This Article appeared in the Irish Examiner June 15th 2018
Last week I wrote a pretty upbeat piece on the Irish economy, with a strong focus on ongoing positive trends in two key components of the indigenous economy, namely Tourism and the Agri-Food sectors. Predictably, I got a negative response from certain quarters, with one in particular claiming that it read like ‘a PR piece to encourage inward investment and that as usual there is a certain group in society doing well and feeling positive, but far too many are being left behind again’.
Difficult to know how to respond to that accusation without coming across as callous and cruel. A point to note is that I did not once mention inward investment and my focus was very much on the domestic side of the economy and on the growth that is being experienced in some key domestic components. This is difficult to argue with.
It is a fact that the reality of life in every developed country in the world is that some people will do better than others, due to factors such as educational attainment, social background, the quality of employment, and the willingness to work hard and take risks. Those with higher levels of educational attainment generally tend to get higher quality and better paid jobs, which in turn is often heavily influenced by social background. It is also generally the case that the harder one is willing to work and the more risks one is prepared to take, the better off one will be. I use the term generally, as it is obvious that this is not always the case.
The challenge for policy makers is to ensure that those who do not get the best opportunities to improve themselves, who are unable to work, or who suffer from some other disadvantage are helped to the greatest extent possible. Ireland does this quite well. The country has a very progressive tax system, in the sense that the more one earns, the more one pays in tax. The proceeds of taxation payments are then used to fund a pretty generous and progressive social protection system, and also to fund public services. People can moan forever about the nature of our economy and our society, but the truth is that if we do not have economic growth and if we do not have people in society doing well, the resources to fund social expenditure and public services will not be generated.
I did not and would not argue for one moment that Ireland does not still have many problems, it does. The lack of sufficient housing and under-funded health, education, and law and order immediately spring to mind. It is a fact that having experienced the most significant economic shock in generations back in 2007, there are still significant legacy issues to be addressed, but at least with the strong momentum in the economy, we will be given the opportunity to address those issues. Without growth, very little would be possible.
Thankfully, as I pointed out last week, we are seeing a lot of growth coming through and the latest data releases show clearly that the good news is continuing to pour forth.
This week, the Industrial Development Authority (IDA) suggested that it is having a very strong first half and that the investments already approved so far this year will lead to the creation of over 11,300 jobs, which is marginally ahead of the first half of last year. The IDA is continuing to attract strong overseas interest in its investment proposition, and that is unambiguously good news. Of course, there are challenges and risks involved here, but that is the nature of economic and business life. Managing the risks in a prudent manner is key.
It is not correct to suggest that a rising tide will lift all boats, but a rising tide is still preferable to a falling one. I firmly believe that the best thing that is currently happening in the economy relates to labour market developments. The level of unemployment declined by 15,600 in the 12-month period to May and the unemployment rate has fallen to 5.8 per cent of the labour force. Since the low point of the labour market in January 2012, the number of people unemployed has declined by 217,300 from 356,300 to 139,000. Of course, we can argue with the quality of some of the employment being created, but the trend should be welcomed by any sensible person with an open mind.