Sunday 22 April 2018

Richard Curran: Boosting quality of life could help firms as much as more non-EU work permits

The Government has been coming under increasing pressure to open up more work permits for people from non-EU countries
The Government has been coming under increasing pressure to open up more work permits for people from non-EU countries
Richard Curran

Richard Curran

Good news often brings its own challenges when it comes to the economy. The remarkable turnaround in Ireland's jobs market has seen the rate of unemployment drop to just 6pc from a 2012 high of over 15pc.

Businesses in many sectors are roaring ahead, and overall economic growth looks buoyant. The last time Ireland was at this point in an economic cycle it was the early noughties.

A lot of the boom may have been driven by credit back then, but real businesses doing real things in the real economy wanted to keep growing. But where would we get the hundreds of thousands of people needed to fill these jobs?

Then in 2004, the accession states joined the EU and Ireland welcomed the fact that a skills shortage could be filled by a couple of hundred thousand workers from places like Poland, Latvia or Hungary.

Here we are again. The economy is growing rapidly again and while the country is on the cusp of full employment, there are shortages of workers in key areas.

But where are all the new Polish workers to fill these jobs? Back in 2004, unemployment in Poland was running at 20pc. Today it is under 7pc. Back then, GDP per capita in Poland was around $7,000. Today it is nearly $12,500.

Better job opportunities and rising living standards at home in several former European accession states has seen net migration to Ireland from these countries hit just 2,500 last year. They aren't coming.

So what are businesses to do? An increasing number of sectors say their growth is being held back by shortages of workers. Of course, fewer available workers mean wages go up. Surely, that is no bad thing? It isn't - except when the labour shortages get so bad that economic growth isn't as strong as it could be.

The Department of Business, Enterprise and Innovation has been coming under increasing pressure to open up more work permits for people from non-EU countries. We already have a permit scheme for relatively highly paid, high skilled people in a range of professions. This includes engineering, medicine, IT and international marketing. The Government work permit scheme has been tuned into the needs of sectors with skills shortages.

The latest wave of pressure is more focused on lower-paid, lower-skilled jobs, where businesses are making themselves heard. Looking at the Department figures on the numbers coming in from outside the EU under existing programmes, we aren't exactly overrun.

For example, there were 11,361 work permits issued in 2017 - 9,401 were new and the rest were renewals. Some 1,458 were turned down.

We had six Afghans; just 106 Australians; six Cubans; one Jamaican; one Nicaraguan; and 23 Vietnamese. The biggest numbers were: India with 3,827; Pakistan with 1,008; the US with 843; the Philippines with 768 and Brazil with 675.

The companies availing of the work permit scheme are broadly as you would expect. The company with the largest number of non-EU work permits was Google with 285. Next was Indian IT and outsourcing firm Wipro with 184. Microsoft had 124 and Intel had 58.

Letterkenny Hospital had 109 while South Tipperary Hospital had 98.

The big issue for the Government is whether opening up - not so much the 'floodgates', because we are talking about a trickle at the moment - but the 'taps' to thousands of non-EU lower skilled workers would displace Irish workers.

Business minister Heather Humphreys is conducting a review in her department of the skills needs of various sectors and she hopes to report the outcome by June. She has flagged the importance of training up more people at home in various sectors but also the fact there are still 240,000 people on the live register.

However, there is evidence that labour shortages are really beginning to bite. Meat processors say they need 2,000 extra workers. They believe they should come from outside the EU, something which will put them on a collision course with unions.

The wider agri sector maintains that it needs 6,000 extra workers in the dairy sector by 2025, while there are 600 vacancies for operatives and pickers in the mushroom farms. And they maintain there are another 1,100 vacancies in the soft fruit and vegetable sector.

The hospitality and restaurant industry got something of a win when the Department of Business announced a change to the work permits scheme to allow 610 non-EU chefs to work. The industry had claimed it was in need of 3,000 new chefs per year.

The Department operates a Critical Skills List where firms can hire people from outside the EU (and EEA) on work permits if they meet certain remuneration and other criteria.

Then there is a list of Ineligible Employments. The Department website says it operates a general permit scheme which means all jobs are open to workers under permit, except those included on the 'Ineligible Employments' list.

At first glance this makes Ireland seem very open to workers from around the world. But then you read the ineligible list. It is pretty extensive, with 234 different categories of jobs across all levels included on it.

Before deciding how many job categories should be lifted from the ineligible list and under what circumstances, perhaps the Government should ask itself why so many workers from countries like Poland, Hungary, Latvia, etc are not coming anymore?

Yes, things have improved in their home countries - but basic quality of life things have gone backwards here. If you are a relatively low-paid worker, big things for you are the cost of a roof over your head, the cost of insuring a car where public transport is poor, the basic cost of living, etc.

I spoke recently to someone who runs a contract cleaning business. They said they cannot get enough people to do the contracts they have and could be winning. It isn't just about rates of pay.

In Dublin, for example, they might not be able to afford to live near the city centre so they live in the suburbs or even further out. This kind of work involves unsociable and irregular hours, so public transport simply may not work for them at the times they need.

There may be a bigger role for employers in the likes of the hospitality sector, which wants the benefit of low-cost labour, to help out more with these kinds of issues.

I recently met one young guy, about 20 years of age, who quit his job with a good manufacturing employer about 26 miles away because he couldn't afford the motor insurance to keep his car on the road.

He then found a job with a closer firm, which buses its employees to wherever their work is.

Opening up the economy to low-skilled workers from around the world should be no bad thing. However, given Ireland's poor track record on regulation of the likes of the rented housing sector, will many of these people end up being simply exploited?

There is already a huge debate raging between employers and unions about precarious employment and whether it is on the rise.

Clearly many businesses feel they need access to appropriately-priced labour to grow their businesses. Population projections for Ireland over the next 20 years imply we need to create another 600,000 jobs. Who will fill them?

The Government should listen to what businesses have to say, but also ensure it is signing up any new arrivals to appropriate protections and a decent quality of life.

Indo Business

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