IRELAND ISN'T WORKING...
Friday, January 9, 2009 at 11:03PM Shocking to read that unemployment in the Republic of Ireland has increased even further and is now 8.3%.
"Unemployment rose to ten-year high of 8.3 per cent at the end of 2008 as the number of jobless people claiming benefits surged by a record 121,100 in the year to December. During 2008 the number ofLive Registerjobseekers' benefit and allow
ance claimants soared by a record 71 per cent to bring the total number of claimants to 293,500. This is the highest level of claimants since December 1993, according toseasonally adjusted figures releasedby theCentral Statistics Office (CSO)this morning. The register grew by 16,300 people last month, according to the CSO. This is the secondly highest monthly total on record, just behind the 16,700 recorded in November. On an unadjusted basis the December rise was a record 22,777."
The thing is, I believe that the unemployed number will rocket well above even 10% by the time we reach March, which is reminiscent of the bad old days of the 1980's. What can be done to stop this? No chance of lowering interest rates, no chance of lowering VAT, no chance of much apart from ever growing dole queues. Tough times south of the border.
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Reader Comments (30)
And 2000 more jobs gone in Limerick at Dell. The mighty Celtic Tiger that Irish Nationalists dangled in front of Unionist noses has run out of steam.
It's sad to watch. No stimulus, tough spending cutbacks and an overvalued currency. It least Britian will get a glimpse from a safe distance of how the policies for which the conservative party is arguing would work in practice. It's not going to be pretty.
Obviously the much-vaunted 12% company tax rate has its limits when it comes to saving jobs in the Celtic Tiger.
The 2000 Dell jobs now going to Poland will migrate further east within ten years at most. The Polskis should enjoy it while it lasts.
Dell are real losers. Not so long ago you could not so easily buy a Dell computer over the counter but had to order it on line, which meant going through an Indian call centre. The growing fraud that resulted from giving up your card details to someone abroad hit Dell hard, so now a lesson was learnt and you can buy them in Tescos now.
Too late. They've missed the bus and a recession has stepped in in the meantime to smack sales on the head.
Tough times indeed.
The problem is that an open economy is going to be hit hardest by the economic downturn. The important thing is to keep doing things right and keeping taxes low and promoting a pro-business environment for when the worm turns.
In addition, there need to be serious "re-evaluations" of wages, cuts in the civil service and prices in the service sector need to be slashed before we price ourselves out of the market.
Al, I don't see why you're being so smug. Did the job losses in FG Wilson escape you? NI is still the economic basket-case it always was. Relying on English taxpayers isn't something to be proud of.
Reg
I wasn't being smug at all, and the FG Wilson losses certainly didn't escape me, nor did the losses in Powerscreen and Fintec and others. I was merely pointing out the Nationalist rhetoric that "look at the south - thriving economy,it makes sense for Irish unifacation" crap is total fantasy and this proves it.
At least NI is part of the fourth or fifth largest economy in the world and yes relying on English taxpayers may not be perfect, but it sure beats the hell out of being part of an undemocratic EU with no control over monetary or taxation policy.
And no sign of a halt to immigration either. I hope the export of jobs to Poland strengthens the approaching second vote on the Communist Manifesto - I mean Lisbon Treaty
There isn't much that can be done to halt the rise in unemployment.
The bubble led to the economy becoming incredibly unbalanced - a disproportianate number being employed in construction. The government abjectly failed to control the bubble. The neccerssary rebalancing was always going to be painful, now multiplied because of the international depression / recession.
The government would be best served trying to make sure we are in a good position to create jobs once this process bottoms out in Ireland and global economies rebound.
Al - Northern Ireland would be better off if it were able to tailor it's own fiscal policy to suit it's own circumstances. Otherwise I can't ever see it weaning itself of the English subvention and maintaining a British standard of living.
David
What can be done to stop this? No chance of lowering interest rates
Really? The ECB have been cutting pretty aggressively of late.
no chance of lowering VAT
Irish retail sells mostly foreign goods. There is no multiplier from increased retail sales for the Irish economy, only the loss of income to the exchequer. By the way I am now seeing Sterling prices rise - in some cases dramatically and Irish retail prices fall massively (to levels as would regard as cheaper than in the north).
Here are some things I think that could be done to bring about recovery earlier.
1. Construction
Sort out the banks - if that means letting some go bust, so be it. Liquidate the developers, get prices of land and housing units down to (or below) fair value asap (this will get the second hand market moving again too). Sorting out salaries for builders may require a little longer of this process - but once these factors are in balance Ireland will be in a position to start building again, for reasonable prices. Which will also boost government finances again.
