The Irish economic future is not as bleak as other economies around the world...
The credit crunch, combined with a global downturn, has put extreme pressure on the Irish public finances, which have not been helped by the worsening situation in the property market. This week, the Government will outline a series of drastic cutbacks in domestic spending aimed at getting our public expenditure profile back into order ahead of any expected bounce-back on the international front. The past 10 years have been so good in Ireland that there is a tendency by some commentators, to view these impending cuts as something akin to, in the Taoiseach Brian Cowen’s own words, Armageddon.
The usual commentators, who have somewhat resented the years of boom, can be expected to rub their hands with glee and pull out the old cliché “we told you so”. That hoary old chestnut – “blew the boom” – is also being retailed, by opposition parties and commentators alike. Of course, this is nonsense. It suggests that the Irish State spent out the good times without a care in the world, neglecting to put aside any money for the rainy day. Nothing could be further from the truth. In fact, significant billions were put aside in the boom years to pay down on our national indebtedness to the point where we have one of the lowest levels in the whole of Europe. We also put huge money from the surpluses generated into our future pension liabilities and serious infrastructure improvements, such as in public roads, were made. All of this was done against a steep increase in the size of the workforce alongside an increasing population, not the least of which came about due to dramatic changes in the Irish demographic picture thanks to large-scale immigration.
Immigration has served Ireland well, not least when it came to expanding services whether this was in the country’s hospitals or the State’s dynamic private sector. It is no exaggeration to state that many of these services could not be maintained without immigrant labour. Recent figures suggest there has been a halving this year of people coming into the country from eastern Europe but the important fact to keep to the forefront is that we are still the subject of inward flows of people and are likely to continue to need people in the years ahead. In fact, even with a fall-off in growth and rising unemployment there will probably arise a situation where we have people leaving as well as coming in. This is because of the economy’s move to higher order, value added services, and the sheer absence of Irish people to fulfil many of these tasks. Some commentators have chosen to focus on the large-scale immigration of recent years as one of the reasons for the defeat of the Lisbon referendum.
However, the published surveys indicate only a figure of between 1 per cent and 10 per cent as being the size of the unease about immigration in the Lisbon ‘no’ vote. While the figure is significant, there is no point going over the top on this issue. Clearly a great number of people on both the ‘yes’ and ‘no’ side of that particular debate value immigration and can see the benefits it has brought to the country. The most recent figures for this year show that 90 per cent of all new jobs went to non-Irish people, while the latest live register figures show a doubling of the number of non-Irish signing on for the dole, but caution needs to be exercised given that the doubling has occurred from a very low base. These figures illustrate one thing very clearly and that is that the immigrants of recent years have not been, to date at least, drawing from our services in any huge way. This also accords with the CSO figures, which show that migrants tend to be in the working age demographic and over-qualified for the work that they do.
The challenge for the country is, against a tightening labour market, to ensure that our own workforce and the immigrants are up-skilled so that they can take on higher order employment as well as be prepared for the inevitable swing round in the international economy. Ireland is a small and very open economy. It is impossible to overcome an international downturn of the kind we are currently experiencing but it does put the emphasis on re-training so that we can make the most of renewed growth when it comes back in two to three years’ time.
