Some 170,000 jobs vanished last year, and the lack of employment is driving a generation away
Dublin - When Simon Phelan started a civil engineering degree at Dublin's Trinity College four years ago, he figured his biggest problem upon graduation would be deciding which job to choose. Ireland's economy was growing at 5.4%, unemployment was a mere 4.4%, and construction was booming.
Today, with graduation fast approaching, only two of Phelan's 100 classmates have even had interviews. Worse, in these recession-scarred times, just two people from the class ahead of him are employed. So Phelan and many contemporaries see emigration as the only option. "The lack of jobs is driving people away," the 20-year-old Dubliner says after trawling through the meager offerings at Trinity's career office, a small building tucked off the school's cobblestoned quadrangle. "Ireland will lose a whole generation of graduates."
It's a scenario most Irish thought had gone the way of the potato famine and two-shilling pints of Guinness. Two decades of prosperity had transformed the island nation of 4.5 million from a European laggard into the so-called Celtic Tiger. After a century and a half in which Ireland's young and energetic routinely fled to South Boston or London's Kilburn, today's twentysomethings grew up expecting to live and work at home. But with one in three males under age 25 out of work, their confidence seems to have been misplaced. "It used to be employers were fighting over graduates," says Shane King, a 22-year-old Trinity senior from County Mayo on Ireland's west coast. "Now graduates are fighting each other for jobs."
The country's budget swung from a surplus in 2007 to a deficit of nearly 12% of gross domestic product last year as the economy shrank by 7.5%. A decade-long property bubble, which saw real estate prices triple, led to a banking crisis that Standard & Poor's estimates could cost taxpayers as much as $34 billion. "Everything we have is being spent on the banks," says David Begg, head of the Irish Congress of Trade Unions.
Drive the 10 miles from central Dublin to Citywest, an industrial park near the border of County Kildare, and you'll see ample evidence of overbuilding. On the banks of the Liffey River, there's the half-finished shell of Anglo Irish Bank's new headquarters. Farther on, "for sale" signs dot posh developments where new homes stand unoccupied.
Many would-be emigrants have made the same trip. On a chilly Sunday, hundreds of people gather in a conference room at the Citywest Hotel for a seminar on emigrating Down Under. Representatives of several Aussie states sit behind foldable tables stacked with pamphlets extolling Australia's low unemployment and "no worries" outlook. Carpenter Michael McGerr, 38, drove more than 100 miles with his wife and toddler to attend. "Our goal is to go away for good," he says.
Last year emigration exceeded immigration for the first time in 15 years as 65,100 people left, outpacing arrivals by nearly 8,000. Almost half of those who decamped were recent immigrants from Eastern Europe. But with few opportunities at home, growing numbers of native Irish are also headed for the exit. "There was loads of work three years ago, then it just dried up," says Patrick Maye, an unemployed bricklayer who traveled to the Aussie seminar from Carlow, some 50 miles south of Dublin. The 22-year-old hopes to move to Australia once he finishes retraining as a fitness instructor.
With unemployment set to hit 13.8% this year, things are sure to get worse. The Economic & Social Research Institute (ESRI), an independent think tank in Dublin, predicts net outward migration of 40,000 for the year ending in April, the highest level in more than 20 years. "We are right back to the 1980s," says Piaras Mac Éinrí, a lecturer at University College Cork.
Back then, unemployment soared to 18% as the economy took a dive. Then in the 1990s, a wave of foreign investment swept Ireland, lured by low corporate taxes and inexpensive workers. Now the blue chips are scaling way back. In the past year, Intel (INTC), Royal Bank of Scotland (RBS), and Waterford Wedgwood have downsized; Dell (DELL) moved PC production from Limerick to lower-wage Poland; and some 1,500 smaller companies have folded. Last year 170,000 Irish jobs vanished, and ESRI predicts 76,000 more will be lost in 2010.
One problem is that Ireland got too pricey. The American Chamber of Commerce Ireland estimates that from 2004 to 2008, Irish wages rose 50% faster than the average of advanced European economies. Former Intel Chairman Craig R. Barrett says that of the 14 reasons Intel came to Ireland two decades ago, only one remained: a low corporate tax rate of 12.5%. "Ireland needs a new game plan," he said at a Dublin conference in September.
In the past, the state has been a big creator of jobs by hiring civil servants and promoting investment. But to plug a yawning gap in public finances, Dublin in December announced spending cuts of $5.6 billion, including $1.4 billion from public sector pay and $1.1 billion from social welfare benefits. The tough measures have helped restore Ireland's standing among global investors, but the cuts make it difficult for the government to launch the policies that might enable people to ride out the recession, either in on-the-job training or higher education.
The biggest job casualties have been in construction. At its peak in 2007, the building trade employed 1 in 7 Irish workers. But over the past two years, the sector has shed 200,000 jobs, according to Ireland's Construction Industry Federation. "We went from being in high demand to no demand," says Gordon Cobbe, a construction manager from Cork. Out of work for a year, he plans on moving to Perth, Australia.
Many Irish aiming to get out face problems similar to workers in, say, Detroit or Toledo: They can't afford to leave their homes. John McKenna is eager to join more than a dozen friends who have moved to Australia. With business slow at the plumbing supply store where he works, "I don't know how much longer I'll have a job," the 39-year-old says. But the house he bought for $306,000 in 2006 has halved in value, so it'll be tough to depart anytime soon.
The emigration surge comes as Dublin tries to implement a program called "Smart Economy." The plan is to boost innovation through tax breaks for research, expedited visa processing for skilled workers, a $689 million fund to back promising tech startups, and other incentives. The glue holding it all together, the government says, is "the knowledge, skills, and creativity" of the Irish—a problem with so many people leaving. "There is a risk that many of the talented individuals envisioned as the foundation of the innovation economy will make their careers elsewhere," says John McHale, an economics professor at the National University of Ireland, Galway.
Other economists are more optimistic. Alan Barrett, a research professor at ESRI, says the current exodus is likely to be benign. As part of the EU, Ireland will again lure immigrants from across Europe as growth picks up. And he points out that many who left in the '80s returned with better skills. "As soon as the economy recovered, people came back in droves," he says.
Kevin Carey, CEO of moving company Careline International, can attest to that. His firm helped relocate emigrants in the 1980s before bringing many back a decade later. Now most of his work is again outbound, and business was up 23% last year. His customers weren't so lucky. "They're all leaving; the cost of living here is too high," says Carey, who was manning a table at the Australian emigration event at the Citywest Hotel. For him, at least, business was good.