Tuesday 21 May 2019

Immigration has brought great benefits for business

'Migrant workers are arguably more important for multinationals than any other sector of the economy, and there can be little doubt that if the labour market was less open, inflows of foreign direct investment would have been lower in recent decades' (stock photo)
'Migrant workers are arguably more important for multinationals than any other sector of the economy, and there can be little doubt that if the labour market was less open, inflows of foreign direct investment would have been lower in recent decades' (stock photo)
Dan O'Brien

Dan O'Brien

The "global war for talent" and similar descriptions are the stuff of management literature cliché. But there is no doubt that having a big talent pool to fish in is important for employers.

It is particularly important for employers who service a diverse range of customers and clients internationally.

As corporate Ireland has become ever more globalised, it has sucked in talent from even the most distant parts of the planet with little historical connection to this island - the fastest growing non-Irish community in the country in the half-decade to Census 2016 was from Laos.

That small, land-locked, nominally communist country in an out-of-the-way part of South East Asia is not, as Mícheál Ó Muircheartaigh might say, a hurling stronghold.

Last year's census showed that Ireland, as of April 2016, was home to 187 different nationalities and had a foreign-born population (including a quarter of a million Irish nationals born abroad) of 17.3pc, one of the highest rates in the EU.

Because immigration into Ireland is still a relatively recent phenomenon, the bulk of the foreign-born population is of working age - they represent less than 10pc of the under-15 and over-65 population, but 25pc of 20-somethings and 40-somethings, and 28pc of 30-somethings.

Click here to view full-size graphic
Click here to view full-size graphic

The Irish labour market is not only very open, those in it are very mobile - Ireland's inflows of people before the crash were not only higher than the UK's relatively, the migration rate was multiples of our neighbour's.

Migrant workers are arguably more important for multinationals than any other sector of the economy, and there can be little doubt that if the labour market was less open, inflows of foreign direct investment would have been lower in recent decades.

Most foreign firms opening a facility want to bring in at least some of their people from abroad, as work permit figures attest - so far this year Google has been issued with more visas than any other organisation.

While there have long been calls to educate and train Irish people better to fill vacancies in multinationals, some of the vacancies will always be jobs that require immigration, particularly those requiring mother-tongue levels of language skills and detailed country knowledge.

Immigrants contribute to Irish-owned businesses as well.

They become consumers, helping to boost domestic demand, and workers, who can fill skills gaps.

Mark Fielding, formerly of the business lobby group ISME, has remarked that "without immigration, many SMEs would be unable to survive".

So what are the big migration trends? Two sets of figures out in the past 10 days give lots of details.

Having experienced net outward migration during the recession, the latest figures show that the tide has well and truly turned. Last week the CSO estimated that net inflows of people reached 19,800 in the year to April 2017.

Immigration was particularly strong among non-EU nationals.

More Irish nationals are still emigrating than returning home, though the difference was down to 3,800 in the year to April.

More detail on the characteristics of Ireland's immigrant population was provided 10 days ago when the CSO released Census 2016 data on 'Migration and Diversity'.

One thing that stands out is that non-nationals tend to be better educated than Irish nationals - 33pc hold third-level or above qualifications, compared with 28pc of nationals.

Almost a fifth of the total number of people who hold degrees in Stem-related subjects are foreigners.

Immigrants are also more likely to have apprenticeships or technical training.

Research by the OECD, which was previously discussed at length in this column, showed that Ireland's immigrants are among the most highly educated and skilled in that club of mostly rich countries.

The migration estimates show there was much coming and going among the educated.

Between 2009 (when figures are first available) and 2017, 237,000 people with third-level degrees emigrated, while almost 300,000 immigrated.

That gives a net graduate inflow of 61,000. Some of the immigration will be returning Irish graduates, but because net migration of Irish nationals has remained negative since the recession, many of the highly educated immigrants are foreign.

Non-nationals have a greater presence in some sectors than others. In accommodation and food services they account for 35pc of total workers, in administrative roles and technology a quarter, and in retail 17pc.

Non-national employment share is quite low in the public sector, at only 3pc in public administration and defence, and 5pc in semi-State utilities.

Non-nationals are more likely to work or be looking for work than nationals.

Their labour force participation rate for those aged 15 and over stands at 73.9pc compared with 59.5pc for Irish nationals.

However, their unemployment rate of 15.4pc is three percentage points higher than Irish nationals according to the census (since it was carried out in April 2016 these rates have fallen).

Both these rates differ substantially among nationalities. In general, those from the long-established EU countries and North America have lower unemployment than natives.

The newer EU-member states perform a little worse than Irish nationals, though the difference is not huge, and Eastern European's labour force participation is very high.

Those who fare worst appear to be non-EU. This echoes ongoing ESRI analysis which showed poorer labour market outcomes and lower wages for non-nationals.

There is no doubt that Ireland's open and flexible labour market has been good for business, but as with any big social phenomenon, migration doesn't come without costs and downsides for societies more generally.

Perhaps the most topical in Ireland concerns housing.

Finding a place to live is high on the priority list of any newcomer and the majority of immigrants go into the private rental market.

As this is where the housing crisis is most acute, the additional demand from new arrivals for a near-stagnant stock of homes is simply making the problem even worse.

There is also the wage-dampening effects of increased supply of workers and increased pressure on public services of more people.

All that said, a broad consensus among economists is that immigration does bring an overall benefit to economies.

That is likely to be the case for Ireland more than many other countries given its highly educated non-national workforce.

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