September 16, 2006

Wage-spending non-nationals fuelling economic boom

Posted in Celtic Tiger · 8 comments ·
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You know that Polish girl who just served you a coffee, the one with the high cheekbones and the green eyes? She arrived here this week. Her friend texted her last week to tell her that one of the Irish students was leaving the cafe and, if she got here quickly, she’d be set up.

Two thousand miles away, in the local internet cafe of a small village called Myslowice, Magda found a Katowice-to-Cork flight for ’1 (www.wizzair.com).

With ’200 in her pocket, wired by her brother via Western Union from Sweden, she arrived in Cork last Wednesday night.

The Skylink bus from the airport to Patrick’s Street, at ’5, cost five times more than the flight. This was her first experience of Irish prices. The 11 o’clock bus from Parnell Station pulled out at a quarter past. She would have been nervous, but just before her credit ran out, her friends had texted her telling her to expect a healthy and very un-Polish disrespect for timetables in her new homeland.

The number 233 roared through a damp Munster night, out the Straight Road towards sprawling Ballincollig – still festooned with crestfallen Rebel flags. From there, it sped through Ovens, Killumney and Srelane, hurtling (the driver obviously wanted to get home) to her final destination: Macroom.

Thirty-six hours after getting the original text from her old school friend, Ania, 25-year-old Magda had moved from western Poland to west Cork. The little one-bedroom flat over the butcher’s on Castle Street was a bit cramped for four Polish girls.

On the other hand, her parents’ Communist-built apartment, which she had just left, was hardly any bigger. She didn’t care; she was ecstatic.

On Thursday morning, Magda was learning to make cappuccinos and lattes and trying to decipher the local patois, which sounds nothing like the English she learned at school. She caught her reflection in the flecked Cork Dry Gin mirror and pinched herself at the thought that she had actually done it: she’d got out.

This was her first big adventure and Magda Pawlowski was about to live the ‘new Irish dream’ and nobody was going to stop her.

Figures released this week by the Central Statistics Office (CSO), which, if you are interested, were in the Quarterly National Household Survey and can be viewed on www.cso.ie, reveal that more than half of the increase in employment this year has been due to people like Magda.

Of the impressive 87,800 jobs created here in the period from March to May, 48,000 were taken by foreigners. And of these, 34,000 were young immigrants between the ages of 25 and 35.

These statistics, which did not get much coverage because of all the ballyhoo about Michael McDowell, will have a more profound impact on our society than whoever wins the next general election (let alone who leads a minority party).

Just think about it for a minute. First, proportionately Ireland is creating three times more jobs per day than any other country in Europe. Why is this? Is it all good news?

Second, half of these new jobs are going to immigrants. If this continues, there will be more foreign workers than Irish workers in 30 years’ time. What implication does this have for infrastructure and resources?

Third, our dependence on immigrants is increasing rapidly. For example, in the second quarter of this year, the labour force increased by67,000, but over 80 per cent of these new workers came from abroad.

The Irish component of the new labour force is shrinking. Figures like this are unprecedented in Europe. What political picture should we draw from this evidence?

Looking at the pure economics first, the demand for labour is now phenomenal. The usual suspects are there again: construction, retailing and ‘ tellingly – security services are the three biggest growth areas.

There is now clear evidence that the immigrants are fuelling the boom by spending a higher proportion of their wages than they were doing a few years ago. Rather than ‘taking our jobs’, they are generating jobs for us. So supply is creating its own demand. The more immigrants, the more money in circulation, the more spending, the more mortgages and the more demand for extra workers.

With the foreign population growing so quickly, huge demands are also placed on our health and education services. Not surprisingly, employment in health and education services expanded rapidly by 25,000 in spring of this year.

At first glance, this seems impressive, but despite these extra workers and the huge increase in credit, the economy is not growing as quickly as it was. We are not getting as big a bang for our buck. In the recent past, Ireland was achieving higher growth rates with fewer workers and less credit.

Today, to achieve the same growth rates we have to throw thousands more extra workers and millions more extra euro into the economic mix. This means that the return on effort and cash in Ireland is falling – a mirror image of increased costs and collapsing value for money.

This means we are using more perspiration and less inspiration. Economists call this a productivity problem. We are running to stand still.

As our country’s population swells, immigration becomes a resource issue, not an employment issue. When Ibec – on the right – says the economy needs more workers, it is only seeing the dilemma through a narrow-gauge employer perspective.

Equally, when voices from the left champion multiculturalism for its own sake, they are seeing the issue through an equally narrow kaleidoscope – a sort of united colours of Benetton view of the world.

So the left and the right are singing from the same hymn-sheet which can be summed up as “the more, the merrier”.

However, if the economic vulnerability signalled by lower productivity were ever to lead to a situation where Irish workers started to lose out to immigrants and jobs became scarce, it is not difficult to foresee racist problems.

Have we prepared ourselves for that?

