy in the EU. We want to put that investment in to supporting and bolstering a culture of innovation and transformation across our economy.
We have a system that is very open to the needs of business and in tune to the needs of business. For example, we have a very resilient education system, so we can provide the skills businesses need to grow and thrive. We also have a very important geographical position – and represent a strong cultural bridge between the EU and the USA. I think we have grown, and we have shown through Covid, and also through Brexit, that, as a government, we are in tune to the needs of business as well. We are open and willing to sit down with business leaders to ensure that our education system is in tune with their needs, ensure that we meet the required infrastructure needs.
We also want to provide business with opportunities beyond the Dublin experience. We can provide them with opportunities and strong success stories to encourage investment in our regions: for example on the West Coast, the Atlantic Coast of Ireland provides a different digital space, a different creative space to the capital city and that’s an excellent opportunity. We are anxious to diversify the investment areas around the country. Most of our investment projects are going outside of Dublin to give employers and incoming investors a different sense of the country but also to address some of the challenges.
There are challenges, in housing for example, and we’re very real about that. We’re investing record amounts of money in housing and will continue to do so for the next 10 years. We will invest €4.5 billion in housing in 2023, including affordable housing. We can also do that in our regions as well. We have invested in Cork, Galway, in Limerick. We’re investing in a National Advancement Manufacturing Centre in Limerick which will have some of the highest tech manufacturing services available to any company in the country to come and do test manufacturing. We have in Dublin, in med tech, a center in UCD that small pharmaceutical companies can test lines within that center before they go to commercialization. We have an ecosystem of support in place. We also have the most professional inward investment agency in the world in the IDA. They are very good at bringing people in and focus on building that relationship so that when that company comes to Ireland, they have an ongoing relationship with the IDA and that continues to grow, shows them support and how to pursue further investment opportunities.
Business Focus: Irish SMEs account for around 99.8% of all active enterprises and 68%of employment in the country. What is the government doing to promote the growth of new businesses in 2022 and beyond, and what new shining stars are we seeing in Ireland’s SME world that we should be paying attention to?
Dara Calleary: To get them through the current challenges, we had a range of supports: we invested huge amounts in SMEs during Covid and we continue to invest considerable funds now; we have a €1.2 billion energy support scheme to get our SME structure through the current energy crisis. We have a network of local enterprise offices in every part of the country that are there to hold businesses hands as they navigate landscape challenges as well as the ups and downs of the enterprise journey more broadly through mentoring and advice and of course through direct financial supports and schemes. Through Enterprise Ireland, we have a range of businesses looking to export and have a variety of hard and soft supports to assist businesses reach new markets. Within Enterprise Ireland there is also a unit that focusses on high potential startups to identify and support rising stars with a specific focus on supporting them through their enterprise journey.
Through the white paper we will be identifying the challenges facing SMEs and will try to put in place a range of programs to assist them. I mentioned earlier, the challenge of time for SMEs and getting them time to focus on digitization and on the sustainability agenda. That is something we are very attuned to and within the white paper we will be looking at clustering, at bringing various classes of SMEs together, or in the same space, trying to get them to work off each other, while obviously respecting the competitive edge. That’s important. There are significant benefits to bringing them together in terms of how they expand. One such area that we are focused on, , is supporting Irish companies to grow and continue to expand rather than to grow and maybe sell off to another company. We want to encourage our ecosystem to be stronger as well as to give innovators and investors the support they need. Last year Enterprise Ireland organized a very good event called Big Ideas where we saw some amazing small companies and many rising stars present and pitch their ideas to a variety of industry leaders and investors. Companies from nearly every sector were involved, including from the med tech sector, some fabulous projects in the engineering and healthcare sectors, showcasing cutting-edge technologies being developed by very small companies that will change the way we live.
Business Focus: Ireland has committed to having net-zero carbon emissions by 2050. How is the rise of green investment changing Ireland’s industrial landscape, and what is the government doing to make sure it reaches its emissions goals?
Dara Calleary: We have set the emission goals and made them legally-binding. They are not aspirations. Every sector is signing up to our carbon budgets, every government sector, so that is the first thing, that they will be legally enforceable. We are finalizing those budgets. In terms of business, we have a range of programs that support business to get there because businesses’ customers will demand that they are doing business in a sustainable way, no matter what business you are in.
Second, we are getting feedback from a lot of companies who are recruiting people and those they are seeking to recruit are challenging them on their sustainability policies, so younger people do not want to work for a company that is not on a sustainability journey. We’re getting a lot of feedback on that. Retaining talent is a big challenge for us at the moment. We are nearly at full employment, and for companies to retain and expand talent, they would have to be able to demonstrate their sustainability credentials as well. Ireland is leading on that in terms of legal targets, government is walking with society. It’s a difficult journey and we have no illusions on that front, but it is a journey that must be taken.
There is a danger of people saying that we’re only a small country and we can’t make a difference, but we can absolutely make a difference. I think because we are at the edge of the continent, we haven’t seen the extremities of weather. There are some people that say this doesn’t affect us. It absolutely affects us, and Ireland has shown its ability to lead the way in international debate since the foundation of the state. We will lead the way on this, but we are very conscious of the need to support business through it. That is why we have a range of programs to make the change, in terms of changing the supply as well as education and guiding them on how to do that.
