27th January 2015
Irish exporters association
Presentation to the Joint Committee on Jobs, Enterprise and Innovation
IRISH EXPORTERS ASSOCIATION
The Irish Exporters Association is the independent representative body for all Irish exporters. It offers a range of practical help and support to Irish exporters under three main pillars:
The IEA represents the whole spectrum of companies within the export industry including SME’s who are beginning to think about exporting for the first time right through to global multinational companies who are already extensively exporting from Ireland.
ENTREPRENEURSHIP IN IRELAND
There is no sustainable employment without business and there is no business without the entrepreneur. It is the contention of the Irish Exporters Association that if we want to build a stronger indigenous economy, we need to foster greater entrepreneurship in Ireland.
To encourage an entrepreneurial culture, we must acknowledge and reward the risk-takers who have the ability and courage to step away from secure employment to become Ireland’s next entrepreneurs and future employers. These are individuals who are willing to invest their experience and energy in new ventures that offer many possibilities including the very real possibility of failure. They are men and women who offer to risk their savings and, very often, their mental and physical wellbeing to venture outside their comfort zones in the hope of achieving something exceptional.
Individual success inevitably leads to wider benefits for their community and for the country. It generates employment and higher taxes for the exchequer and delivers to those who might otherwise be unemployed, a strong message that society needs and values them too. The benefits of entrepreneurship are far-reaching.
Most entrepreneurs are not solely motivated by money. If they were, we would have to characterise many Irish entrepreneurs as unsuccessful compared to their peers in the established corporate world. Among other things, entrepreneurs are motivated by the challenge, the desire to make a difference, to reach their full potential, to provide employment, to serve a happy customer and to contribute to their community (ref. GEM 2013).
However, entrepreneurs do have families and responsibilities and, like the rest of society, must also eat, pay medical bills, house and educate their children and plan for their retirement. Starting a business carries significant risk to the individual. If government shares our belief in the importance and value of entrepreneurs and is genuine when it says it wishes to foster entrepreneurship, why then does it support policies that fail to acknowledge those risks? Current policies send a very clear message to would-be entrepreneurs and it is not one of encouragement, nor of support or appreciation.
In addition to all the inherent challenges to be faced in starting a business, currently:
Entrepreneurs continue to be refused a PAYE tax credit;
If they succeed their marginal tax rate is 3% higher than the rest of society and/or they must pay capital gains tax of 33% when they try to realise gains;
Our tax legislation encourages families to sell out rather than keeping building on through the generations;
If entrepreneurs’ businesses stumble, they carry the full cost of redundancies despite paying hefty employer PRSI contributions, and
If they fail, they are provided with no safety net from Social Welfare.
If legislators really want to deliver sustained economic growth, higher exports and lower unemployment, they need to show, not just tell, our entrepreneurs, risk takers, business owners and employers that their efforts are truly appreciated and valued.
It is the view of the Irish Exporters Association that the current penalties suffered for being an entrepreneur and an employer in Ireland are not only unjust but dangerously undermine one of the very important foundations of wider economic development.
We are not short of data and reports about Entrepreneurship and in particular female participation. Reports such as The Gem (Global Entrepreneur Monitor) Annual Report 2013 for Ireland by Paula Fitzsimons and Colm O’Gorman have given us great insights.
Without going into the different stages of entrepreneurial activity, the main fact is that male/female participation ratios are 1.4 males for every 1 female. This is up significantly on 2010 when the figure was 2.5 males for every 1 female. Within that figure in 2013 we saw both male and female New Business Owners increase significantly over 2010 figures.
For 2013 the number of new businesses created each month by women was 1,100 while the equivalent figure for men was 1,500. This means that if we could increase female participation in entrepreneurship to the level of male participation, we could create another 5,000 businesses which in turn would lead to further job creation.
In the latest Action Plan for Jobs, the Government has particularly focussed on entrepreneurship and the Government’s ecosystem. The Government has created 31 Local Enterprise Offices [LEOs] as one stop shops providing financial and other supports. LEOs provide funding for businesses that demonstrate they can grow into internationally traded service providers or succeed as import replacement businesses.
Nicola Byrne is a Council Member of the Irish Exporters Association and also a member of the evaluation committee of her local LEO. The evidence from the support sought and given over the past year reveals:
In Fingal, 60% of supports went to male-led businesses, 30% to female-led and 10% to joint male/female-led businesses.
More interesting is that when it came to non-financial supports offered by the LEOs such as Mentoring Assignments the percentages moved to 39% male-led, 44% female-led and 17% joint male/female-led.
For Workshops provided for Business Owner/Managers the statistics also reveal higher female participation at 55% versus 45% for males.
Even the participants enrolling for events during Enterprise Week split 51% female Vs 49% male.
Without going into a deeper analysis of the figures, one of the most obvious reasons for why 60% of the businesses are male-led would seem to be that women are more likely to set up lifestyle businesses which at this present time are not supported by the LEOs.
