He has given welcome guidance on retaining foreign direct investment in light of Obama’s crackdown on overseas tax benefits.
Paul Duffy, whose day job is Pfizer’s vice president of manufacturing in Ireland, last week dispensed some valuable and much needed guidance to Ireland on the importance of retaining foreign direct investment (FDI). In the current economic climate, FDI is critical to the country as unemployment rises and jobs are shed across all sectors. Duffy has called for the scale of job losses predicted by the ESRI over the next two years to be minimised. Addressing representatives of 100 American chamber member companies, he said that economic recovery must be export led, focusing on competitiveness in the short-term and innovation and upskilling. As Ireland is so heavily reliant on FDI, creating the proper climate for the retention of this base will be crucial.
With US president Barack Obama this week announcing big changes to tax advantages currently in place for firms operating outside America, Duffy’s comments could not be more timely. As part of a plan to save up to $210bn over the next decade, Obama has put forward proposals to crack down on tax loopholes used by US multinationals who move operations overseas to avoid paying tax.
The proposals are aimed at keeping jobs in America but could have big implications for the Irish economy and the high number of people employed by foreign companies. Although Obama stopped short of calling for a complete repeal of overseas tax benefits, Ireland was name-checked as a place where foreign profits reside. Under the new plan, US firms operating here will still be able to defer paying US tax on Irish profits but will no longer be able to claim tax deductions in America for expenses related to their Irish operations.
Some big name companies have already spoken out against the intended reforms. Microsoft, Johnson & Johnson, General Electric, Pfizer and Oracle were just some of the 200 companies and trade groups that protested against the planned changes last month in a letter to Congress.
Public sector shake-up
At a time of rising debt and private-sector job losses, Duffy says the private sector cannot be expected to bear the burden alone and that the pay differential between the public and private sectors cannot be sustained. Calling for a reduction in the public-sector pay roll, he said that the Government and public-sector unions must face up to the fact that relative to wages in the private sector, public servants have an unsustainable premium.
Retraining and upskilling
Retraining for the newly unemployed has been highlighted as one way of digging Ireland out of the crisis. But a targeted approach to upskilling is needed, focusing on the sectors that will improve Ireland’s reputation as a knowledge economy. Duffy says that providing upskilling grants to people while they are still in employment is also something that needs to be looked at as a way of preventing further job losses.
Much more needed
Government reaction to the crisis has been criticised by the business community. Duffy says there are positive stories in Ireland amid all the doom and gloom. “The current ad hoc approach is inadequate and is failing to address international concerns fast enough or thoroughly enough. We need a unified political response. This is a task in which the Taoiseach and his officials must lead and in which the Departments of Foreign Affairs, Finance and Enterprise, Trade and Employment must play a major role.”
- 100,000: the number of people directly employed by US multinationals in Ireland
- 250,000: the number of indirect jobs supported by them
- 130: the number of new and expansion projects announced by the IDA last year
Business & Finance, Business Person of the Month
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