2. Competitiveness
If wages are too high in Ireland relative to our competitors, cut Employers PRSI and pass it on to the employee instead. This is effectively the same thing as a global wage reduction.
Wages and head count in the public sector probably do need to be cut.
Investigate other business costs - and do what it takes to get them down (electricity, commercial rates etc).
3. Bankruptcies
The bankruptcy laws are penal. They should be reformed to enable insolvent citizens to default on their jumbo mortgages and return as productive members of the economy asap.
4. Better tax breaks for investing in earlier stage business. Government tax breaks fueled the property boom, perhaps they could fuel another more productive boom in the future. The expansion of the BES is welcome, the upper limit should be removed to ensure business can scale faster.
Mack
I'm all for slashing the public sector and promoting the private sector but unfortunately there isn't that much wisdom floating around with the goons up at Stormont.
I don't want to join the single currency in Europe nor do I aspire to the little Ulster Nationalism which is so prevalent in the DUP. NI's future lies with a more integrated system with GB, both politically and economically.
"I was merely pointing out the Nationalist rhetoric that "look at the south - thriving economy,it makes sense for Irish unifacation" crap is total fantasy and this proves it."
Nonsense. It proves that the whole world is suffering from an economic downturn and the Republic, as an open economy, is suffering more than many.
NI can't sponge off the English forever.
NI can't sponge off the English forever.
Reg
See my 02:57PM.
Im always amused how pro Southern commentators always make out Ulster historically to be a "basket case" compared to the Republic, which was a very different state indeed before membership of the EU.
Up until direct rule in 72, Northern Ireland proportionally was doing three times the trade of the Republic, in the commercial and industrial sphere.. Trading figures for Ulster in 1969 hardly an ideal year were 1400 Million an increase of 12% on the previous year , which had been a record year (1968) with a rise of 17.5%. At this time 80% of the Republics trade was with Britain. Do remind us once again who in economic terms was dependent on Britain for its existence?
Scouseproud
Going that far back doesn't tell you much. Ireland then didn't have its economic act together at all, and international ( even intra-European ) trade wasn't what it is now.
For better and worse, there have been many, probably permanent, changes since then.
Scouseproud - that's historical analysis not economic analysis. Go a little further back and there ways an empire on which the sun never set. Goddam-uppity-yanks thinking they're a super-power now! We know the truth though don't we? ;-)
It's not 1969, it's a different world and Ireland, Britain and Northern Ireland have a different place in it.
Look forwards not backwards ;-)
Im happy to discuss todays economies just as much as the 60s Mack!
Although GDP per capita between Northern Ireland and the Republic are similar, given lower rates of Income Tax and higher levels of Public spending Ulster folk still have a much higher standard of living. Private consumption per head is one fifth higher. The gap is even bigger when levels of public spending are considered, even when the entire law and order budget is left out. Private and public spending implies the average living standards . Ulster exceeds the Republic by the order of one quarter to one third. If you fall ill or have to pay towards youre childs University education we all know youre better off in Northern Ireland than the Republic. The Republic has always benefited by transfer pricing, in the south the Corporate Profit tax is 10% traditionally it is 3 times higher in the UK and five times higher in Germany, this allows multi national firms to inflate the book value of output in its Irish subsidiaries in order to reduce their tax payments.
Scouseproud - In all seriousness, what you've written is just plain wrong.
GDP per capita 2007
Ireland: US$62,934
United Kingdom : US$45,626
Source - CIA.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
Ireland's GDP per capita is more than 30% higher than that of the UK - of which NI is the poorest part.
There is free university education in Ireland unlike in the UK.
There is free public health care available for those who can't afford to pay small portion of their costs - for everyone else there is health insurance.
Wages are substantially higher in Ireland than in Northern Ireland, personal taxes substantially lower than in the UK.
Ireland has a lower age structure than the UK (and the highest birth rate in Europe), this means Ireland has a more favourable dependency ratio, that should keep taxes lower and benefits higher than in the UK for the forseeable future.
Mack, GDP and GNP do not determine living standards , they depend on levels of taxation, private consumption and public spending. Private and public spending in Northern Ireland is at least one quarter higher than in the Republic.
For years while it was calling itself the Celtic Tiger it was Europes most heavily subsidised country-highest EU structural funds. I always looked forward to the time when the Republic would be a net contributor and start making a financial transfer to the UK , instead of the other way round!
Dr Anton Murphy TCD on the Celtic Tiger and the Irish national income figures "Phantom statistics and the souffle effects"
Scouseproud -
Wages and personal taxation levels - which are better in Ireland than in the UK - are pretty good indicators for standard of living. Do I detect a moved goalpost?
