January 23, 2014
'Soft Power' - From economic migrants to economic ambassadors.Posted in Behavioural Economics · 79 comments ·
Recently there has been lots of talk about who is buying Ireland. Foreign investors are buying Irish government debt and foreign funds are buying Irish prime property assets. Both of these developments are taken as barometers of how foreigners perceive this country.
I am more interested in “who is buying into Ireland” rather than who is buying Ireland. Who is buying into Ireland can be measured by immigration; who is coming here, from where and how has this changed over the past few years.
The figures for immigration are staggering. Fifteen years ago there were precious few immigrants here. Today, one-sixth of the population is foreign born. This is a massive social transformation by any measure. My preferred measure of immigration is air traffic and in particular, the Ryanair route planner. These days, people immigrate here by text. It’s not a big deal really. Someone gets a text in Poland about a job or a gig and a few days later they are in a housing estate in Dublin, Waterford, Cork or Limerick bedding down, three to a room, about to start a new adventure.
They come and go regularly. A Polish girl who works with me has just headed home for a long weekend. She’ll be back on Sunday night, yet she is an immigrant who may or may not settle here.
Unfortunately, there isn’t too much hard data out there about who has come from where; I took the latest CSO numbers on immigrants and plotted it.
CHART 1. NEW ARRIVALS
As you can see from the chart – and this may come as a surprise – the biggest group of immigrants in Ireland are Americans. These may well be Asians – mainly tech workers – joining American technology companies but it is more likely that these are two massive areas on the move and a tiny fraction end up here.
The next up are the Poles and then the British, who have always been a sizeable immigrant population. Then we have decent numbers of Germans and French people here.
However, the next chart is more interesting as it shows how the immigrant population has changed over the past few years. The most striking aspect of the change in population is what could be called the ‘Flight of the Slavs’.
CHART 2: FLIGHT OF THE SLAVS
The Slavic population here has slumped from its boomtime peaks of 45,000 immigrants who arrived here from the new EU countries in 2008. This figure has dropped dramatically and it underscores the fact that lots of immigrants have no intention of staying here. The Eastern Europeans come for jobs and when they dry up, they leave.
This suggests that the Irish labour market for East Europeans behaved like a prosperous region of the US. When a place like Massachusetts booms, migrants from all over the US flock there for opportunity. When the economy turns down, the immigrants switch off, pack their bags and head elsewhere. Their behaviour is totally different to rich EU immigrants. While fewer rich Europeans are coming here, they don’t evaporate at the sign of a downturn. They display more normal patterns.
The reason for this is that they are not working-class immigrants. They are much more likely to be working in professional jobs in large foreign- owned companies, which are much less sensitive to the collapse of the domestic demand. In contrast, the Slavs worked in the domestic economy and when it collapsed they were on the first Ryanair flight out of here.
African immigrants are not going home when the economy turns down, and this is probably because the quality of life for their children and the opportunities they believe that children will have here are better than the countries they came from.
Looking ahead, we have to ask ourselves what will Ireland do with its immigrants. By that I don’t mean what will we do with the problem, but what will we do with the opportunity?
Almost every region outside Europe where the immigrants are coming from will be growing much faster than Ireland in the years ahead.
Ireland and Irish companies need only a tiny slice of the action in these countries to make a huge difference to income here. However, as anyone who has ever exported anything will know, it is difficult to get people who don’t know you to buy something from you. We all do business with people we know.
Wouldn’t it be an interesting notion to appoint ambassadors for Ireland among these Chinese, Indian and African immigrants?
Our State spends a fortune on the likes of trade missions, Enterprise Ireland offices and expensive political trips to curry favour in elite circles in faraway places for Irish companies. However, the best sales people for Ireland are right here under our noses. They are the immigrants.
These people could open doors, understand the culture, understand the mentality and do more in a few phone calls than official Irish agencies could do in a year of “glad handling”.
People make the difference and we have tens of thousands of people here who have aspirations that we could harness. Now if that isn’t an expression of soft power I don’t know what is.
DAVID MCWILLIAMS’S DAILY FINANCIAL UPDATE IS OUT NOW ON GLOBALMACRO360.COM