The ever-increasing need for foreign labour

Some people have been concerned to hear that in the years ahead we will need 50,000 immigrants annually to supplement our diminishing…

Some people have been concerned to hear that in the years ahead we will need 50,000 immigrants annually to supplement our diminishing domestic labour supply.

It is important to understand that there would, in fact, be nothing new or alarming about such an inflow in the period ahead. The fact is that at the height of our boom, between 1999 and 2001, immigration was averaging almost 60,000 a year.

Whilst because of the recession immigration subsequently fell back to an annual 50,000 a year, during 2004 this inflow of labour probably rose again to, or perhaps above, 60,000, because of a combination of two factors.

This reflects a combination of increased labour demand within our economy and an increase in the supply of available labour from eastern European countries following the accession of many of them to the European Community on May 1st last.

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It is also important to understand that some 40 per cent of these so-called "immigrants" are not foreigners, but are in fact Irish-born young people returning to Ireland having gaining experience during some years abroad - although this temporary flow of young people out of, and then back, to Ireland has declined by almost one-third in the past few years.

In fact, since the mid-1990s there has been virtually no net emigration by Irish people. Between 1996 and 2002 a small net outflow of about 3,000 a year was almost exactly offset by the fact that during this period returning Irish emigrants each year brought back some 2,000 children who had been born to them while they were temporarily living abroad.

When these factors are taken into account, the 50,000 "immigrants" who, we are told, will be needed in future annually in order to meet our annual employment needs, come down to less than 30,000 adult non-nationals - no more than we have in fact been accommodating annually for some years past - and, in fact, fewer than came here during the boom years around the turn of the century.

Most of the foreign nationals who have been coming here in recent years are major net contributors to our economy.

We know that in 2002 no less than three-quarters of these foreign immigrants joined our labour force, so only one-quarter of them were dependants - a far lower dependency ratio than in the case of our own Irish population. (That high proportion of workers amongst the foreign national component of our population would, of course have been even higher if the Government had permitted the asylum-seeking minority of these immigrants to work.)

This low proportion of foreign workers' dependants in Ireland - especially marked in the case of the 75,000 who by 2002 had arrived here from eastern Europe or other continents - reflects the facts that most of the dependants of these latter workers remain in and are housed, and, in the case of their children, educated in those countries, at no cost to us.

These dependants are being supported out of the remittances of their relatives working in Ireland - in the same way that so many of our own population used to be supported by Irish emigrants to Britain or the United States.

The importance today to the economies of these eastern European and overseas countries of emigrants' remittances from countries like Ireland may well be as great or greater than was the case in Ireland 60 years ago, when as much as one-eighth of all our foreign income was accounted for by the remittances of our emigrants.

Our immigrants have been drawn from a very wide range of countries. In 2002 almost 40 per cent of those foreigners usually resident here were British, 30 per cent came from other EU countries or the US, and 30 per cent were from eastern Europe or other continents.

But the geographic pattern of our immigration has now changed radically. While the EU and the US still supply 30 per cent of our immigrants, only 20 per cent of the current inflow is now British, and half now come from eastern Europe or elsewhere. Our rapidly increasing reliance on immigration for future Irish economic growth is one of the most striking features of current Irish demography.

Between 1996 and 2002 foreign nationals provided about one-quarter of the increase in our labour force.

But, because of a reduced inflow of Irish workers into employment for demographic reasons, the growth of our economy, at a hoped-for 5 per cent a year during the decade ahead, will necessitate over half of future increases in our labour force taking the form of foreign labour.

The truth is that the 1990s were a quite exceptional period for the growth of our labour supply - one that will never be repeated.

First of all, there had been a huge increase in the young married population during the 1960s and 1970s, at a time when contraception had yet to become widespread, with the result that the birth-rate was rising sharply in the 1970s.

Consequently, 20 years later, in the 1990s, an exceptionally large number of young people were emerging from our educational system. In relation to our labour force, this inflow from education was three-fifths higher than in the rest of the EU.

For the decade ahead, however, this inflow into the labour force will be declining quite rapidly - reflecting the sharp drop in the birth-rate post-1980.

Next, the drop in unemployment from its very high level in the early 1990s added a further 100,000 to the workforce, but with unemployment now only slightly above 4 per cent, there is little more to be gained from this source in the years ahead. Finally, the 1990s was a period during which very many women working at home chose to enter the labour force.

But with well over half of all married women now in the labour force, this source of additional labour is bound to start tapering off in the years ahead.

Our domestic labour shortage in the period ahead is now such that even a continuation of the inflow of foreign labour that we experienced during the Celtic Tiger years, which will double the present number of foreign nationals to about 700,000, will only yield a growth rate some two-fifths less than that of the Celtic Tiger years.