Most of us don't go around working out what our personal productivity is. To measure the efficiency of the lump of so-called "human capital" that is me would be to allow the economist inside to run wild. But, of course, there is an economist of some sort at work in us all.

Given the choice, wouldn't you rather work for a company where your productivity and wages were higher than one where they were lower? And would you feel more or less secure in your employment or, better still, employability, if you were skilled in a function used in an internationally-competitive, high-productivity business? The answer seems obvious. This outbreak of philosophising has been provoked by none other than the battling outsiders at ISME, an organisation for Irish Small and Medium Enterprises. This is the organisation that is not the Small Firms Association, the IBEC member. Over the last few months, and I wouldn't be surprised if for some time before, ISME has been arguing that multinational firms are making life increasingly difficult for Irish owner-managed businesses. In May, a press release said the "over-reliance on the multinational sector is being reinforced to the detriment of traditional industries".

In June, ISME made a submission to a visiting OECD delegation, saying that "many SMEs have been encountering wage demands of 10 per cent and more for the past three years as they competed with multinationals or the State for scarce labour, or the poaching of their staff by larger cash rich companies".

Then in August, ISME commented on the IDA Ireland annual report, concluding that "multinationals threaten the existence of indigenous industry". In Dublin, ISME said, "there is evidence that a number of multinationals have been poaching key personnel and ready-made trained operatives from indigenous companies by offering packages greatly in excess of those afforded by local enterprise". "Ready-made trained operatives" should be kept for the locals.

I am interested today in what this all means for the supplier of labour, you and me, rather than the buyer, the ISME member.

But as a brief aside, ISME has quite a few other points to make, such as the need to orient IDA incentives away from multinationals in the Dublin region (the only difference with actual policy is the speed at which this should happen). It also makes some valid criticism of the absence of the "dynamism" of the owner-managed, entrepreneurial sector from the social partnership process, offering as the remedy, of course, that ISME should be included.

Unfortunately, its points are often made hamfistedly, and badly edited, with the inevitable loss of credibility. But that can be fixed.

The main point is that, if the ISME view were to be taken on board fully and multinational foreign investment downplayed in the Republic, where would that leave you and I, workers in the world economy?

All the indicators are that productivity is greatest in the multinational manufacturing sector and the internationally traded services sector, such as software and financial services. The argument against over-reliance on multinationals is that they are, in ISME's words, "almost by definition" footloose industries, liable to move easily from one location to another.

That's not the whole story, by any means. But if it is true that people are being attracted away from domestic firms to work for multinationals, that represents people voting with their feet. Perhaps they are blind to what others might call the risks of working for a multinational, but you could also say they are very savvy.

Their inner economist is telling each of them that, in an internationally competitive market, the risks of working for a company that does not achieve high productivity is even greater.

ISME asks where would the indigenous sector be if multinationals left, having bid up labour costs that local firms couldn't afford? Well, maybe wages might just fall. But, for the worker, what's the point of hanging in at lower wages and lower productivity with a local firm, if economic conditions deteriorate to a point where the uncompetitiveness of that firm is cruelly exposed? And what if no big downturn comes?

These issues were signalled by the National Economic and Social Council last year in Opportunities, Challenges and Capacities for Choice. It said: "The tighter labour market will reinforce pressure on vulnerable sectors that do not produce sufficiently high value-added per worker to support higher employee remuneration." ISME's complaint now reflects that pressure.

The answer is to assist local firms to increase their productivity, but without harming the employment options for you and I, and that has been the thrust of enterprise policy since last year. A change from facilitating the business environment for foreign investment is not needed, whatever ISME's discomfort at the rising wage levels that many thousands of rational, and deserving, workers have enjoyed.

Oliver O'Connor is contributing editor at Finance and Finance Dublin.

e-mail: ooconnor@indigo.ie