Immigration Vital for Ireland’s Economic Growth
While some countries are discouraging immigrants, Ireland says they are vital to maintaining its economic growth. 2020 saw multiple disruptions to Ireland’s economy, most notably as a result of the COVID-19 pandemic and Brexit.
With the end of the Brexit transition period behind us, many online shoppers have been affected by the Irish Sea Border, a customs barrier which separates Northern Ireland from Great Britain, causing significant shipment delays. The issues have led to many firms calling upon both the UK and Irish governments to remove the barrier or relax the rules.
Irish fishing fleets are also concerned regarding the fishing deal struck between the UK and EU, claiming that it would have a disruptive impact on the Irish fishing community. As a result, the Irish government has forecast that Brexit could cost the Irish fishing community around €35million a year.
Ireland economy is fastest growing in Europe
Ireland has a robust economy and strong population growth underpinning their economic development. Ireland benefits from a younger population and has been Europe’s fastest-growing economy for a number of years. Though 2020 was a difficult year for most economies as a result of COVID-19, Q3 showed Ireland’s economy rebound by an impressive 11.1%. IBEC has forecast that Ireland’s economy will experience further growth of an estimated 5.3% in 2021, mostly led by exports.
Different attitudes to immigration
A significant difference between Ireland and the UK is the attitudes towards the immigration process. The UK is looking to attract “the brightest and best” talent but is looking to limit numbers elsewhere.
The British government has implemented a points-based immigration system from January 2021 which would end free movement. Immigrants will need to achieve a score of 70 points to be able to work and live in the UK.
Migrants fill up half of new jobs
Ireland recognises that migrants now fill up more than half of new jobs in key sectors and are vital to its continued economic growth.
In fact, net inward migration will be the most important source of new employees if the Irish economy continues to grow strongly, says the Central Bank of Ireland. If migrant numbers rise, there will be an additional need for housing, infrastructure and social services.
Net migration in Ireland doubles
In the last economic downturn, many Irish citizens and migrants, particularly from Eastern Europe, left the country, with more people leaving than moving to Ireland. However, Ireland’s immigration has picked up over the years, with the year to April 2020 seeing immigration levels reach 85,400. Whilst this was a decline in comparison to 88,600 in 2019, the drop is undoubtedly a result of COVID-19 travel restrictions.
However, net migration is unlikely to reach 2007’s total of 104,800 in the short to medium term. This is due in part to Ireland having to compete for migrants with other countries in Europe and beyond.
Previously, migrants in Ireland had been attracted to low wage jobs, but now they are likely to require higher wages, says the report.
Improvement in services needed
This remarkable improvement in the labour market is welcome, but maintaining such favourable conditions will require action on the part of policymakers to avoid eroding competitiveness through wage and price pressures as the economy continues to grow. It also requires improvements in services.
“The policy actions available to authorities faced with an economy at full employment are constrained when it is small, highly open and part of a monetary union. However, it is important that government policy does not exacerbate competitiveness challenges while maintaining supply-side support to improve housing supply, transport networks and public services to support continued employment growth.”
University educated immigrants
Immigrants arriving in Ireland are today more likely to be university-educated or coming from Western Europe or South America. According to Census 2016, there are 535,475 non-Irish nationals – around one in eight of the population. One in three holds a degree or higher qualification.
Census also showed that UK citizens make up the second-highest group of non-Irish nationals at 103,113, meaning Brexit could have severe repercussions for Ireland’s economic growth.
Since COVID-19, unemployment levels within Ireland have risen from 4.7% in December 2019 to 7.2% in December 2020 and it’s suspected that the struggle will continue during the beginning of 2021. It’s thought that strong net inward migration will be the most important source of employment growth if the economy continues to grow at the rates seen over the past number of years.
Post-Brexit risk to the economy
As mentioned previously, despite the UK’s trade deal with the EU, there are still threats to Ireland’s fishing community as well as shipping delays as a result of new customs requirements. It’s difficult to say how this will impact Ireland’s economy in the long term, given that we are only a few days post-transition period.
External political and economic risks
In its 2020 Financial Stability Review, the Central Bank of Ireland said, “the immediate and future implications of the COVID-19 outbreak and the necessary public health response will put pressure on the financial position of banks, insurers and investment funds, especially through their exposure to the domestic real estate market and the economic sectors most affected by the containment measures.”
The Central Bank also outlined post-Brexit banking risks; “as a result of Brexit, some cross-border and intra-financial system activities of internationally-focused banks that were formerly conducted in the UK have been transferred to their Irish entities, which could allow for the transmission and amplification of risk, including exposure to potential disruptions in global capital markets.”