'Brain drain' takes edge off St Patrick's Day
Updated on 17 March 2010
As the economic crisis in Ireland deepens, business analyst Dr Peter Stafford writes on how unemployment and emigration is starting to bite.
The greatest crisis facing Ireland in this recession is unemployment.
Unemployment is currently 12.6 per cent. The last time it was such a level was January 1995. It took five years of strong economic growth in Ireland before unemployment was effectively eliminated at 4 per cent and there it remained for a glorious period of what we now think of as the Celtic Tiger economy.
Within eighteen months of the global economic crisis hitting Ireland, unemployment is back to 12.6 per cent and shows no sign of falling.
Between 1995 and 2008, Ireland's economy has been the envy of Europe as it expanded every year, drawing citizens from all over the world, including a new generation of economic migrants from the expanded European Union.
There are good reasons why Ireland grew during the last decade - it is a well-educated, entrepreneurial country with some excellent universities, a good tax regime and a great quality of life. Those positive underlying factors remain in place. Ireland also attracted some high profile foreign investment, but these companies are also affected by the international recession.
The country has been transformed as exchequer surpluses allowed vast expenditure on physical and social infrastructure and public buildings.
While the economy looked solid, the problem in retrospect was that while the economy grew, it didn't diversify - the economy became over-reliant on the construction and transaction of property, the profits of which increased prices, undermined competitiveness and eroded other industries.
So when the international credit crunch hit, Ireland's unbalanced economy took a battering. Next year, the construction industry could shrink to one quarter the size it was at its peak, and private sector investor confidence is weak.
The difference between Ireland of St Patrick's Day 1995 and 2010 is staggering. A decade of economic growth means that Ireland is now a much bigger country, and it remains a more prosperous one for all of its difficulties.
Back in 1995, 275,000 people were out of work across the State; now the figure is 435,000, many of whom are young professionals who had anticipated a long career of un-interrupted employment and a steady income, just as people a decade earlier enjoyed. Instead, they face a future involved in standing in queues either for the dole or for a visa to leave the country.
Unemployment is a major problem for all economies but in Ireland the situation is compounded by the fact that many of those employed are well-qualified professionals who commanded good salaries and therefore contributed a large amount of money to the exchequer through income tax.
Ireland's social welfare regime is also generous so as young professionals move from being tax payers to unemployment benefit recipients, the whole national economy takes a double hit. A fairly un-diverse labour market means even the brightest and most qualified are competing for too few jobs.
The government has been very good at trying to broaden taxation and reducing public spending - and indeed has won plaudits from the EU for its actions - but the real issue lies in broadening the whole base of the economy and returning it to competitiveness, so that the small start-ups and indigenous businesses can flourish.
Without the diversity of economic activity enjoyed by other countries, and with an uncompetitive economy, the solutions to the problem of unemployment is going to be hard fought.
The young, newly qualified professionals who should be working on the next period of Irish economic growth, are taking their skills and education to benefit other economies. With unemployment at pre-Celtic Tiger levels, Ireland will need another period of economic transformation to bring them back.
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Twitter @peterstafford
Twitter snapshot
So how will Ireland cope? Will it be a happy Saint Patrick's Day? We asked Twitter to provide a snapshot of feeling, and share their answers below.
AnnieAura writes "Nope, no businesses left in this country", while ConorCulkin points to a graveyard of empty guest houses in western Cork as a result of the property collapse saying "My parents are proprietors of a guest house. The country is full of zombie B&Bs and hotels."
Another, orladeburca, expands on the so-called graduate "brain drain" in her blog, saying that over half of her graduate classmates have already left the country:
"It never dawned on my peers or I that we’d have to leave. Obviously we wanted to travel but the idea of it being a necessity would have seemed ridiculous. Since then, six of my classmates have stayed and eight have left. Not quite a mass exodus but certainly a significant departure"
dermotcasey is more succinct. "SNAFU sums it up".
However it's not all doom and gloom. Quite a few posted messages of hope.
tomosull2000 writes that "charity and community activity seem to have jumped in the last year. Hopefully a good sign of people pulling together... in spite of, rather than because of, political and economic 'leadership'"
Whilst nickers1973 has noted a "Slow steady improvement in the private rented sector."
Whilst finally several have messages of hope for their Irish brethren:
Clonrf: @channel4news some of us are doing fine thank you. Not in negative equity, red or despair. Thanks for asking.
GerryHanratty: @channel4news Re: Ireland, everything's unbelievable over here, back as good as ever. Why? What have you heard?
brianspollen: @channel4news deffo turned a corner but we like to moan so we won't admit it
However the most telling sign possibly comes from Ireland's 'new' national anthem - penned by Divine Comedy front man Neil Hannon and Thomas Walsh - the two part musical due behind The Duckworth Lewis Method.
Their lyrics aptly point out that:
"Ireland, Ireland, once we were poor,
Then we were wealthy; now we are poor again."
But they rally to the flag in the final verse:
"Ireland, Ireland, you are the best
Place to the west of Wales and Scotland.
Sometimes it’s heaven, sometimes it’s hell,
But I'd rather be Irish than anything else."
