Not-so-smart economy


The symbolic spectre of net emigration has returned with potentially dire consequences for the economic future of the country, writes Shane Murphy

The eighties are back. Dodgy hair, dubious fashion, corrupt governments, mass unemployment, and – perhaps most worryingly for the UCD student – emigration have all returned in recent times. The dreaded e-word, scourge of so many generations of Irish people in the past, has raised its head once more, and the prospect of a ‘brain drain’ reminiscent of the eighties is taking shape with ominous signs for our economic future. Taoiseach Brian Cowen’s much vaunted ‘smart economy’ is fragmenting in the face of government intransigence.

fibre opticsJust over two weeks ago, the Central Statistics Office (CSO) published what many commentators had seen coming: net emigration had outpaced net immigration for the first time in nearly 15 years. According to Fine Gael’s Labour Spokesman, Damien English, “for the first time in a generation Ireland is again a net exporter of people, as a combination of rising unemployment and falling job levels drive people abroad.”

Analysing the CSO figures reveals that a total of 65,100 people left the state in the year up to April, whilst only 57,300 people entered Ireland. The emigration figure is up from 45,300 year-on-year, whilst the immigration figure plummeted from 83,800 to 57,300 in the same period – highlighting the first net emigration since 1995.

Many commentators attribute much of this emigration to the repatriation of the ‘Polish Plumber’ and his European compatriots, who helped swell the population during the boom. However, there is also a worrying Irish component to the migration: of the 65,100 who emigrated, some 30,400 were from new EU member states, while a staggering 18,400 Irish people choose emigration over economic capitulation.

Whilst this figure might not at first sound alarming, it is something that will invariably worsen as Ireland becomes further entrenched in an economic abyss. Financial experts have voiced their concern that emigration figures will almost certainly worsen due to additional economic contraction. The fact that the existing figures only go as far as April suggests that the next data sets from the CSO will be even worse. Rossa White, economist at Davy Stockbrokers, suggested “that these figures to April do not capture what seems to be faster emigration in recent months.”

The collapse of the construction industry is the key component in the rise of the emigration figures. A quarter of all jobs lost were in construction, compared with eight per cent in the economy as a whole. This would certainly explain the exit of a large number of migrant workers. The fact that the downturn in construction is now being matched by other sectors, where the prevalence of foreign workers is not as high, suggests the number of Irish emigrants will rise in tandem.

Dr Alan Barrett of the Economic and Social Research Institute issued a somewhat drastic prognosis for the emigration figures in the second half of the year, stating that “what we are seeing might be the tip of the iceberg in terms of the outflows.”

The government has so far had a laissez-faire attitude towards the problem. Many proposals in government-commissioned reports accentuate the problem of emigration among young people. According to the National Youth Council of Ireland (NYCI), government actions to tackle the recession will force more young people to emigrate. NYCI director Mary Cunningham suggests that the government is doing little to stem the flow of young people.

The NYCI has pointed out a number of proposals in these government-commissioned reports such as the McCarthy Report that serve only to augment the crisis. Most significant are the halving of jobseekers allowance for those aged 18-19, a cut of jobseekers allowance for those aged 20-24 by 25 per cent, proposals to cut the minimum wage, as well as the shelved possibility of third-level fees. If the government acts on these recommendations it will simply worsen the situation.

The much-touted ‘smart economy’, ubiquitously cited by a host of government figures for the last decade, will almost certainly lay in ruin unless drastic action is taken to support young graduates. The reintroduction of third-level fees, while commendably stalled, would do little to contribute to our economic health in the long term. Instead, myopia like this will only harm our longer-term economic goals by preventing access to education for many young people.

The recent spectacle of hundreds, among them quite a significant number of professionals, eagerly queuing for part time jobs in Marks & Spencer should act as a wakeup call to the government about where our economy is headed. Unless it acts decisively, any chances of the heralded knowledge economy will merely become another CSO migration statistic. The current regime seems determined to push for reforms that will extinguish any hopes of obtaining their economic Eden. Given our current predicament, such actions are far from smart.