Overall, this week’s figures from the CSO are extraordinary and should be championed as evidence that economies can generate such dynamism. Equally, every Magda who leaves her small town adds something new to us.

However, we are now absorbing more immigrants per head than any other European country; this should be generating a debate about their future in our country.

All we are hearing is a deafening silence.


  1. Mikey

    The real acid test of the wisdom this open door policy will
    be a downturn.
    The fact is that several major studies e.g. Harvard
    Professor George Borjas and others, have shown how
    low-skilled immigration brings little or no net benefit to
    the domestic economy (regardless how IBEC, ISME etc might
    insist otherwise).

    Countries with successful immigration policies are those
    like Canada, Australia, New Zealand who employ strict points
    and quota systems to tailor for the needs of the native
    people and fill skill gaps in the economy. Such systems
    also, unlike here, allow for the threat to social cohesion
    that a free for all may lead to and, importantly in this
    respect,it prioritises in favour of existing citizens.

    Some have called this approach “citizenist” and many of
    those are unashamedly are its supporters.

  2. JJ

    Hey ‘Mikey’ – your economic veil (Professor Borjas) is himself an immigrant
    from Cuba who arrived in the US aged 12. How skilled was he at 12 years of
    age? Not very I suspect. What was his cost to the US tax-payer until he
    graduated from Columbia University at the age of 25 – significant I would
    expect. Borjas has since gone on to become a darling of the US right and a
    standard bearer for the anti-immigration movement. Now, it is reputedly lost
    on the Americans, but irony really is itching to bite somebody’s arse here.
    What are the other ‘major studies’ to which you refer? Are they by any chance
    the studies conducted by David Card (Prof of Economics at University of
    California) or Alan Krueger (Prof of Economics at Princeton)? Probably not
    because these gentlemen do not subscribe to your view which is, I suspect,
    no more considered than that of a bona-fide good-ole-boy. You simply ‘don’t
    want no goddam settlers takin yur land and sleepin with yur women-folk’.
    Thankin ya kindly.

  3. Fred

    JJ, from your xenophobic attack on Prof Borjas and
    scurrilous ad hominen attack on Mikey you’ve inadvertently
    shown how hateful and condesending immigrationists are
    toward those who disagree with them.

    Dr. Aiden Rankin hit the nail on the head with this

    http://conservativedemocrats.20m.com/photo3.html

    ;)

  4. JJ

    Fred, I can only assume you’re a confused American as you appear, in some
    bizarre way, to have mistaken my ironic reference for a bout of xenophobia. And
    as for your link to Dr Aidan Rankin – a spokesperson for the National Front
    breakaway group (on grounds of the NF being too soft) the notorious Third Way
    - it made me realise that rather than hating the good Doctor with every atom of
    my being as I did as a younger man, I now feel nothing but pity and am
    consumed with the urge to give him a big hug. Oh and incidentally, comrade,
    you spelt condescending incorrectly.

  5. john d

    Yes there will be serious racism issues in Ireland in the
    future.
    When the downturn in the economy soon arrives,those least
    effected will be the low paid immigrants doing the
    essential jobs.
    Their jobs such as mechanics,supermarket checkouts,bar
    staff already on little more than the minimum wage will not
    be effected,very few if any have mortgages,credit card
    bills or other debts and are used to a frugal lifestyle.
    The Irish will blame them for taking their jobs,the truth
    is the Irish can’t afford those jobs anymore.
    As the construction industry winds down those kept on will
    be those who can work for the least amount of money-mostly
    immigrants.
    The Unions already know this is going to happen as we seen
    with the Irish ferries incident.
    Interesting times ahead.

  6. Fred

    My response to JJ ha sbeen censored :(

  7. szczupak

    Hi Guys

    Hope anybody noticed that Polish people go to Ireland and other countries just to make money and pay taxes. We are not going to blow up ourselves on a subway trains or in a restaurants etc. We are not lazy frustrated fat eaters /random US citizen…sorry but it’s true/ covering their backs behind all labor unions, social money etc. If we go to any country ….we are going to work there hard. So Irish people….hope you will love us because we love you and your culture !!!!:)))) It’s not a secret some of us are going to stay longer in Ireland …. some of us are just temporary. Hope we can coexist in peace…having some beer from time to time and enjoy life as much as we can

    Like George W. said one day…”human being and fish can coexist in peace”…deep isn’t it ?:))))))))))

    J. NYC

  8. Donal

    I’m sorry Szczupak,

    but that thought of your’s is wishful thinking. Their are many things that we have in common with Poland but we can’t live in the same country together as guest and owner.

    Friends whom are distant are friends for longer, Friends whom live together don’t last very long.

    Tolerance towards foreigners has never been part of the Irish Psyche, you need only read the history of Ireland for the last 800 years or so. Poland didn’t have much tolerance for Communism or (Soviet) Russian Military Presence for nearly a half a century.

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