Wednesday 28 September 2016

David McWilliams: The Croats are singing about us - we must be doing something right

Published 17/08/2016 | 02:30

Croatian ska band Postolar Tripper, whose song ‘Irska’, meaning Ireland, resonates with young Croats.
Croatian ska band Postolar Tripper, whose song ‘Irska’, meaning Ireland, resonates with young Croats.

Could Ireland possibly be regarded as a land of milk and honey? Nah, I didn't think so either; that is, until I came to Croatia this summer and heard that one of the most popular local pop songs is about escaping the scarcity of Croatia for the abundance of Dublin, via Ryanair. The song resonates here as, over the past three years, 10,000 young Croats have emigrated to Ireland, according to local newspapers.

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The song, which can be viewed on YouTube, is by a Croatian ska outfit called Postolar Tripper, and is simply called 'Irska', which means 'Ireland'.

There is a rich tradition of ska in this region, going back to the post-punk days of the Yugoslav underground movement, when the country was dominated by statues of Marshall Tito.

Some 30 years and a few wars of independence later, ska is still popular, if not quite as melodic as its original Jamaican version or its later reincarnation on the streets of Coventry and Birmingham.

However, the fact that young Croats are flocking to Dublin tells you lots not just about Croatia, but also about Ireland.

The push factors from Croatia are identical to those pushing central Europeans out to Western Europe in their droves from behind the Iron Curtain. There is a line from Stettin in Poland to Trieste, behind which young people face enormous difficulties finding decent work.

Typically, these are highly educated in the rigid Germanic gymnasium system, which give kids a rigorous, academic training.

They also have excellent technical schools that give kids extremely good training in trades. They are a huge resource that is wasted because they can't find opportunities that would pay, enabling them to stay and create a stake for themselves in their own societies.

The pull factor in Ireland is that they can work. They can find jobs easily. People are now emigrating based on Whatsapp messages.

When a job comes up, a Croatian in Dublin simply sends a Whatsapp or a Viber message to his mate, who arrives the next day on Ryanair. They bed down on a mate's floor and thus begins the great adventure of migration. It doesn't always end up well, but it happens for a reason.

There is no better indicator of the health of an economy than migration. When people flock to live in a place, they do so for a good reason, and when people can't wait to leave a country, this is also a sign that things are not right. People are not stupid, so a country losing young people is a place where something is going wrong.

You can't walk into a bar or restaurant here in Croatia without someone telling you about their brother, sister or cousin who has moved to Ireland.

More plan on coming after the easy jobs of the Croatian summer on the beautiful Dalmatian coast disappear along with the tourists in September.

These young people are a great boon to the Irish economy.

Once immigrants arrive, they create their own demand because they spend their money, go out and begin to live an independent life.

They also are working, as most immigrants do - initially at least - in jobs that pay below the median wage. And this is where Ireland is most attractive because taxes at moderate-to-low incomes are very low in Ireland in comparison to other European countries.

Far from being a high-income-tax country, Ireland at modest incomes is a low-tax country. It starts to get extortionate only when you begin earning good money. Ireland is uncompetitive at high incomes, but highly competitive at lower incomes.

Recently, a left-leaning outfit called the Nevin Institute produced statistics on the reality of income taxation in Ireland. Now, a word of warning here: left-leaning organisations will always say tax rates are OK and that if they are not OK, they are too low.

Armed with that 'health warning', let's see what the Institute had to say about tax and why the intricacies of the taxation system in Ireland may be one of the additional reasons attracting young Croats to work in our bars, cafes, shops and call centres.

According to the study, at 50pc of the average wage, Irish effective rates were significantly lower than international comparators. The Irish effective tax rate of 3.7pc was dwarfed by an OECD average of 19.8pc and an EU15 average of 20.8pc. This is revealing - and true.

Even as your wages increase, the income tax rate is still attractive. So imagine you were earning 67pc of the standard wage - then you are still paying significantly less if you are working in Ireland than working elsewhere.

You would be paying income tax of 13.6pc in Ireland. In contrast, in the OECD you would be paying 23.7pc and in the rest of the EU you'd be coughing up 25.9pc.

At the average wage, Ireland's effective tax rate increased to 20.2pc.

In contrast, the OECD average absolute rate of 31.0pc and the EU15 average rate of 27.7pc remained substantially above the Irish effective tax level in 2014.

As you start to earn well above the average rate, the Irish tax system becomes as extortionate as any, but at the lower end of wages and incomes, people who work pay far less income tax than almost anywhere else.

Because young immigrants usually get jobs that don't pay too well and are happy to simply work and get a start in life, the tax system is a significant plus for short-term immigration.

Because they don't have children and don't need the health system, they don't see the flip side of lower income tax.

Taken at face value, immigration is telling us we are doing something right in Ireland. It's an acid test -and one we are passing with flying colours.

Irish Independent

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