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Finding a job in Ireland is easy. Finding a place to live is the hard bit

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Ireland’s economy is “absolutely booming,” says Stephen O’Dwyer, the founder and owner of Dublin’s Tang cafe/restaurant chain. “But it has left people facing a very unequal and difficult society to work in.”

At the top of O’Dwyer’s concerns is housing, which is cited by businesses large and small as a significant barrier to Ireland’s economic growth. The capital is not alone: cities from Cork to Limerick report acute housing shortages and rising levels of homelessness.

“Housing is such a big issue – probably the No 1 issue businesses face at the moment,” he says. “For most people in the city, finding a job is the easy part. Finding a place to live is very difficult.”

Tang owner Stephen O’Dwyer says housing is the biggest issue facing businesses. Photograph: Ruth Connolly/the Observer

In the run-up to this week’s European elections, which take place in Ireland on 7 June, the housing logjam has led to much soul-searching: how can the country hope to fully capitalise on its economic potential without giving people a place to live?

After a decade of low investment in all aspects of public infrastructure, when the only new properties being built were the single-dwelling homesteads that dot the countryside, Ireland is building again.

Yet construction work is consistently falling behind demand, held back by an exodus of building workers after the 2008 financial crash.

Business groups have urged the government to inject more urgency. Ministers say spades are going in the ground as quickly as industry can take on new work.

Meanwhile, projects to build data centres, rail connections and hospitals face delays while contractors fight among themselves for skilled workers and the government desperately tries to clear planning backlogs.

Emblematic of these difficulties is a €2.2bn children’s hospital due to open in Dublin this year, but only after many delays and a budget that has swollen to four times its original estimate in 2015.

Homes shortage

The arrival of US multinationals such as Facebook owner Meta has boosted Ireland’s GDP but put pressure on housing. Photograph: Getty Images

O’Dwyer knows from experience the cost of inaction. “We have just lost two guys because they couldn’t find accommodation,” he says. “We had known for some time they were struggling to find accommodation and we had been trying to help them. But no landlord was interested.”

The “problem” was that the two men were Algerian asylum seekers. “When the market is oversubscribed to the extent that it is, they are at the bottom of the list,” O’Dwyer says. “But we couldn’t run a business like ours without migrants. Of the 46 staff, we have 19 different nationalities.”

Immigration, a topic that was once considered by many in Ireland as a UK problem, has risen up the list of concerns in recent years. Conor Healy, head of Cork’s chamber of commerce, says 49% of people living in the city were not born there and “it hasn’t been a problem”.

But refugee encampments along Dublin’s Grand Canal are stretching that tolerance, and demands for measures to prevent influxes of refugees from worsening the housing shortage are rising up the agenda.

In many ways, Ireland is suffering from the same constraints as hold back the UK economy – among them infrastructure upgrades that were delayed or cancelled during a decade of austerity; a narrow and underfunded education system that downplays technical skills; and complex planning rules.

But unlike the UK, which would need to borrow heavily to start tackling these issues, Ireland has the money to sort things out.

With a budget surplus of about €9bn each year, which it puts into a sovereign wealth fund, and one of the lowest levels of public debt in the EU, Ireland could, at least on paper, overhaul its ageing infrastructure, build much-needed homes and invest in skills without worrying too much about how to pay for it all.

Chart of employment growth in Ireland compared with other nations

Ireland’s national income or gross domestic product (GDP) per person is the second-highest in Europe, after Luxembourg, and the employers’ group Ibec expects the economy to expand by 2% this year and 3.4% next year.

These figures are driven by the presence in Ireland of multinationals such as Apple and Google, and the 1,500 foreign companies operating in the country, many there to benefit from its famously low corporation tax rate of 12.5%.

Ireland has profited from harbouring US tech and pharma businesses that shield profits, in particular on their intellectual property gains, from the watchful eye of Washington’s federal tax authority.

But it may not be able to ride that wave indefinitely. Gerard Brady, chief economist at Ibec, believes the era of tax competition is coming to an end, and sees a new age of subsidy competition threatening Ireland’s success at attracting foreign investment.

He says: “Corporate tax competition from countries looking to attract inward investment is a second-order threat these days. The biggest threat to the Irish economy, which is one of the most open in the world, is from the fractured global trading environment.”

Referring to the Biden administration’s efforts to bring manufacturing back to the US via the $369bn Inflation Reduction Act, he adds: “What we see now is big power blocs looking to dramatically increase support for their own companies through huge amounts of state aid.”

From the ashes of the financial crisis

Minister Paschal Donohoe says Ireland has ‘lost many years of housebuilding’. Photograph: Clodagh Kilcoyne/Reuters

In 2010, the situation was very different. Dublin, like Athens, Madrid and Lisbon, had run out of cash in the wake of the global financial crisis. Waves of bankruptcies across its financial and construction sectors forced the Irish government to seek a three-year, €67.5bn bailout by the International Monetary Fund and the EU – equal to 40% of Ireland’s annual national income, as measured by GDP.

It lost its Celtic Tiger epithet and spent years in shock, even after it had paid the money back. Some say the government lost the habit of spending even while the economy recovered and tax revenues grew.

Paschal Donohoe, minister for public expenditure and reform in the centre-right coalition government, says: “One of the bitter consequences of financial crisis is that we lost many years of housebuilding.”

Speaking in his office in the department of finance, next to the taoiseach’s grand office and the National Museum of Ireland in central Dublin, Donohoe says the government is working around the clock to revamp the country’s ageing infrastructure.

