The report Here to Stay, published today by AIB Bank, says that there were 159,300 non-nationals in employment in Ireland in Q3 2005. This represents 8% of total employment of 1,989,800. There was an increase of almost 45,000 in the number of non-nationals in employment in Ireland in the year to Q3 2005.
This represented 46.5% of the total increase in employment of 96,200 over the period. This increase is a continuation of the trend in rising non-national participation which has seen the proportion of non-nationals in employment pick-up from below 3% in 1998.
The report says that there has been a marked increase in non-national workers since the opening up of the Irish economy to the Accession States in May 2004. In Q2 2005, there were 47,300 workers from the Accession Sates in Ireland2 and the number of workers from these countries would appear to have more than trebled3 since the Accession States joined the EU. Those from the Accession States accounted for 31.5% of non-national workers in Q2 2005 compared to less than 14% a year earlier.
While the level of non-national participation in the total labour force (employed plus unemployed) has increased significantly (to 8%) this is not exceptional in an EU context. In Q2 2005 the proportion of non-nationals in the Irish labour force was 7.9% while the average for the EU-15 was 7.3%. There were four other EU-15 countries with higher levels of non-nationals in their labour forces than Ireland (with percentages ranging from 8.4% to 10.7%). These figures exclude Luxembourg which has an exceptionally high level of non-nationals (around 45%) due to the presence of a multitude of EU institution offices.
The report says that much of the media attention in terms of non-national workers has focused on their role in the construction sector. However, as the chart below highlights, the construction sector in no way stands out in terms of the number of non-national workers. In Q3 2005, there were 22,600 non-nationals employed in the construction sector in Ireland. However, there were 27,800 employed in manufacturing. Meantime, the levels of nonnationals employed in education and health combined (21,200), financial and other business services (21,500), hotel and restaurants (23,100) and the wholesale and retail trades (18,900) in Q3 2005 were roughly similar to the number of non-nationals employed in the construction sector.
Notably, in the manufacturing sector, there was a decrease in employment by Irish nationals of 19,400 in the year to Q3 2005 but an increase in employment by non-nationals of 8,500, reducing the decrease in total employment over the period to 10,900. Similarly, in the hotel and restaurant sector, while there was a net increase of 4,200 jobs, Irish national employment decreased by 1,000 but employment by non-nationals rose by 5,200. There was also a decline in Irish nationals working in agriculture while employment by non-nationals increased. Meanwhile, in transportation, only 600 Irish nationals gained employment over the period compared with 3,100 non-nationals.The report says that increased non-national participation in the workforce has been an important driver of Ireland’s recent strong employment growth. Without this, it seems likely that the recent strong economic growth would not have been possible. Indeed, Ireland’s superior growth performance within the eurozone largely mirrors its comparatively strong employment growth.
Without non-national participation, employment growth would have been on average 0.7% lower since 1999 and 2.2% lower in the year to Q3 2005. This differential has increased significantly in recent quarters, from a trough of close to zero in Q2 and Q3 2004. This no doubt partly reflects the strong influx of non-national workers over the past year, particularly since the Accession States joined the EU in May 2004. The impact of non-nationals on employment growth over the past year implied by the CSO data may, though, be overestimated by a sampling error.
AIB says that by the very nature of the intensity of international competition today, it is very likely that some non-national workers have displaced Irish workers as companies seek to remain competitive.
However, actual statistics on this issue are not available so it is difficult to ascertain the scale on which it may be happening. It is also a complex and contentious area and the phenomenon of displacement cannot be isolated from the creation of jobs in Ireland by foreign multinationals which could be at the expense of their respective home base workers. In reality, this issue must be seen in the round. It could also be argued in some cases that jobs would have been lost but for the substitution of lower paid non-nationals. However, it does not excuse the exploitation of non-national workers, wherever it occurs.
AIB says that the magnitude of inflows may slow down but as evidence from estate agents shows, many of these workers are now buying property and are here to stay.
There are 23,100 non-nationals in the hotel and restaurant sector, representing 19.2% of that sector's workforce. This is the highest percentage share of non-nationals in any sector in Ireland. Around 25% of these nonnational workers come from Asia.
The financial and business services sector has 21,500 non-national workers (8.2% of that workforce). Over half of these workers come from the UK and the other EU-15 Members.
In health and education, the 21,200 non-nationals account for 12.8% of that workforce. There are almost 19,000 non-nationals in the wholesale/retail trades, representing 6.6% of total employment in that sector.
Despite the increase in non-national employment in Ireland, employment among indigenous Irish workers has continued to grow and the unemployment rate for this group has remained close to full employment.
There are three sectors where employment of Irish workers fell while nonnational employment increased. In manufacturing, employment of Irish nationals fell by 19,400 in the year to Q3 2005. However, 8,500 more nonnationals were employed in the sector leaving overall employment down by 10,900. In the hotels sector, there was a decline of 1,000 in employment among Irish nationals while non-national employment rose by 5,200. In agriculture, overall employment fell by 300 but non-national employment rose by 2,300 while the number of Irish employees fell by 2,600.
These figures can offer only prima facie evidence that there could be some displacement of Irish workers by non-nationals. There is no detail on subsectors to ascertain whether individual industries are experiencing displacement. Nor can these figures tell us whether Irish workers are moving on to other employment with equal or better employment conditions. Thus, the case regarding displacement remains unproven.
The growth in non-national workers in the Irish economy is expected to continue. PPS numbers suggest further employment gains. The strength of the economy and the fact that we have been at close to full employment since 2000 will continue to attract foreign workers. The magnitude of inflows may slow down but as evidence from estate agents shows, many of these workers are now buying property and are here to stay.