Irish folk gained from world crisis

FOR one European country the global financial crisis of 2008 made its business environment more advantageous.

Particularly, multinationals found Ireland a much better place to do business in, even compared to the boom period before the recession hit, Professor Paddy Gunnigle, of the University of Limerick's Kemmy Business School, told executives in Port Elizabeth yesterday.

He said although the recession had a dramatic effect on the Irish people who lost their jobs, the economy of Ireland recovered significantly from it with the unions' power diluted and an ample supply of labour.

Gunnigle, who was speaking at the Nelson Mandela Metropolitan University (NMMU) Business School's Strategic Conversations Anthology yesterday, said in Ireland, most multinational companies had, in fact, no union representation and the labour federations were mostly active in the public sector.

NMMU Business School associate professor Paul Poisat said the situation was in stark contrast to the political and economic labour relations in South Africa, where unions had a strong political and social influence, even on legislation.

Gunnigle, who was cautious about comparing South Africa with Ireland, responded to a question from the audience on whether South Africa could save itself from a recession if it limited the power of unions.

Gunnigle said the power of the unions was certainly diluted in modern-day Ireland and it expected to have a 2% to 3% economic growth rate by next year.

Economic growth in South Africa is weak, with the latest growth statistic released by Statistics SA yesterday measuring 0.6%.

Gunnigle said as a highly foreign direct investment- dependent country, Ireland had suffered the worst from all the developed countries when the global financial crisis hit, "but things have been turning around".

Ireland moved from being the most expensive country to do business with in the Eurozone – with a combined stock of foreign direct investment totalling more than all the Brics countries combined in 2006 – into an economic recession where unemployment shot up from an effective full employment to more than 15% unemployment.

Only 10% of employees in Ireland received increases after the global financial crisis hit, with 70% pay freezes and 20% pay cuts implemented.

"Several changes were also made to employees' pension plans and profit sharing schemes," he said.

"The impact on industrial relations is that there is greater pressure and willingness to accept changes by the workforce and a decline in union power and influence."

Companies, through human resources management, played an important organisational role in responding to the global financial crisis. - Cindy Preller