April 27, 2008
The news this week that the Polish government has launched an international campaign to bring its talented people home should come as no surprise.
Those familiar with the IDA’s successful effort to bring Intel here will know that one of the swing factors was our ability to bring home skilled graduates who had left in the 1980s recession.
While the reason for the recruitment drive in Poland might be similar to the Irish call to the exiles in the late 1980s, the main reason Polish immigrants will leave Ireland over the coming months and years will be fewer job opportunities.
Anecdotal evidence, particularly from the rental market, suggests that many immigrants are leaving. In addition, and more worryingly, data from the jobs market indicates that many thousands have gone on the dole.
Before we get high and mighty about the dole, let us remind ourselves that some of the finest dole scammers in London in the mid-1980s were Irish ‘workers’. That said, the point is valid, because the public’s stance on immigration will be negatively related to the number of immigrants on the dole.
The major question is what will happen when thousands of immigrants leave. One reason to assume that many will leave rather than go on the dole is that, for the most part, they came to pursue the Irish Dream. They are here to improve their lot. For central European immigrants, it is hard to imagine that Ireland is their final destination. It makes more sense to see Ireland as a transit point on their journey.
When things are good here, it makes sense to stay. If things turn down, it makes sense to leave.
The major flaw in this argument is that no other economy in Europe is creating jobs in decent volumes at the moment, so they have nowhere else to go. Faced with a similar dilemma in the 1970s,thousands of Irish immigrants went on the dole in Britain when things turned down.
Bearing this in mind, let us examine What might happen if (a) they stay and if (b) they go. Then let’s see whether the current immigration policy is likely to survive a slowdown in the economy or whether changed circumstances demand changed priorities.
If the immigrants go, the brunt of their absence will be felt in the housing market. This is because immigrants, by expanding the labour force, drive the price of houses or rents higher than they would be had the immigrants not arrived. They also drive workers’ wages lower than they would have been had the immigrants not been competing in the jobs market.
Therefore, immigration is bad for workers and good for landlords and employers. So if the immigrants go, the supply of labour will contract, pushing up wages. However, at the same time the demand for houses will fall, pushing down rents and house prices.
There was always something pretty idiotic about the idea – which gained currency last year – that the demand for immigrants in construction would keep the price of houses up on its own. This was particularly silly, as it was the Polish workers themselves who were expected to live in the very houses they were building.
So a fall in immigration might actually be positive for workers’ wages and the proportion of those wages they have to give over in rent. If, on the other hand, the immigrants decide that they know Ireland, they have networks here and they have a better chance of fighting over a diminished pie in Ireland than starting afresh in Germany, another dynamic takes over.
In this case, the immigrants will do jobs for considerably less than their Irish counterparts. This implies that wages will fall.
The reason for this is that, as it was for Irish workers in New York in the 1980s, the reference point for whether you are doing well or not is the difference between what you were earning at home and what you could earn abroad. As Irish wages are still six times higher than Polish wages, our wages would have to fall a lot for it to be worthwhile for the average Pole to go home.
Sometimes, we don’t realise that the immigrants live in a parallel world to us where prices, values, experiences and aspirations are benchmarked against conditions in the home country, as well as conditions here in Ireland. If they stay, therefore, we are likely to experience a battle between Irish workers and the immigrants over available jobs and available wages.
Time will tell which one of these scenarios plays out. Irrespective of what happens, one thing is clear: the era of opening the door to everyone who would like to come is over.
At the moment, our immigration policy basically opens the door and sees who comes in from central Europe. This is obviously fraught with danger. It is like having a party without a guest list.
Why not, in the future, use our immigration policy as a national recruitment policy? Let’s recruit the best for Ireland. Because there will be far fewer construction jobs, the pull of Ireland to construction workers from the east will be significantly impaired. This change in conditions allows us to be selective. We might consider framing the policy with this key question: what type of immigrant do we want?
Think of the world as a talent pool where the country has much more value than simply its sovereign or political form. In the new economy, where millions of people are trying to find a place to live where they can better themselves and further their talent, a country which can offer such opportunities is very special.
A country is like the host of a party, and the country that hosts the best party is the one where most guests want to go. It is up to us now to write the guest list.
Ireland could easily emulate the likes of Australia and Canada and issue invitations based on talents that we think we need. In this way, we could ensure that every immigrant contributes to a pool of human capital, rather than having an open-door policy which is, by definition, hit and miss.
This might put us on a collision course with Brussels, but isn’t this what sovereignty is all about – the ability to make decisions for ourselves and live by them?