A Changing Ireland

A continuing population surge, dramatic demographic changes and a bouyant economy for the early decades of the 21st Century. A Report focusing on the south by NCB Stockbrokers includes these forecasts. Are they good indicators for where the whole island may be if peace is embedded in the north in the time ahead?

  • Pete Baker

    There are other economic projections, apart from the NCB Stockbrokers report, that carry equal if not more weight, notably the OECD Economic Survey of Ireland

  • Brian Boru

    I personally feel that whether the report is true or not, that what is says about immigration may actually be an underestimate of immigration coming in. No-one is sure how many there are here. Officially, they are 9% of the workforce and 10% of the population. But this is very uncertain. We know that since EU Enlargement, around 200,000 PPS no.s were issued (needed to work, claim social welfare). But this doesn’t tell us how many dependents they brought in with them. Furthermore, it doesn’t tell us how many are still here. Garrett Fitzgerald has said in the Irish Times that with 65,000 Eastern EU citizens working here (estimates by AIB report based largely on NQHS) that subtracting that from the PPS no.s, then 100,000 must have went home. Call me a cynic but I find that hard to believe, given how dreadful economic conditions are in Eastern Europe compared to Ireland. In Latvia, the average wage is around $3359 per annum. Its around 10 times that in the Republic. So its hard to believe they would want to go home. But maybe I am wrong. I suppose unlike Irish emigration to the US there is the language barrier, but then again, English is taught in primary-schools as a foreign language in Eastern Europe – I hope been told it is in Poland anyhow. After that, German is the next widely-known language, and Germany and Austria have closed their doors until 2009-11. I think we may well see a considerable fall in migration from Eastern Europe when these countries open their doors. I suppose you can understand German concerns about competition from cheap labour considering their 12% unemployment. But Austria with 5%?

    Of course, substantial immigration would probably still continue. The government are hell-bent on bringing in endless immigration and I fear that the Opposition will be even more liberal. I don’t believe that Pat Rabbitte was speaking for Labour as a whole when he made his very welcome comments on the need for immigration controls. For this reason the consideration I had given to voting Labour is gone. Ivana Bacik, Joe Costello and Michael D were not exactly glowing in their praise of him after those remarks. In fact Michael D and Bacik openly criticised them. I think that for those of us with immigration concerns to vote Labour would amount to voting for a trojan horse from which the liberals would jump out to open the floodgates even further. The current crowd I do not trust either, but at least Bertie is saying restrictions on Romania and Bulgaria will probably be imposed when they join, and that Turkish entry would cause problems, and that immigration at current levels for another 20 years would cause problems (in the Sunday Business Post). I am inclined to vote Independent if I can find an immigration-sceptic candidate who would hopefully prop up FF-PD and extract concessions from them in this area. I see them as the lesser of the evils compared to the Rainbow.

    Now on the economic issue specifically, I would say that the politicians could be creating an overdependence on the construction industry that could be disastrous in the long term. Immigrants need somewhere to live, and their coming in helps fuel a seemingly endless construction boom. Demand is still higher than supply, so prices keep rising. They are expected to rise 7% this year alone. On Joe Duffy today they were ringing in complaining about how Irish people cannot afford a house. There is a real danger that the policy of bringing in an endless supply of immigrants will ultimately lead to house prices finally growing to unsustainable levels, causing a crash in housing demand, and the loss of some of the 400,000 construction industry jobs (25% of the total). This is scary, and the politicians are showing all their usual short-termism. They seem to be almost waiting for problems to happen rather than pre-planning for the eventuality now. I would recommend to the government that it take measures to moderate the flow of immigrants, in order to reduce demand gradually, so as to achieve a slower rate of house growth. What is going on now will ultimately only benefit the property developers with a cosy relationship in many people’s eyes with FF – especially if the crash comes. We can avert the crash by reducing the flow of immigrants. What profits us if we achieve 6% growth on the back of policies that could ultimately lead us to recession? Ultimately 3-4% growth a year would be more sustainable and ultimately leave us better off than a reckless headlong rush into boom-bust.

    Friends First also released a report today warning of our overdependence on the construction industry. The govt should listen. But I won’t hold my breathe.

  • Crataegus

    Brian

    Go to Ryanair’s web site and see just how many flights there are from Dublin to central Europe; Suggests heavy demand.

