Migrants add flair to Irish economy
By John Murray Brown
Published: October 20 2005 03:00 | Last updated: October 20 2005 03:00
It is no coincidence thatstaff at the Bank of Irelandon Dublin's O'Connell Street speak Polish, Russian and Mandarin Chinese. Seamus Maher, the branch manager, estimates migrant workers account for more than 70 per cent of the accounts opened in the last 12 months.
"As an immigrant the first thing you want is a job. If you have a job, you have to have a bank account just to be able to get paid," he says.
Not all immigrants are poor either. Davy stockbrokers are currently looking for a Chinese speaker to sell equities to local Chinese clients.
These are just two illustrations of the growing importance of foreigners to the Irish economy. Commentators sometimes assume Ireland's recent economic performance is some form of productivity miracle, or is the result of large transfers of European Union aid.
Eunan King, senior economist at NCB stockbrokers, says the reality is more simple. Where the baby boom, greater female participation and returning Irish expatriates helped fuel the labour supply in the late 1990s, today's growth is being driven in large part by an inflow of foreign workers.
The government's Central Statistics Office calculates gross domestic product grew by 4.1 per cent in the year to July.
Mr King believes this understates the real growth rate and points to the 5.1 per cent increase in employment - the highest since 1999. Productivity is holding up at about 2 per cent.
As for EU aid, from next year Ireland will be a net contributor to the EU budget. Ireland arguably used its EU aid better than other countries. Spain and Portugal, for example, built roads and other infrastructure. Ireland invested in human capital, building tertiary colleges. These are now providing the technical skills that Ireland needs as it aspires to become a knowledge-based economy.
As the Irish workforce becomes more educated, immigrants are fulfilling the growing demand for services. There are currently 870,000 jobs in private sector services. This dwarfs the 100,000 in the foreign-owned manufacturing sector.
Ireland, along with the UK and Sweden, opened its labour markets to the 10 new EU accession states when they joined in May 2004.
This resulted in the biggest ever annual net inflow, of 53,500 people in the year to April 2005 - 70,000 arrivals and 16,500 leaving the country. The 10 new members of the EU accounted for 26,000 arrivals. In the same period, the number in work increased by 94,000 to 1.9m.
Indeed since accession, 139,000 people from the 10 new member states have registered to work in Ireland. The figure is currently running at 12,000 a month, with Poles and Lithuanians making up by far the largest number.
While business has been happy to tap this fresh supply of cheap labour, trade unions believe it is a mixed blessing. "Economic growth for its own sake is of limited value," says David Begg, secretary general of the Irish Congress of Trade Unions.
"If it is supported by a large intake of immigrants, it will increase GNP but not necessarily GNP per head, in other words living standards. The reason is that everyone who comes to work in Ireland needs a home, healthcare, education. Providing for these needs costs money. With the economy at virtually full employment a more balanced approach is called for."
He says 42 per cent of the jobs created in the economy in the last year have been in construction. He believes it is a fair assumption that the vast bulk of those jobs are being taken by immigrants, while the houses built are either being bought or rented by immigrants.
If the economy were to take a downturn, Mr Begg says, this has "all the attributes of a potential property bubble".
Perhaps the 8 'Old EU' countries who went for the last minute opt out, will realise what their mistake has cost them.
Posted by: Joel | October 21, 2005 at 02:19 PM