Ireland’s business voice in Europe

Head of Ibec Europe Erik O’Donovan discusses the focus of the Brussels office with Fiona McQuade, including tackling unemployment.

Erik O’Donovan describes his office as the “eyes and ears of Ibec in Europe” representing its 7,500 members. Ibec provides access to MEPs, the Council of Ministers and of course the Irish Permanent Representation in order to shape and influence draft policy and legislation to benefit Irish business.

The European Parliament’s input to the choice of the next European Commission President and to legislation “matters to business.” O’Donovan argues that business acts as “an engine in society”, therefore the Parliament’s understanding and response to business needs is vital to providing growth and jobs.

“The key issue is unemployment across the EU,” O’Donovan remarks. He highlights the need for Irish MEPs to “continue to provide a strong voice for Ireland [by being] involved with economically important committees and secondly working at EU level to promote entrepreneurship.”

Parliament must work with other EU institutions in order to build economic confidence. O’Donovan uses the example of an effective functioning banking union as “important to provide economic stability and certainty to the broader EU.”

The European semester is an “important vehicle for economic governance that Irish business should have a voice in,” O’Donovan remarks. The process provides country-specific economic recommendations.

Research by Business Europe, of which Ibec is the only Irish member, indicates that of these recommendations 84 per cent were deemed important to business. However, only 24 per cent have been implemented so far. He adds: “We have a long way to go in terms of putting in structural reforms which Europe needs to make competitive.”

Sensible tax policies at EU level “would certainly help promote entrepreneurship” and Ibec wants to see the financial transaction tax dropped. O’Donovan warns that the current digital economy tax proposal should not be used to hamper innovation in the digital sector and the use of digital tools across all business.

He backs smarter regulation and supports the work done so far by the Commission such as the Regulatory Fitness and Performance Programme (REFIT) which systematically reviews legislation. There is a need to continue this work and look at areas where laws are duplicated in order to improve efficiency.

Horizon 2020, the main EU research and innovation programme, is worth €79 billion. O’Donovan relates: “Business needs help in uptake of funding and in intellectual property protection [and] will help attract mobile investment and talent in the R&D area.”

To realise its full potential, the single market must be completed in infrastructural areas such as digital, services and energy. Currently, the single market adds 2 per cent Irish GDP per annum.

Implementation of the Services Directive alone could add up to 2.6 per cent GDP across Europe, according to Ibec. In terms of energy in Ireland, the work towards completion of the EU electricity single market is significant. However, O’Donovan says that some choices such as design will have to remain up to member states.

O’Donovan stresses the importance of the completion of the digital economy at European level which, he says, would add 4 per cent to European GDP. This would equal around €1,000 per citizen. A data protection regulatory framework will encourage trust. However cross-border flows should not be restricted and “you must strike a balance between protecting the rights of individuals’ security and innovation of companies.”

“Ireland’s international reputation is right up there again.” O’Donovan states. He notes the European view: “Ireland came out of a bail-out, the first of four euro zone countries to do so. It is testament to the Irish business model and to the hard work and sacrifices of Irish people at home and of Irish people in Brussels.” The Irish are seen as “people you can do business with.”

He reflects on the “lessons learnt” from Ireland’s recovery. The Irish business model is based upon trade and “we have traded our way out of this recession” but there is a need for EU-wide stability: “It is not enough for us to come out of it. Everybody else must come out of it too. It must be put on a sustainable footing; the way we see this happening is trade.”

The Transatlantic Trade and Investment Partnership (TTIP) is “hugely important” as it could generate a potential €119 billion for the European Union. The United States and the EU are worth around half the global GDP. O’Donovan sees the need to “build a bridge between the US and EU to acknowledge and recognise standards and regulation on both sides of the Atlantic.”

Supporters say this could add 2.2 per cent (€275 billion) to EU GDP, which is equivalent to adding another country as big as Denmark or Austria. Critics claim that small businesses and workers’ rights will be disadvantaged.

Balanced regional development remains a key driver of growth and jobs. The European Investment Bank lent €2.7 billion to Ireland between 2008 and 2012 with around half going to strategic energy infrastructure and 17 per cent going to transport.

A skilled, flexible and mobile workforce needs to be created. Between 2008 and 2013, youth unemployment increased from 16 to 24 per cent across the European Union meaning that around 5.7 million young people are now out of work. Ireland’s youth unemployment rate is 24.2 per cent but it stands as high as 60 per cent in Southern Europe.

To tackle this, in an Irish context, O’Donovan believes a focus needs to be put on public employment services, reforming apprenticeships and targeting employment subsidies. Overall Irish unemployment is down from 15 per cent to 12 per cent due to structural reforms, which he emphasises have to continue.

“The European economy is recovering, the recovery is divergent across member states, but it is recovering nonetheless,” O’Donovan observes. “It is important this recovery can be sustained. The EU needs to move from inward crisis management mode to an outward effective entity looking out to trade with the world and within its own borders.”

The EU is seemingly at a crossroads, thus O’Donovan stresses that decisions made at European level “affect business and affect you as a citizen … wherever you are.”