He needs to spend €165bn to meet his 2021-2030 development plan goals. Last month he reported that capital spending in the first three months of the year reached €1.72bn, which was €549m ahead of a year earlier, but €271m under budget.

“Homes are a real focus. How we support local authorities and the private sector to build more homes is the number one priority of that plan,” he says.

Chart of housing completions in Ireland

More than 30,000 homes were completed in Ireland last year and Donohoe says he hopes to push that to 50,000 a year in the near future. For context, Ireland’s population is one-thirteenth of the UK’s, so last year’s Irish total would be the equivalent of building 390,000 homes a year in Britain. The actual figure for the UK in 2023 was 133,000.

Transport is another priority, with proposals for a new train link from Dublin airport to the city centre and the beginnings of a Dublin metro system topping the list.

But both are unlikely to see spades in the ground until a post-2030 plan has been launched, leaving an €11.6bn overhaul of the bus and tram network as the government’s main achievement before elections expected next year.

Improvements in health, education, telecoms and the energy transition to reach net zero soak up much of the remaining public investment funds.

Donohoe, a professed anglophile who spent six years working in the UK before going into politics, chairs a development board that examines blockages in the system. Until last year he was finance minister, but under the coalition agreement between his Fine Gael party and Fianna Fáil, he swapped roles with Michael McGrath, though he retains the presidency of the Eurogroup of finance ministers.

“Last year we built more homes than at in any period since the Tiger period,” he says. “I am very confident we will be able to maintain that progress this year and into next year.”

But are the homes affordable?

Wayne Stanley of charity Simon Communities says Ireland relies too much on the private market. Photograph: Ruth Connolly/the Observer

Donohoe can point to a surge in local authority home building, but with Irish house prices rising by 7.3% in March, compared with 1.1% last August, he is struggling to persuade city dwellers that his plans are making housing more affordable.

Wayne Stanley, director of the homelessness charity Simon Communities of Ireland, said the country was suffering from an “over-reliance on the private market” and failure to provide more affordable homes.

He adds: “There are 166,000 empty homes across the country, many of them outside urban centres, and there doesn’t appear to be a plan to use them.”

Pearse Doherty, Sinn Féin’s deputy leader and finance spokesperson, also criticises the government’s lack of urgency. “The housing crisis is not an act of nature,” he says. “It is the result of government policy. We are suffering from the decision to curtail investment in the aftermath of the financial crash and, even as the economy was recovering, from ramping up investment.

“This is a serious problem that is impacting not just those in housing need, but our competitiveness. It is the number one issue on the agenda of the business community when we meet them.”

Doherty says a catch-up plan would put more emphasis on funding local authorities to build homes. Private developers would also be forced to build flats for rent at more affordable prices.

Brady at Ibec says the state needs to step in to solve the housing crisis. “The scale of the problem is such that the private sector is never going to solve it.

Everything we can afford, we can’t do. We can’t get the workers to do the new jobs because they can’t get a house and we can’t build a new house because we can’t get the skilled workers.”

It leads, says the writer Fintan O’Toole, to a situation where “Ireland is simultaneously over-developed and underdeveloped”.

Tech boom

To some extent Ireland’s housing woes have been created by inward investment from the tech and pharmaceutical sectors, which has sent average pay rocketing and in doing so set off a property bidding war.

To give a measure of the scale of investment, Intel has established the largest semiconductor factory in Europe just outside Dublin, and Pfizer, which employs 5,000 people across five sites in Dublin, Cork and Kildare, will add another 400 jobs when a $1.26bn expansion of its Dublin plant is finished in 2027.

Most big pharmaceutical and medtech companies have operations in Ireland. The country produces about 40% of the world’s contact lenses, as well as all the world’s Botox and the key ingredient in Viagra.

Memories of 2019, when Irish ministers feared Westminster’s plans for a hard Brexit would physically isolate Dublin, are fading rapidly. Figures show trade via Northern Ireland has improved and the number of container ships from Dublin and Rosslare bypassing the UK as they head to France has increased dramatically.

Neale Richmond, minister for financial services, says Dublin’s insurers have become the main gateway for foreign firms, including London-based insurers, into the EU’s highly regulated market. “Post-Brexit, thousands of jobs have been created here,” he says.

Chart of expected export growth

Tom McDonnell, co-director of the Dublin-based Nevin Economic Research Institute, says the housing problem has been exacerbated by the arrival of multinational tech and pharma companies, with knock-on effects for school places, childcare and health, and is made worse by the incoming businesses soaking up talent and research funding, leaving crumbs for domestic businesses.

The rate of research and development among domestic firms is poor compared with other EU countries, he says, which means many families are doomed to taking permanent low-grade work. “If you want to find people who have broken out of the low-education, low-wage trap, they are virtually nonexistent,” he says.

O’Toole agrees, saying much of the innovation in the Irish economy has been outsourced to US multinational corporations, leaving domestic companies devoid of new ideas and products.

Alan Sullivan heads one of Ireland’s few domestic manufacturers, Meditec Medical, which makes pressure-relieving mattresses for hospitals and care homes. His sales at home and abroad are under constant threat from cheaper Chinese versions, but he says the higher quality continues to win out.

He says the government does support manufacturers like him, but as with O’Dwyer at Tang, his problem is finding skilled staff and keeping them. “Hanging on to good people is always difficult,” he says. “But I think the government is doing all it can in the circumstances.”

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