Irish emigration, a lesson in language barriers in the EU

Civitas, 4 October 2010

Last week Ireland’s financial woes were well reported, writes Stephen Clarke. It became clear that the cost of Ireland’s bank bailout was a lot higher than previously forecast. The country is burdened with a €45 billion bill for bailing out all its embattled banks, this will see the annual budget deficit rise to 32% of GDP this year, with the cost of the bailout calculated at €22,500 for each of Ireland’s 2 million taxpayers.

A further worry for the country is the fact that the latest GDP figures showed the economy contracted by 1.2% in the second quarter of 2010, after shrinking by 10% in 2009. Ireland suffered from a housing boom and then subsequent bust, the country now has 300,000 unsalable homes and 20,000 homes in negative equity (where the loans are higher than the value of the house).

Inextricably linked to this financial malaise is an increasing concern about rising levels of emigration from Ireland. It was reported that over the weekend 5,000 people attended a 2-day exhibition entitled ‘The Working Abroad Expo’ in Dublin. The exhibition featured stalls and information on emigrating to countries such as New Zealand, Australia, Canada and America, the most popular destinations for Irish emigrants. One particularly concerning element in this recent spate of emigration is the fact that, unlike previous exoduses, this time it is ‘the best and brightest leading the way’.  Many of those in the audience at the Dublin Expo and those who attend daily events run by ‘Visa First’ are graduates who feel that the Irish economy no longer holds any promise for them. With joblessness running at 13.6% and the loss of 1 in 8 jobs since 2007, it may be hard to argue with them. The result is that 65,000 have left the country this year and 120,000 are expected to leave next year, according to research by the Economic and Social Research Institute, a Dublin based think tank.

Although immensely worrying for the country, Ireland’s ‘new exodus’  also provides a critical indictment of Ireland’s education system in relation to its integration in the EU, particularly the common market and economic and monetary union (which Ireland is a part of, but the UK isn’t). When faced with difficult conditions at home, current Irish emigrants have chosen to move to countries that have historical links with Ireland and those that have been the focus of previous mass emigrations. However, it cannot be just history that is pulling them there, language seems to be one of the main attractions as well. This does explain the fact that very few have moved, or are considering a move, to Europe. Language difficulties aside, Europe should be an attractive place for Irish emigrants, many European economies have recovered well from the economic downturn and there are far fewer barriers to prospective emigrants than outside the EU, plus it’s a lot closer to home and so a lot easier to return to Ireland, temporarily or permanently, if emigrants wish. Language then seems to be the decisive factor (although the Australian climate is undoubtedly an important pull).

The worrying thing for the EU is the fact that the single market for labour seems to be far from a reality. Labour mobility is a necessary component for any successful economic and monetary union, and was rightly acknowledged as such by the leading academic of currency unions, Robert Mundell who outlined the theory of an ‘optimal currency area’ in an article in 1961. The importance of labour mobility for an economy is highlighted by the fact that many analysts have suggested that America’s current high unemployment rate is the result of the unusually immobile nature of America’s current work force. This immobility is partly the result of many homeowners being ‘trapped’ by negative equity, and  therefore unwilling to relocate to search for work because of the huge loss that selling their house would entail. Interestingly, this is also a problem in Ireland with many would-be emigrants saying that the negative equity on their house is keeping them in the country.

The benefits to an economy or single market in facilitating good labour mobility is undoubted and yet some of the benefits of the EU’s single market and economic and monetary union is unavailable to Ireland because of the language barrier that discourages emigrants from moving to Europe. That is not to say that mass emigration from Ireland to mainland Europe would not be worrying but there is an argument that such a movement may not be as costly in the long run with emigrants being able to move back to Ireland relatively simply (indeed the benefit of the single market should be that labour moves to where it can be profitably used at the current time, and then can relocate when demand pulls it elsewhere). Ireland has undoubtedly benefited from the EU single market and the economic monetary union in the past, but it is now, in one important respect, failing to benefit from it. Furthermore, addressing this failure by educating Irish children in European languages will take an immense amount of effort and a great deal of time and, if the past is anything to go by, has little chance of occurring. This is a real worry for the EU and Ireland, and indeed the UK.