Outgoing chief executive Brian Geoghegan warns we've got to take up the opportunities and head off the threats posed by globalisation, writes Marc Coleman, Economics Editor

A week after the World Trade Organisation talks in Hong Kong put the spotlight on globalisation, the State employment agency FÁS issued a review of trends in the labour market in the last year. A bumper year for jobs growth means that outgoing FÁS chairman Brian Geoghegan will step down from this position on December 31st on a high note.

The life of this particular Brian has spanned the Central Statistics Office, employers' lobby group Ibec and the boards of several companies and State organisations.

Despite the great overall performance of the labour market, globalisation is starting to make itself felt and much of the FÁS review was devoted to addressing this.

"Globalisation is a threat, but it also presents huge opportunities. In the last number of years Ireland was a beneficiary of globalisation via foreign direct investment (FDI). We captured a high proportion of high-quality FDI projects. Now the game is changing with strong competition from China, India and eastern Europe. If we want to take the opportunities that are there we've got to get our act together," he says.

But with manufacturing and foreign direct investment declining, how exactly does Geoghegan think Ireland should react? "We need to be smarter. There are opportunities in manufacturing, probably in different kinds of manufacturing than we've had up to now. If you look at a manufacturing plant now it would be a much leaner entity than it would have been 10 years ago. There are new opportunities in relation to high-tech manufacturing."

But with overall manufacturing employment falling, this leaves a deficit to be filled. Geoghegan sees the services sector as filling that gap.

"A big part of Ireland's success in the last 10 to 15 years has been the development of the services sector. Ireland is now well placed to look outward to take advantage of a growing global services market," he says.

And he is generally upbeat about the economy, and surprised at the negative coverage of it he reads. "When reading coverage, I sometimes wonder if I'm living in the same country." There are still lots of opportunities but upskilling the workforce will be needed to take advantage of them, he says.

Perhaps this is wishful thinking. After all, with construction dominating employment growth, shouldn't we be preparing Leaving Certificate students for jobs as brickies?

"This does bring its own threats. It is mainly cyclical and I think we do need to plan for the day when construction may not represent as big a proportion of the economy as it does at present."

Net immigration will continue for several years, but the rate of immigration can adjust to absorb moderation in construction output. But he sees the construction industry remaining strong for years to come. "We've a long a way to go in this country in terms of the infrastructure requirements. By comparison with other European countries we have significant investment still to be made in roads, transport, waste management and housing. Our population could reach five-and- a-half million in 20 years' time. It doesn't seem to me that a collapse of the construction sector is going to happen."

FÁS would like to see immigrants participate in a wider range of sectors and not just construction, retailing and hotels. But as the Irish Ferries case showed, labour cost competition is causing tension. Wouldn't such an approach worsen this?

No, argues Geoghegan. Irish Ferries was a once-off. "The Irish Ferries case has elements that are not transferable to other parts of the economy. Shipping is a particular example of intense competition internationally, with low-cost airlines. Over time the Irish Ferries story will be set against a bigger picture."

Geoghegan says that as a country that has benefited from our own workers going abroad and from a globalised economy, Ireland has to adjust its vocabulary when referring to immigrant labour

"We're going to see increased competition for jobs in various sectors between Irish workers and immigrants. I don't like using the words 'bring in' when we talk about migrants. We are after all part of the European Union and we have free movement of labour, and we have a lot to gain from that in terms of skills."

But why should low-skilled workers face competition from abroad when public servants, many professions and - effectively - many managers are insulated from it? "I think we have to keep it in perspective. We're not going to have mass immigration. We have an appropriate level that has added to our economic, social and cultural life and this is likely to continue, perhaps at a lower level," he says.

He makes reference to nurses as an example of how immigrants are competing in a broader range of sectors, such as medicine. But would he favour hospital consultants facing such competition? "There is certainly a need for more competition and better regulation in the professions broadly speaking," he says.

The FÁS review came up with several policy ideas for the labour market, as well as analysing it. One such ideas was a wage insurance scheme. "The idea came from FÁS research linking problems in certain sectors with globalisation. There is the idea that you can cushion the transition of these workers." But Geoghegan shows some reservations about the idea. "There needs to be a fair degree of study on this. It's been tried in other countries and could work here. Interference with markets might cause a problem, but it's worth examining."

A more contentious idea relates to reforming of Disability Allowance and the One Parent Family Allowance, which might be lowering the incentive to work, according to Geoghegan.

"It's true to say that there is underachievement of potential where people have the potential to contribute. It's a difficult area. FÁS, Ictu and Ibec are looking at the issue of incentivising people in receipt of such payments to enter the workplace. There's no easy solution - we have to look at innovative ways of doing this."

On top of policy advice, Geoghegan has advice for the recruitment industry, which he agrees plays a crucial role in keeping unemployment low

"Keeping ahead of existing trends and spotting future trends will be critical to helping workers adapt to new positions," he says.

His own position is about to change. After decades of work in public policy, Geoghegan is one person who can say that he has done the State some service. He is now free to do himself some service and there will be no shortage of companies lining up for his expertise. "I don't intend to rest on my laurels", he says.