The reason for Ireland’s economic difficulty

Personally I am not a fan of negative media. When you endure over five years of criticism and mere doom and gloom the negativity becomes tiresome. The Irish economy hit a cliff in 2008 which seemed like a plunge into a dark hole without a landing. The Construction sector was the basket in which the Irish government in the 2000’s had all its eggs in on economic policies. When the basket of eggs got lost the consequences were catastrophic. Ireland in 2007 had a 4% unemployment rate which increased dramatically to 15% in 2010. That figure has dropped ever so slightly to 13.4% for August 2013. These figures suggest a poor economic situation given that a well balanced economy will have an unemployment rate of between 6-7%. The 4% Irish unemployment rate in Ireland also was counter-productive as an unemployment rate under 6% leads to the overheating of an economy. When an economy overheats wages rise to unsustainable height, the wealth effect goes to overdrive as workers become wealthier and purchase more and more mortgages guaranteed by future wages. When to economy collapses you end up with massive unemployment and crippling gross household income to mortgage debt ratios.


The unemployment level in Ireland

Ireland’s unemployment rate is decreasing yearly by minimal reductions. A decent paid job in Ireland is like trying to find a black spec of sand in the Sahara Dessert, they are few and far between. There are part time jobs available for professionals with experience, if you are a graduate however you will more than likely end up on the unemployment list. The percentage of people in Ireland without work or full-time hours is 25%. That is 1 in 4 without a post they feel is satisfying.


What the Irish government is doing

The Fine Gael and Labour led government is doing very little to help the current crisis in Ireland. They have introduced counter productive policies such as the JobBridge and Community Enterprise schemes where they pay firms to take on unemployed workers who can continue getting their social welfare payments. This is great if you want to start of in the career ladder but its counterproductive in the long run as more permanent jobs are getting lost to these social welfare schemes. When people take these positions on these schemes they will not have to sign on for social welfare, therefore statistics reveal a drop in unemployment figures.


The reason for Ireland’s slight drop in unemployment

The most obvious reason for the punitive drop in unemployment is the rate of emigration of Irish citizens. Over 70,000 Irish have emigrated to Australia alone. The UK, Dubai and Canada have also become destinations where Irish citizens have moved to. The drop in Irish unemployment figures are therefore a farce in my book. Massive challenges are ahead if Ireland is to get back to a reasonable 7% unemployment. I have reported recently that there may be a need to start building again in Ireland’s capital, Dublin. This may see a genuine recovery in unemployment rates in Ireland, however it will be 2016 before we can really get Ireland back to where it was in 2002.

For more information on the effects of a construction sector on an economy follow this link to an article that I have previously written: How to profit from a housing boom.