TIGER BURIED...
Wednesday, December 3, 2008 at 06:36PM 
Sorry to see that unemployment in the Republic of Ireland is soaring, currently at 7.8% and destined for a staggering 10% in the next twelve months.
"The statistics agency says the number of people on the Live Register increased by almost 17,000 to 277,200 in November. Over the past year, the numbers signing on the dole have increased by almost 107,000, or 66%. Last month's increase was made up of 13,600 male workers and 3,300 female workers.
Jim Curran, head of research at independent business group Isme, called for the pay deal to be suspended and local charges frozen as employers struggle to cope. “The latest figures, together with the dramatic fall in taxation revenue, confirm that the economy is in dire straits,” he said. “Unless immediate action is taken on a number of fronts to address the situation the number of job losses announced to date will accelerate, putting further pressure on the already weakened public finances.” IBEC’s Retail Ireland said the sector, which employs 300,000 people, has been hit by the largest year-on-year decline in sales in more than 20 years. Torlach Denihan, the group’s director, said: “In view of rising unemployment and a declining property market, consumers are cautious and reluctant to spend money. This has been aggravated by a loss of business to the North due to the weakness of sterling and the now 6.5% difference in the VAT rate. It is now approximately one-third more expensive to run a retail business here than in the North.”
This is all very worrying and I see no end in sight. I wonder what is happening to those tens of thousands of Eastern European workers who swarmed into Dublin and elsewhere over the past few years, are they exiting? Is there rising tension with local workers as they fight over limited jobs. The Celtic Tiger is dead and buried and 2009 will see Ireland in severe economic difficulty. NONE of this gives me any pleasure and I wonder how the government will deal with it? So far I see little skill or vision?
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Reader Comments (12)
Yes, I agree about the land of saints and scholars. It's about the economies of scale, and the problem for Ireland is that the population is so small.
There is a very real chance it won't be able to hack this Depression and we may see a repeat of the 1950s Irish exodus to the UK to seek work.
Back then they filled the NHS, and made truly dedicated nurses and staff.
Fat chance nowadays. Most of those posts are filled by the third world.
Maybe not helpful but a true comment from an Irishman living in Englnad: the Celtic Tiger has become Bag Puss. It amused me!
David,
The news is worsening across all economies, not least the US fed report of today.
The US is looking at 9-10% unemployment figures.
A good question about the Irish economy, however, is the miserable state of the treasury. Despite the 'boom' there appears to be very little in the state coffers- and many parts of the infrastructure were and remain neglected- schools and hospitals most particularly. Which leads me wonder, was the low corporate tax really wise, in the long run? What will become of the crumbling schools and hospitals now that there is nothing in the coffers to spend. How badly mismanaged the revenue from the boom years actually was, will become the political fight of the near future, I suppose.
Interesting to see rightworld desert the celtic tiger, after lauding its low-tax free-market capitalism during the years when it seemed to be delivering.
Surely the 12.5% rate of corporation tax will save it now, especially when the rate in the UK is 21% for small companies and a staggering 28% for large companies? No? Aw shucks!
David
Surprised no one addressed your query on the Eastern European workers. I heard anecdotally many months ago that loads of the Poles and others were heading back east, for better opportunity at home.
This appears to confirm.
Phantom,
No doubt a sizable majority of the Poles will head home, but personally I know of 8 polish individuals that will be staying, some because of relationships and some because of their love for the place.
Peter,
Construction is where it's hitting and it will have a knock on effect. But I can't see it hitting certain industries such as IT.Most of these multinationals have heavily invested in Ireland as their gateway to Europe and they are not going to pull out that easily. Go to the Microsoft Ireland homepgage and you will see quite a few job advertisements. Intel also always looking for Test Engineers
We still have that low tax rate and a readily available knowledge based workforce. What is letting ourselves down here is our investment in broadband. This is badly needed if we want more foreign investement here.
Still though it was good to see yesterday 600 new jobs announced, granted it's not matching the rate of people losing their jobs in other sectors, but the fact that some companies are doing well and looking to expand can only be positive.
Pinky - "despite the 'boom' there appears to be very little in the state coffers- and many parts of the infrastructure were and remain neglected- schools and hospitals most particularly. Which leads me wonder, was the low corporate tax really wise, in the long run?"
The state coffers are dry because the government embarked on the ludicrous benchmarking scheme, while at the same time ramped up public sector employment levels on the back of unsustainable increases in property bubble related tax revenues. The benchmarking scheme took the average public sector wage to over €48k (£41.6976), compared with €34k in the private sector.
80% of the spend in education goes on wages. Train drivers, who strike when asked to train a new hire - leaving commuters stranded at the platform - get paid €52,000 (£44,590) per year.
Remember those well paid train drivers also get defined benefit state pensions that increase with any pay awards (not inflation) given to their colleagues (worth an additional 30% of salary per anum).
By anecdotal media accounts, large numbers of HSE employees do next to nothing for their large pay cheques.
So we ramped up spending (on wages & employment levels) without getting anywhere near the appropriate bang for the buck from quality of services delivered. When the government invested in the rail infrastructure, aforementioned hard-pressed train drivers demanded a productivity pay rise as their trains now went faster!
The Corporation tax move was inspired - even for the long run. The ramp up in public spending without an appropriate return in productivity was niave / stupid / wasteful / incompetent.
(I wouldn't have thought I'd find many high tax advocates here!)
Luckily there is at least one get out available.
Pinky - also on the state of government finances. While the Irish government is running deficits now, debt as a percentage of GDP is low in Ireland (certainly compared to the UK). Public spending was financed out of cash inflows and for many years we ran a surplus. In that sense the Irish government has kept it's powder dry - and would be able to initiate a genuine Keynesian response were it necessary (instead of the economic harri-karri Broon is embarking on).
I think borrowing to pay overpaid public sector workers is nuts. We genuinely need government spending cuts. That said the continuation of the national development plan to build out much needed infrastructure is essential.
Excellent post, Mack!
Agreed - good post Mack.
Peter
There is no uniform "rightworld" here. As a card carrying member of the vast right wing conspiracy, I think that Ireland is a pleasant place to live, a good place to visit, and a fine place to do business.
I do business in Dublin, with British and Bermuda based financial services companies who find it a fine place for them to set up shop. They don't get lost in the vast sauce of London, but are right next to it. Rents lower than London, workforce terrific, easy flight access to every big European city and to to many American ones. Can't beat it.
These are small firms, but they will grow and others will follow.
This economy will kick everyone in the head, Ireland included. Batten down the hatches for these times, and prepare to benefit from the better days and better and perhaps unforseen opportunities that will follow.
Ireland has managed its economy pretty damned well over the past 15 years plus. It ain't dead yet.
I think borrowing to pay overpaid public sector workers is nuts. We genuinely need government spending cuts. That said the continuation of the national development plan to build out much needed infrastructure is essential.
I agree.
Good posts, Mack.