    I would welcome more immigration up in these parts. Generally good workers with a positive attitude and a bit of get up and go. But we have been over this before.

  • Mike H

    The amount of flights ex Dublin to Eastern Europe reflects the increasing amount of business traffic. Plus of course, while recent immigrants may not want to return just yet they will want to visit home, especially if you can get cheap flights. I’m travelling from Dublin to Riga in 2 weeks for €125 and could have got it for €100. That’s dirt cheap for an almost 3-hour flight…

    Will be interesting to see what happens when Germany and Austria open their borders, given the famed irish cost of living etc.

  • DK

    The report mentions a doubling in the number of cars. Anyone living in Dublin – take note!!!

    Without a radical transport strategy for the capital I cannot see this as anything less than a disaster waiting to happen – as if it isn’t bad enough already.

  • “Call me a cynic but I find that hard to believe, given how dreadful economic conditions are in Eastern Europe compared to Ireland. In Latvia, the average wage is around $3359 per annum. Its around 10 times that in the Republic. So its hard to believe they would want to go home. But maybe I am wrong.”

    Brian Boru

    I think maybe you’re wrong!
    “Dreadful economic conditions”?-the accession countries particularly those from Central Europe and the Baltics have on average performed much better(eg GDP growth) than the Euro area as a whole over the last five years.

    “In Latvia, the average wage is around $3359 per annum. Its around 10 times that in the Republic”

    The cost of living is also rather more expensive in the ROI than Latvia. Are many of the new immigrants buying property in ROI, for example? What about the possibility that the new migrants are working in ROI to accummulate enough dosh to buy their own house or flat back home?

    “I think we may well see a considerable fall in migration from Eastern Europe when these countries( Germany and Austria) open their doors.”

    I doubt it. Anyone from Poland,Slovakia etc who wants to work in Germany can already do so. Guess which country has the most Eastern Europeans workers? Yep, Germany but the only problem is that the vast majority of them are working illegally and thus contributing nothing to their host economy. There will be a fall in migration to the UK and ROI, when potential migrants see that economically it’s worth their while to stay at home. And given that very high economic growth I spoke about earlier we’re probably looking in years rather than decades for that to happen.

  • Stephen Copeland

    Paul,

    You’re right about some things, and wrong about others.

    The cost of living is also rather more expensive in the ROI than Latvia. Are many of the new immigrants buying property in ROI, for example?

    Very few. But I am hearing of a lot of marriages, even in rural areas, between Irish people and Poles and Lithuanians. These people are then building or buying, and will stay.

    What about the possibility that the new migrants are working in ROI to accummulate enough dosh to buy their own house or flat back home?

    This is exactly what most of them are doing. As many of us did in our day, in England, Germany, the US, etc …

    [illegals in Germany] the only problem is that the vast majority of them are working illegally and thus contributing nothing to their host economy.

    This is rubbish. Legal or illegal, you are contributing. As you say yourself, they are working, therefore producing, and contributing to GDP. They are also consuming in Germany, and thereby contributing to demand in Germany. The only thing they are not doing is paying direct taxes – but that is not the only way to ‘contribute’.

  • slug

    “As you say yourself, they are working, therefore producing, and contributing to GDP.”

    Contribution might be defined as difference between amount produced and amount consumed (both public and private goods). A micro-based understanding of economics would not commonly define consumption as a “contribution” except in the broadest of senses.

    In an economy with a substantial government sector, it is quite possible for a person, if paid an amount equal to his “marginal product of labour”, to consume an amount greater than they produce, because he does not pay income tax or national insurance, but does consume government-subsidised public and private goods.

  • foreign correspondent

    re immigration to Ireland:

    Bring ’em all in,
    Bring ’em all in, Bring ’em all in,
    Bring ’em all in, Bring ’em all into my heart.
    Bring the unforgiven,
    Bring the unredeemed Bring the lost,
    the nameless,
    Let ’em all be seen

    (Mike Scott)

  • Stephen Copeland

    slug,

    … a person, if paid an amount equal to his “marginal product of labour”

    It would be a strange employer who would pay any employee, let alone an illegal, a wage equal to his production! Clearly every working illegal is producing more than he is consuming, or he’d be out of a job.

    As for the consumption of public goods, I doubt if most illegals are big consumers. They are not entitled to most forms of welfare, and like the Irish illegals in the US they probably head straight home if they get sick.

