The effect of the economic boom was said to have increased the number of those living in relative poverty, in particular the elderly. However with a 50% increase in social welfare pensions from 99 Euro’s to 147 Euro’s from 1998 to 2002, this significantly improved the position of those who were said to have been worse off financially in the previous 5 years. (Clinch, Convery and Walsh 2002)
Dependency theorists such as Denis O’Hearn (cited in Clancy et al 2001) would argue that the inaccuracies of GDP figures is apparent. . A more wide and varied method used to calculate productivity would be that of output and input figures, in particular those from the CSO, which incidentally is regularly quoted by the government and shows the highest quote of GNP. In Ireland what the country retains is not an accurate indication of productivity and growth as it has been shown to seriously overestimate output. TNC’S whose financial investment in Ireland is key to the recent economic boom notoriously do not reinvest profits. Appealing to these TNC’S is the low paid labour force, lowest corporate taxes in Europe and the fact that they generally do not have to pay to train the staff. Dependency theories would be popular here in Ireland as it is seen as a critique of capitalism. Socialism has never really taken off in Ireland, as Irish workers would appear to have more in common with their employers than other working class workers of different religions.
Modernisation theorists would argue that the Irish economy has had to modernise in line with other industrialised countries for example people have moved from the service industry and agricultural backgrounds to big cities to work in factories etc. The economy has opened up to more foreign investment creating new employment. Development of the working class has lead to a more educated workforce where more specialised skills are being taught. Notably O’Hearn neglects to mention the Irish food industry in relation to Irelands economic growth, which has seen massive growth exports. Indeed 20 of the top 100 Irish indigenous companies have provided between 20 – 25% of all manufacturing employment in Ireland since the 1970’s. (Irish Times 23 February 1998 cited in Tovey and Share 2000)
TNC’s can generate extraordinary profits by importing pieces from high tax zones, assembling them and exporting again with an inflated price. This of course expands GDP and is the source of the argument over how real the GDP figures are. Trans-National profit rates are far higher in Ireland than elsewhere for the same processes, and when compared with similar Irish owned companies. Secondly, there is a low ratio between investment and profits. (Tovey and Share 2000)
Full employment is sometimes referred to as a ‘Tight labour market’ we are almost at the point were there will be full employment and not be enough staff to fill vacancies. This was apparent recently in a restaurant in Dublin’s city centre in which a notice in the window read ‘Help wanted immediately, ability to speak English an advantage’. It is obvious from this sign there is such a staff shortage, that neither experience nor a capacity to converse in English are no longer required to gain employment in Dublin. (Clinch ,Convery and Walsh 2002 p.194)
Female employment, which was initially quite low has also risen and is now on par with that of the European Union average. However Breathnach cited in Tovey and Share argues that the reason for this is that TNC’s tend to employ more women in the workforce in the belief that women are more suitable to undertake lower skilled, lower paid employment. (Tovey and Share 2000)
The growth of employment in Ireland in the recent economic boom has been seen as nothing less than miraculous in comparison with other European countries. In the past we have been associated with high emigration in more recent times the percentage of people leaving Ireland has been replaced with a large number of people now entering the country. Immigration is now said to account for half the current labour force, (Clinch, Convery and Walsh 2002)
Statistics from the recent Census 2002 show that on average 25,000 immigrants per annum have come to live in Ireland between 1996 and 2002,which is almost double the rate recorded in early 1970’s.While Tovey and Share (2000) say that included in the immigrant totals there is a number of returned immigrants especially from the UK who make up half the total. Of the 44,000 who returned to live in Ireland in 1997, 20,000 came from the UK, 8,000 form EU countries, 6,000 from the USA and 9,000 from the rest of the world, 4,600 of these applied for political asylum.
The 2002 census (produced by the C.S.O) show that the population of the Republic of Ireland has increased by approximately 290,000 since 1996. The total population of the Republic now stands at 3,917,336 which is an 8 % increase in the last 6 years now standing at its highest level in the past 130 years. ( 2002)
Northern Ireland differs from the Republic of Ireland in the sense that an economic boom never happened. In the past the North has been dependant on external investment mainly from the UK but the effect of more than 30 years of political turmoil has seen a decline in industries such as clothing factory productions, food and drink and tobacco industries. (Clancy, Drudy, Lynch and O’Dowd 2000)
Transfer pricing also affects GDP as this is also seen artificial, the reason being that it appears to show more profits than are actually generated. Components are made and brought in from different countries, an example of transfer pricing can be seen in the Coca - Cola factory in Dundalk Co Louth. 20 workers were said to have made the company an annual profit of £2 million for the company, with an annual wage of £30,000 per worker this would mean that they each produced a profit of £200,000 each creating profits that even capitalist’s would never have dreamed of. (Allen 2000)
Presently Ireland is the biggest base for US investment in Europe today, there are more American companies based in Ireland than any other country in the world. If these Multi - National Companies (MNC’s) where to be defined as a single sector they would actually be larger than agriculture and tourism and equally as important as regional development in Ireland. It is estimated that the US invests up to $34 billion and creates over 90,000 jobs. Recent events in Iraq however could be seen as detrimental to the Irish economy as US investment could be halted if the war is prolonged. It is essential to the future of Ireland that the 12.5% corporate tax is retained as it is seen as paramount to Irelands recent economic success. The only problem in the foreseeable future is that if other European countries follow Irelands lead and reduce their tax to 12.5% also, this would leave Ireland competing with other countries over the amount of current Foreign direct investment (Sunday Business Post 2003)
In conclusion I have shown that many factors are responsible for the reason that productivity has been difficult to discern in relation to the Celtic tiger. Primarily the unreliability of GDP and GNP figure’s, accompanied by the fact that transfer pricing is uncontrolled in the Irish economy. Secondly TNC’s continue to dominate Irish economy in a way that it would be impossible to estimate actual levels of unemployment. Thirdly the rising population/employment ratio is due to the growth of the working age population being assimilated into the labour market where prior to 1980’s it would have been normal for them to emigrate. Immigration has also increased dramatically, a large percentage of these are returning immigrant’s where in the past Ireland had been on the receiving instead of the sending end of the ‘brain drain’. Finally women’s participation in the workforce, particularly married women, has risen swiftly in the Celtic tiger because of the demand for low skilled, low paid jobs. The factors above show that although there may has been an acceleration in the labour force this does not necessarily mean that there has also been an increase in productivity levels. Because of the domination of TNC’s it would be virtually impossible to really know the true figures for exports, profit’s, or even employment. For this reason I would agree strongly with Brendan Walsh, the Celtic tiger is extremely difficult to discern in terms of productivity.
Bibliography
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Allen, K. (2000) The Celtic Tiger (The Myth of Sociology in Ireland) Manchester: University Press.
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Clancy, P Drudy, S Lynch, K and O’Dowd, L.(2000) Sociological Perspectives (Irish Society) Dublin: Colour Books Limited
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Clinch,P, Convery, F, and Walsh, B.(2002) After the Celtic Tiger (Challenges Ahead) Dublin: O’Brien Press
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Share,P and Tovey,H. (2000) A Sociology of Ireland Dublin: Macmillan.
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Friemann,G.(2003, January 5th ) Irish jobs could be at risk over Iraq Sunday Business Post .14
- Census ,(2002 )Central Statistics Office
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Walsh (2000 September 15th ) No room to be smug about productivity
The Irish Times
