(Originally written for university marking in November 2011)
11/11/2011
Post ‘Celtic Tiger’
Ireland.
Ireland’s construction industry awaits the recovery.
By Michael Muldowney, Dublin.
With peak economic growth rates at an unprecedented level of 11% Ireland was
once hailed as the ‘Celtic Tiger’ of economies. But when the global economic
downturn impacted in 2008 businesses folded, jobs were lost over night and despite
major efforts to repair the shattered economy, three years later Ireland is
nowhere close to recovery.
The Republic of Ireland’s sovereign debt crisis became so critical that at one
point the country was considered the highest risk of sovereign default in the
Eurozone. Extensive measures were implemented to address the crisis but nothing
could halt Ireland’s slide. As a result, in November 2011 the Government of Prime
Minister Brian Cowen, deciding that all other measures were exhausted called
in the International Monetary Fund and the European Central Bank to ‘bail out’
Ireland to the cost of around €113bn. As part of the payment deal Ireland was
inclined to implement a four year austerity action plan which consisted of
massive spending reductions, higher taxes, and a lower minimum wage. These
measures proved so universally unpopular with the Irish that Cowan’s Fianna
Fáil party, which had held a majority since 1987 was routed in the following
election.
During Ireland’s economic accent it’s construction industry was one of the
primary sectors of industry driving the country forward as it strived to build
world class infrastructure. Heavy
funding and subsidising of programmes nationwide were approved in an attempt to
showcase Irish ingenuity, especially in the capital city Dublin which benefited
from substantial funding in an attempt to build a cosmopolitan metropolis to
rival other European cities.
The €752 million Dublin port tunnel was completed in 2006, major expansion of
Dublin’s international airport and the building of over a thousand kilometres
of motorways were among some of the high intensity projects undertaken. Many of these infrastructure projects are
still incomplete and this week the government was forced to cancel several high
profile programmes. The Dublin North metro line, the long awaited Dublin
underground network, Western corridor rail link, a new high security prison and
the Limerick to Cork motorway are among the programmes that have all been
cancelled. However plans to construct a national children’s hospital will be
continued, albeit using national lottery grants.
Industry officials look to the future.
The Irish construction industry already badly mauled by the recession now faces
further damage with the cancellation of these large projects. “Both
private and public construction investment is severely impacted by the economic
and financial crisis here” says Martin Whelan, the director of
communication for the Irish Construction Industry Federation (CIF) “The cutbacks in public capital investment
have significant implications for the indigenous construction
industry. Since the downturn commenced, over 180,000 direct construction
jobs have been lost and there is now concern for an additional 25,000 jobs in
the sector in 2011 because of the reductions in investment. The
construction industry is, in consequence, losing essential productive capacity”
With the loss of such a high number of jobs the future outlook of the industry
is bleak. When the global economic downturn eventually ends Ireland will be in
a weakened position and unable to call on the skilled workforce it once boasted
to re-start projects in the future, which is something Martin Whelan is acutely
aware of. “The Irish economy will recover and will require a construction
industry, which, although less than half of the peak, will amount to 12-13% of
Irish GDP and would represent a very significant sector of the economy… one of
the legacies of the past 15 years was the creation of a world-class
construction capacity in Ireland, capable of delivering major infrastructure
programmes. The ability to deliver this infrastructure did not happen by
accident – it was the result of sustained investment in people, plant and
systems in response to the growth needs of the Irish economy.
With further cuts to investment and jobs, can Ireland sustain its
construction workforce and still hope to emerge with an industry capable of
delivering? The CIF Director continues, “Construction activity this year is
forecast to be 7% of economic activity and to fall to 5% in 2012. This is
leading to the erosion of essential skills and capacity and undermining the
entire fabric of the sector here… It will not be easy to rebuild these
skills. Not only is Ireland losing skilled workers to other economies, it
is also losing the skilled workers of tomorrow because apprentices and young
professionals are not coming through the educational system”
The Irish government has decided that the country
cannot build it’s way out of recession and instead hopes that the multinational sector, which according to a
spokeswoman for the Department for Jobs, Innovation and Industry is “in a very
healthy state,” can be the foundation for the country’s recovery. The official
went on to comment that, “The multinational sector in accounts for 75% of all
exports. We have a 14% competitive advantage over three years ago, and while
salaries are 8-9% down it works out as a 14% overall gain because in Europe
costs have risen.”
Workers sit tight, awaiting a recovery.
West of Dublin, in Country Kildare are thousands of either unfinished or
completed but as yet unsold houses which are known as ‘Ghost estates.’ On the
finished estates only 20% of the houses are inhabited.
I met Matthew Bracken, a 20 year veteran of
the construction industry who
has become one of the casualties of the downturn.
“It’s not like it just snuck up on us, we knew the boom had to end at some
point, but I expected a lull of maybe 3 or 4 years, nothing quite this
catastrophic” Matthew tells me. Like many Irish construction workers he earned
high wages during the boom period and then entered the housing market, buying
and budgeting on expectation of the good earning they were making.
“At the height of the boom” he continues, “even the apprentice workers on site
were taking home perhaps €2000 per month minimum, so that gives you some
indication of the kind of money involved in the industry. We were building on
every piece of land available but as you can see, most of these houses are
uninhabited and essentially worthless.”
I ask Matthew what he plans to do with no end to the depression in sight. “I’m
going to have to stick it out and sit tight, eventually it has to get better.”
ENDS
Many thanks to Mr Martin Whelan of the CIF for his input on this article.
No comments:
Post a Comment