I would be incredibly surprised if private consumption was higher in Northern Ireland than in Ireland in recent years. Given the scale of the property bubble in Ireland. 93,000 houses built in 2006 (that's about half the amount for the whole of the UK). A huge amount of expensive property transactions going on. Have you got a link to back up your claim?
Public spending doesn't directly affect standard of living. As we all know governments are not efficient allocators of capital. A lot of government spending exists in NI just to keep the unemployment rate artificially low. What does matter is the quality of service provided. In my experience these are roughly comparable - with the north coming out ahead slightly in some areas (health) and the south ahead decisively in others (education).
Office of national statistics 1996
Health Northern Ireland £1265m (£770 per head)
"""""" Republic of Ireland £1975m (£553 per head)
Education Northern Ireland £1283m (£781 per head)
""""""""""Republic of Ireland £1791m (£502 per head)
Public housing ,transport, water and sewerage
Northern Ireland £402m (£245 per head)
Republic of Ireland £799m (£224 per head)
Private cars per 1000 population
Northern Ireland 307
Republic of Ireland 242
Standard gross margin of profitability on farms
Northern Ireland 121.8
Republic of Ireland 101.8
Doctors per 1000 population
Northern Ireland 1.8
Republic of Ireland 1.7
Dentists per 1000 population
Northern Ireland 0.5
Republic of Ireland 0.4
Income tax comparisons
Income £10,000 tax due ROI 1771 NI 1459
"""""""£15,OOO tax due ROI 3680 NI 2709
"""""""£35,000 tax due ROI 13280 NI 8785.
Scouseproud - 1996 ?
2009 Income tax comparisions..
In 2009 an Irish worker earning around €36,000 takes home € 30204.16 net of tax. It will cost the employer less in employer taxes to pay that wage.
In 2009 a Northern Irish worker earning around €36,000 Euro (£33,480) takes home €26,782 (£24,908.80) net of tax. It will cost the employer more in employer taxes to pay that wage.
http://www.taxcalc.eu/
http://listentotaxman.com/index.php?c=1&yr=2008&age=0&add=0&code;=&pension=0&time=1&ingr=33480&vw;[]=yr&vw;[]=mth&vw;[]=wk
Reg,
I was not being smug.
Scouseproud - By the way, you'd be hard pressed to find anyone on a wage of £10k in modern Ireland, you have to be earning between €18k-19k to any income tax at all.
The average manufacturing wage is €36k (hence I chose it in the example above).
It was from the 90s(when they did) an example!
Here are some more from the 90s "Joint authority would mean picking up half the tab and we cant afford it " Des OMalley then leader of the PDs.(Irish News)
75% of the people in the Republic would not be willing to pay higher taxes to achieve a United Ireland (Irish Independent)
When asked to choose between a United Ireland and a negotiated settlement in Northern Ireland only 30% chose a United Ireland (Irish Times)
Only 2% saw Northern Ireland as a priority issue , the same proportion of voters in the Republic concerned at the cost of phone calls (Irish Times)
Were not going to agree Mack! People can make their judgement from the above posts. As i have previously said Private and public spending implies the average living standards in the North exceed the Republic by the order of one quarter to one third.
Scouseproud - The Irish economy has gone on a serious tear since the mid-90's.
You can't add public spending and private consumption together and then compare. As most wages in NI are paid via public spending - the same wages that then fuel private consumption? You'd be double counting if you did.
I've lived and worked in both states (from the north originally), my personal experience is that there is more money to be made, and less tax to be paid in the south. If I thought you were right, I'd move back..
"I was not being smug."
David, that wasn't directed at you.
"Im always amused how pro Southern commentators always make out Ulster historically to be a "basket case" compared to the Republic"
Scouseproud,
My comment was that NI is "still the economic basket case it always was."
My point being that the Republic was an economic disaster (albeit without relying on English taxpayers) but turned things around. NI was and still is an economic basket case inspite of the poor old English taxpayer.
I'm sure David would agree that the NI civil service is so bloated as to make an old communist state blush.
Also, it's a little odd that you choose 1996 to compare and contrast modern Ireland when the "Celtic Tiger" only began in 1995. Why not choose last year, for example? No? Hmmmm.
I am sure many people are looking for a solution – because we all know it’s needed
desperately.
Now we need more than rhetoric, we need Action, we need a solution that will save jobs.
We need to know that the money is going to be lent to companies who have a chance to survive, who will grow, who will retain and increase employment, who will pay more taxes, companies that will keep Ireland afloat.
Thanks for article. Everytime like to read you.