    The US is the world leader in the study of the impact of illegals on the economy, and I think they consider it highly positive (after all, who else would do the shit work?).

  • slug

    “It would be a strange employer who would pay any employee, let alone an illegal, a wage equal to his production!”

    It would be a profit maximizing one, since if the last unit of illegal labour employed is paid less than his marginal product of that labour, the employer can increase profit by employing another unit until such point as the marginal product of labour equals the marginal cost of labour (the wage).

  • Stephen Copeland

    slug,

    We’re talking at cross purposes. I think we agree (though your language is one that I thought I had left behind when I graduated!). If the employee is paid a wage equal to his marginal cost of labour, and that is equal to his marginal product of labour, then he can only consume (i.e. by spending his wage) the same amount as his marginal product. In other words, he can never consume more than he produces, and is therefore a net contributor to the economy. All of his production up to the marginal level is profitable for his employer, and thus the economy.

  • slug

    “If the employee is paid a wage equal to his marginal cost of labour, and that is equal to his marginal product of labour, then he can only consume (i.e. by spending his wage) the same amount as his marginal product. In other words, he can never consume more than he produces, and is therefore a net contributor to the economy.”

    If the consumption is subsidised or unpriced by the government sector, e.g. the marginal cost of a rivalrous but nonexcludable good such as using the road or the refuse collection services, then there is a strong chance of the marginal cost of his consumption exceeding the price paid.

  • Stephen Copeland

    slug,

    Yes, of course the illegals will use some public goods (road, rail, public lighting, etc), but the marginal cost of such usage is very close to zero. In any case, in Germany (the case in point) a lot of public goods are charged for, including, I think, refuse collection. The big costs in public provision are precisely those than most illegals cannot use – schools, universities, hospitals, social welfare, and so on.

  • slug

    “Yes, of course the illegals will use some public goods (road, rail, public lighting, etc), but the marginal cost of such usage is very close to zero.”

    Obviously if it is a true public good, i.e. non-rival in consumption, then the marginal cost of another user is zero, the classic example being a lighthouse or defence.

    However there are numerous goods that are rival in consumption like water, sewerage, refuse collection, road, rail. Then there is a non-zero marginal cost including nonpecuniary marginal costs such as congestion costs, some of these are considered substantial (and the long run marginal cost is very high when the service is capacity constrained). As you say it depends on the extent to which there are public services that are rival and nonexcludable and that are unpriced or priced below true marginal cost, all of which is an empirical question that varies somewhat with the set-up in the economy in hand.

  • Dutch

    My wife is Polish so I know many people from there including many people who live in Holland, Ireland and the UK.
    The only Polish likely to buy a house in Ireland are those who are married to Irish people. You can buy an apartment in the best block in Zielona Gora for 25,000 GBP so I don’t think that anybody in their right mind would waste their money on a place anywhere in Ireland.
    The Polish dream is generally to save enough to go back home. Like the Irish will do and others won’t. Irish people get ‘stuck’ in the UK or the USA because the cultures are similiar and the language is the same. With Poles it is more likely that money lust, penury or love will prove sticking factors. Not one of my wife’s friends in the UK or Ireland has any plans to stay as of now but they are all in their 20s.
    Actually I am stuck myself in Holland so I guess that the same thing will happen to some of the Poles. You have a house, a good job, your kids are at school. The idea of change is draining so you just stay where you are.
    In general I think that that NCB report will prove way off the mark. Ireland’s economy is one big bubble based on property that is sure to crash.

  • “”[illegals in Germany] the only problem is that the vast majority of them are working illegally and thus contributing nothing to their host economy.”

    “This is rubbish. Legal or illegal, you are contributing””

    Stephen,
    You’re quite right of course, I should have specified contributing nothing in terms of taxes and social security payments.

    This is where the UK, ROI and the two other countries allowing legal migration have been big winners. And I don’t really care if my future pension is being funded by the present contributions of Latvians, Poles or even Irish paying into the UK social security system!

  • Brian Boru

    “The cost of living is also rather more expensive in the ROI than Latvia. Are many of the new immigrants buying property in ROI, for example? What about the possibility that the new migrants are working in ROI to accummulate enough dosh to buy their own house or flat back home? ”

    I think a lot of cheap labour immigrants are being housed at the employer’s expense though, so I don’t know whether I would take property as an indicator. Our minimum wage legislation allows employers to make deductions from the minimum-wage for accommodation costs.