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Emigrants vote with their feet

THE purpose of economic policy, as far as the Irish are concerned, has always been the creation of jobs. Apart from a few brief episodes, policy has rarely been a success.

Sadly, mass emigration is back, after two decades of healthy employment. According to today's forecasts from the Economic and Social Research Institute (ESRI), more than 100,000 people will leave the country over the next two years.

We cannot be more precise than that because, inexplicably, the ESRI declines to give its actual estimates. This follows similar coyness from the Central Statistics Office about providing -- admittedly uncertain -- figures for migration.

It would be a worry if such bodies are being politically sensitive, but otherwise it hardly matters. We can assume that more than 5pc of those of working age will depart these shores over the two years, which is worse than the outflow in the 1980s.

Most will be young. One in four of those in the 20-25 age group are unemployed. Emigration on this scale is a human tragedy, if not to the same degree as in the era before cheap air travel. But it is also an economic blow.

The loss of these potential workers reduces the economy's potential. As firms close, or scrap equipment, potential falls further. This is one reason why the ESRI has become more dubious about an initial bounce in the first years of recovery. It now talks about "slow growth" as the economy turns, which will come from productivity rather than more employment.

"Job creation" is again the central plank of political parties, especially those expected to form the next government. Past disappointments should give them pause for thought. One uncomfortable lesson is that directly targeting employment, with state investment or subsidies, can be counter-productive in the end.

Governments do not create employment, but they can create the conditions which encourage it. Even that is limited at present. EU Commission president Barosso is right to say that we have bankrupted ourselves, but it is equally true that there can be little chance of growth or jobs until the austerity squeeze eases.

Even in the grip of the squeeze, government can make things better or worse. The ESRI points out that the present Government has gone for the soft option of relying on income taxes rather than new taxes. That approach was another failed aspect of the 1980s, and made unemployment worse than it could have been.

We shall see whether the new government has the courage to learn that lesson, or prefers the old conjuring trick -- popular as it is -- of taxing work to "create" jobs.

Irish Independent