It would be worth considering two proposals in this regard:
The extension of the LEOs’ remit into locally trading businesses, particularly female-led;
The determination of why more females rather than males participate in other supports offered by LEO’s - to see if there is a skills shortage amongst females, if there is an issue with women multitasking multiple job roles in their business, or whether females are prepared to take time out to advance their skills, etc.
Main Challenges Facing Female Entrepreneurs Vs Male
So what are the basic challenges that female’s face which are different to those faced by men?
The reality on the ground is that women bear the main responsibility for rearing children and this impacts in a large way from the time of being pregnant right through to child care. While the Government has been progressive in terms of maternity benefits and preschool support, it has not yet addressed childcare support or increased tax allowances for female entrepreneurs.
If we want to reap the benefits of job creation from increasing female entrepreneurship, then creating a child care tax relief which recognised that entrepreneurs require a different level of support to an equivalent employee is essential. Supporting the female start up requires additional child care provision and supports.
Unlike other forms of employment, entrepreneurship requires a completely different level of time, engagement and effort. For that reason, the Irish Exporters Association believes that providing a specific female entrepreneur focussed child care incentive package, which would allow such women to focus on internationally traded businesses as opposed to lifestyle businesses, would make a real difference.
WOMEN IN TECHNOLOGY
Ireland has initiatives such as the NDRC funding which provides start up incentives for Female Founders. This is just one of many initiatives the NDRC created. Female Founders is particularly relevant to those who have a deep knowledge of their relevant industry sector. It is especially suited to those who have potentially disruptive ideas for new technology which they are considering bringing to market.
The NDRC recognised that different ideas sometimes require different skill sets to bring to fruition. These skills are not necessarily provided by the lead entrepreneur and the NDRC can help build a team with the correct skill set to ensure the idea becomes a business.
When “start-ups” are mentioned in the media or by Government, more often than not it is tech start-ups that are being referred to. This is where a lot of the media attention and Government funding is invested as can be seen by the range of tech start-up incubators and supports in existence.
Tech start-ups are important and there is no doubt they represent a major part of what is required to build jobs for the future. However, they only represent one aspect of entrepreneurship and business start-ups and it would be a mistake not to also recognise the importance of other business start-ups that, while not being in the tech sector, utilise a tech substructure. The reality of the 21st Century is that all business is tech business. One new support for this sector is the Ignite Academy for Business Start-Ups in Dublin.
Joanne Hession, founder of The Ignite Academy for Business Start-Ups (and author of #1 bestselling book for entrepreneurs “Don’t Get A Job Build A Business” published by Mercier Press) currently has over 200 start-ups on educational programmes in the Ignite Academy (approximately 35% of which are female-led) .
The Ignite Academy note that “all of our entrepreneurs in the Ignite Academy require skills to start, run and manage their business. The ability to utilise technology to support their business is one of the most important of these skills. We need to start looking at technology more broadly, so that it is not just seen as an industry sector, but rather is seen as a core element of all new business start-ups and a key entrepreneurship skill.”
70% of the Ignite Academy’s graduates (many previously long-term unemployed) have successfully established their own businesses, with funding support for the Ignite programme coming from the Government’s Momentum initiative. “They would not have been able to achieve this without an appreciation of how to make technology work for them. This is truly meaningful ground-level tech support for women in start-up businesses” says Hession.
As noted above, it would be a mistake to think of the tech sector only in terms of technology and start up. We are too keen to classify tech as somebody who can code.
Technology is critically dependent on support services such as sales, finance and HR in which women are well represented. Therefore tech courses/training programmes need specialist tech sales, tech finance, tech HR courses; this would immediately and usefully increase female participation in the sector.
We need to recognise that the term ‘technology environment’ has become too limited. To state there is an issue with attracting females into a very narrow definition of the term is both harmful and untrue. There is a huge potential to attract women to enter in technology start-ups but they don’t have to be programmers to do so.
The NDRC initiatives reflect this and allow women with technological backgrounds to bring their ideas to fruition. We need stronger role models in this area to promote a wider understanding of what the technology sector is as opposed to male programmers thinking they have a ownership of all the good ide
In summary, we ask for due consideration to be given in relation to tax relief on child care for female entrepreneurs, for an extension of the LEO’s remit into locally trading businesses and for a study to determine why more females than males participate in other supports offered by LEO’s.
We would ask that consideration be given to entrepreneurs who continue to be refused a PAYE tax credit. We must change our tax legislation that encourages families to sell out rather than keeping building through the generations. We should also consider offering entrepreneurs some respite in terms of funding the full cost of redundancies which they currently must cover the full cost of.
We need to decide if we want Ireland to be a global leader in terms of Entrepreneurship. We must be open minded in how employment for the future will be created and by whom. We know that 50% of the jobs that will exist in 2030 don’t exist yet. If we are to be at the forefront of Entrepreneurship and innovation then we must focus on policies that create an environment where this is possible, where risk-takers are rewarded and not penalised, where they are acknowledged and appreciated.