Business Focus: The US is undoubtedly one of Ireland’s largest markets in terms of trade and investment. American FDI in Ireland stood at $390 billion in 2020, more than the US total for Brazil, Russia, India, China, and South Africa combined. How have relations tightened in the last decade between the US and Ireland, and what kind of new opportunities are we seeing in the Irish market that foreign investors might be interested in?
Dara Calleary: It’s a two-way relationship. Ireland is the ninth biggest inward investor in the USA. We have over 100,000 US employees with Irish sourced companies, which is very significant for a country of just 5 million people. The relationship is always strong, and we are not complacent about the relationship. We don’t take it for granted. Irish enterprise agencies spend a huge amount of time in the States. We have an on-the-ground presence building relationships constantly and consistently across all spheres including tech, med tech, life sciences, and food. We have a huge amount of food exports to the US market. We also share a common knowledge, and we have a lot of similarities in culture.
The most important thing is that we are not taking this unique relationship for granted, and we are very attuned to the need to maintain and grow that relationship. Politically our relationships are very strong at the moment. There are connections between the Biden Administration and the current government which are very strong. We have a very good team here in the US Embassy. Ambassador Cronin has been phenomenal since she came here earlier this year. Equally, Ambassador Byrne Nason and our own embassy team in Washington is strong and active also. Together with our consulate network and our State Agencies, it works across the United States, building that relationship, building it politically and economically and pursuing opportunities that will deliver economic growth and jobs for Ireland.
We have most of the top US companies here. They are not here just for the sake of it. They are here because it is good business proposition. They have decades of experience. Companies that came in the 1970s doing the most basic of manufacturing are now in the 2020s doing the most up-to-date technological manufacturing. What a company was in the mid-1970s is completely different from what they are today. The name might be the same, but that is about all. That is because Irish education and Irish innovation support the pace for research and development. The journey of those companies has changed completely over that time due to the Irish labor force and due to the creativity and resilience of the Irish labor force, and the fact that we have a very strong education system here. But equally, we have the basics right in education, but Irish workers are creative and resilient by nature.
Business Focus: You stepped up as Minister of State for Trade Promotion, Digital and Company Regulation in August and bring a ton of experience, including being Minister of State at the Department of Enterprise, Trade and Employment from 2009 to 2011. As a Minister of State, what are your top three priorities, and where do you see the Irish economy in the next five to ten years?
Dara Calleary: Within my specific area, we have digitalization, company law, and trade promotion, so a core focus for me and the Department of Enterprise is to continue the growth of the Irish economy and to continue assisting Irish enterprise.
Secondly, it is to get Irish enterprise through the immediate crisis , to assist them through the energy crisis but also within that to put the foundations in place for greater resilience and to be able to seize new opportunities – essentially future-proofing our enterprise eco-system. One example of this at the moment is the support that we are offering under our temporary energy support scheme: businesses have to put their company in order in terms of sustainability. We hate burdening Irish business with more paperwork but equally want them to focus on the challenge of sustainability as well as of energy, so we will be working with Irish business on that. I believe the White Paper is going to be very important because it will lay out a big picture road map for the next 7-8 years, and for 2023, the challenge will be to fill in that map, to fill in the routes, and put the supports in place. The White Paper will have big pillars and they will fill those pillars out. We continue to work on that through our agencies.
We’re very proud of our enterprise agencies, but we always want them to be better. We always want them to be more competitive and hungrier for business, and we’re very lucky that they will be. IDA are out there internationally bringing companies in, and Enterprise Ireland are supporting our stars, identifying those companies, giving them support early on and giving them the ecosystem earlier on. We have our local enterprise office network with the smaller companies altogether. We work with a range of different agencies in supporting of the small businesses.
We’re not just about multinational investment, we’re not just about foreign direct investment, we’re about those small companies as well. We have about 275,000 working in our Foreign Direct Investment as of the end of 2021 *. There are two-and-a-half million people working in the economy. While FDI gets all the attention, there’s a lot of companies employing two million or so people around the country that are very important to us as well. We’re very upbeat, we’re very confident, but we’re very real as well. We understand the economy will face more challenges in 2023 and as a government we’re very realistic. That is why we have put money aside and into a reserve fund: €2 billion in 2022, €4 billion in 2023, to have an armory in place with which we can assist business, enterprise, and our citizens through the challenges to come.
In the past six years, we have had Brexit, we have had a once-in-a-century pandemic, we have had the worst war on the shores of Europe since the 1940s, we have had once-in-a-generation energy crisis. Irish business and Irish enterprise have been exceptionally resilient throughout all of that. Irish labor and Irish employees have been beyond resilient and creative throughout all of it. The Irish government has shown its ability to compromise. We set put a strategy. We wanted at the end of our term in office to have two-and-a-half million people at work and we have that figure now. We will continue to be agile through the challenges that face us in 2023 and 2024.
*FDI employment figures: results announced in December 2022, states total employment in FDI companies is now at 301,475, a 9% increase on 2021.