Foreign owned firms now employ over 45% of total labour force in manufacturing. The native sector such as clothing, textiles and food processing employs only a small part of labour force. Orientation on the international trade resulted in an uncompetitive native industries, and during the 1980s the total employment in manufacturing declined. But thanks to FDI the Irish manufacturing employment has recovered in 1990s, there was increase in the demand for skilled labour, and FDI imported into Ireland new management skills and technologies which were not present in national economy. ad 4) Investment aid from the European Union, and
Ireland as a relatively underdeveloped region of the EU has benefited from the transfer of funds from EU. This financial aid represents a substantial contribution to Ireland’s income. The transfers from the structural funds significantly contributed to the Irish economic growth. ad 5) Domestic policy
Instruments of these most important elements of domestic policy: industrial policy, fiscal policy, and institutional policy, contributed substantially to maintenance of stable macroeconomic environment with low inflation, low public deficits and surplus in the Balance of Payments. FDI is the major force in the Irish economy, accounting for about 45% of manufacturing employment. Ireland have been attempting to attract investment since the late 1950s, it offered various capital grants and tax-exemptions. The success of this strategy has resulted in significant economic restructuring, which is mainly oriented to export markets and in production of electronics and pharmaceuticals.
In 1980s Irish public finances went out of control. There were a high budget deficits annually. The public debt represented a heavy burden on taxation, which in Ireland, is levied heavily on personal incomes. The key objective in 1980s and 1990s was to gain control over the public finances. Restoration of the public finances and the reduction in public debt meant that tax cuts could be offered in exchange for wage moderation - the central bargain in the national social partnership. Fiscal imbalance, huge unemployment and soaring emigration shifted to changes in behaviour and institutions. The shift was also clear in the willingness of the trade union movement.