At Large

Pluck of the Irish

A report from the happy land of economic boom.

By 12.4.05

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DUBLIN -- Ireland, Europe's "Celtic Tiger," shows no signs of turning into an economic pussycat. Quite the opposite.

Next year's government budget, just out, projects Gross Domestic Product growth of 8 percent, and some analysts think it may reach 10 percent.

Ireland's construction boom and strong consumer spending have driven up tax revenues. This is expected to continue. The result should be a budget surplus of approximately $1.8 billion. About half of this has been earmarked for public employee pay increases and added spending on childcare and other social welfare programs.

The remainder, nearly $1 billion, may go for tax cuts for the second consecutive year. The debate is between those who favor one-time credits and those who want to index income tax rates.

With the economic boom continuing, the benefits of one-time credits without indexing would soon vanish as taxpayers' prosperity moved them into higher brackets.

Some members of the Dail (parliament) want more spending on health care from the surplus. All this will be sorted out in the caucus of Fianna Fail, the party which commands a strong majority in the Dail.

Once a country of high unemployment, Ireland now finds itself with not enough people to fill all the jobs available. As a result, workers from new European Union countries in Eastern Europe are emigrating to Ireland to take the jobs. It isn't always that simple, as the current strike against Irish Ferries indicates. In that case, Irish Ferry workers do not want foreigners taking jobs (and at lower wages). At present, the ferries that ply the Irish Sea with passengers and cargo, are tied up in Wales.

The ferry strike is the exception. Overall, employment is expected to hit two million by year's end -- out of a labor force of 2,086,500. Talk about full employment!

From whence did all of this spring? It was triggered by Ireland's joining the EU in 1972. That brought the country large sums of Regional Development Funds, used to build infrastructure, promote tourism and lure inbound investment.

The population grew younger. Approximately 40 percent of Ireland's four million people are under 30 and it has the highest percentage of 15-24-year-olds in Europe.

College and university enrollments have climbed steadily, making the young, well-educated, highly motivated work force attractive to high-tech companies.

"The ICT [information/communications technology] sector is the savior of Ireland. Imagine what would happen to the economy without it," said the vice chairman of a leading high-tech company late last month. Modest corporate taxes (12.5 percent) and a generally supportive government have made Ireland a magnet for many international ICT companies.

The country is not without problems. Housing prices have averaged a 7.2 percent increase over the last 12 months, and consumer debt it up. These are problems of prosperity. There are darker ones, too. The other day the Dublin police seized $8.1 million worth of cannabis resin, shipped in from Spain in boxes labeled "notepads." Drugs in rural areas have also become a problem.

And, shades of Washington, D.C., Ireland has its own lobbyist scandal. Various people and companies have come forward to say they paid large sums to one-time government officials who used them illegally to bribe officeholders.

Not even the well-liked Prime Minister, Bertie Ahern, has escaped the tar brush. A developer has accused him of accepting a bribe of $1 million a dozen or so years ago to thwart a tax break for a shopping center. The PM stoutly denies the allegation.

Good times aren't all a matter of the good luck of the Irish. Hard work is an important part of it, but everyone seems to be enjoying himself. The enthusiasm for continued good times and the warmth and hospitality one encounters meeting with individual Irish men and women put a visitor in a very happy mood.

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About the Author
Peter Hannaford was closely associated with the late President Reagan for a number of years. He is a member of the board of the Committee on the Present Danger. His latest book is “Presidential Retreats.”