Demography is destiny. The single most important statistic in any developed economy is the population size. When planning for the future, the most critical forecast concerns the number of people in the country, their age and where do they live. Everything flows from that: housing, roads, rail links, hospitals, schools, water infrastructure, power grids, police resources – basically everything that a government should oversee will depend on the number of people.
One of the strangest aspects about the new programme for government is its failure to scrutinise population dynamics. On page 106 the programme states: “Ireland’s population is growing rapidly. By 2040, there will be close to a million more people in the country” – and that’s about it. Walk through any town and you will see that the aspect that has changed most dramatically over the past few years is the number of new people in the country. The capacity problems that we have everywhere from housing to health and education are driven by the simple fact that there are far more people here than there were previously.
Economists, when talking about immigration, often blandly refer to “workers” or “talent”, but immigrants are people who expect services on a par with the citizens beside whom they are working in bars, creches, hospital wards and building sites. If the State hasn’t got the capacity to deliver these services, immigration becomes a significant dilemma. When services are under strain, people will, not surprisingly, ask: “What is all this immigration for?” What is the purpose of running the economy so hot, straining capacity to the limit, simply to provide more workers to various industries that might be fairly described as overtrading?
Overtrading describes a situation where a company is growing quickly and selling as much as it possibly can to drive revenue or market share, without having the back-office capacity to deal with the complexity of a rapidly expanding business. A fast-growing company might lack cash, staff or production capacity, which means it can’t deliver on its commitments to employees, suppliers and customers. Because of a focus on growth, maybe driven by the chief executive or shareholders, things look great from the revenue perspective but inside the company everything is falling apart.
New government must build more and face down opposition to development
No single location captures global nature of Irish economy more than Dublin Airport
The United States needs the world more than it thinks, and that’s no bad thing
The old gatekeepers have lost control of the message. The implication for politics, democracy and society is enormous
To survive this period of intensity – this “seat of the pants” episode – companies must invest in the boring stuff, the systems, the accounting know-how, the humdrum back-room details that make the chief executive’s or shareholders’ exclusive focus on revenue bearable for the average employee.
The same goes for a country.
A society that focuses exclusively on a revenue metric, such as economic growth, elevating it to the primary goal, will feel like an overtrading company. It will be unbearable. The inability of the State to deliver normal services means quality of life falls even as the standard of living measured by income rises. We will feel like a poor rich country. Inflation eats away at progress, leaving everyone worse off. It may seem paradoxical, but what is needed to achieve a higher quality of life is to take some of the heat out of the economy. When money is not a constraint, the “slower means better” equation is even more likely to hold.
Should levels of immigration be driven exclusively by the immediate needs of ‘Corporate Ireland’ rather than the ability of what might be termed ‘Everyday Ireland’ to deal with a rapidly growing population?
If a government doesn’t want to risk slowing the economy down on purpose and wants to go for more growth, then it must clear the way for more capacity. This means building more and facing down opposition to development. Ireland finds itself in this position right now. If we want to grow, to service the bigger population we need to change what it means to live an everyday life in Ireland. In a nutshell, rapid development means fewer rights for the people who live here to facilitate the rights of those yet to live here. All this starts with population. If we want less strain on the capacity of the country we should limit immigration to some extent because, right now, the pace of immigration largely determines those strains.
Ireland’s demographic story is odd – an outlier in both European and world history. We are the only nation whose population today is smaller than it was 180 years ago – and significantly smaller. The Republic’s population – 5.38 million inhabitants – is still almost 20 per cent smaller than in 1841. For more than 100 years Ireland grappled with persistent emigration and population decline – well into the 1960s. In contrast, the rest of postwar Europe experienced unprecedented population growth and prosperity.
Today the script has flipped and Ireland now boasts one of western Europe’s more favourable demographic backdrops, with an old-age dependency ratio of just 23.2 per cent and a median age of 39.1 – the second lowest in the European Union on both metrics. We have a significantly younger population than our greying continental peers. And, despite a huge 20 per cent drop in 2022, Ireland also has a fertility rate of 1.54 – well above the EU average. Projections, largely based on immigration, point to a population rising by 1.8 million or +34 per cent, to a total of seven million over the coming decades. The Central Statistics Office’s modelling from 2023 to 2057 is based on three different migration scenarios. High immigration, about 45,000 new people per year, pushes the population to above seven million by 2059 while a lower rate of immigration, 10,000 per year, keeps the population at about 5.7 million.
More people demand more services and each new citizen multiplies the pressure on already strained systems. Most of us who have suffered Dublin’s rush-hour gridlock, or the daily congestion choking Cork and Galway, will surely be asking the obvious question: if our transport infrastructure is buckling under today’s population of five million, how will it cope with seven million?
Dublin ranks as the 15th most congested city globally and third worst in Europe, with drivers delayed by an average of 81 hours per year. The problem is even worse in Galway, where drivers saw the ninth highest average delays in all of Europe (67 hours), with Cork not far behind. These are not major metropolises, just modestly sized but woefully managed regional cities. We have a dreadful rail system by continental standards and an abysmal track record on delivering major infrastructure projects – something that might be considered a fundamental state competency. The housing crisis continues to escalate. In April 2022 the Housing Commission estimated a housing deficit of 256,000 homes and since then the figure has grown.
For the health of the economy is the key metric the physical entity that is size of the population or the monetary entity that is GDP? Logically, it should be a combination of both. We have the money but we don’t yet have the capacity to build and plan properly. Should levels of immigration be driven exclusively by the immediate needs of “Corporate Ireland” rather than the ability of what might be termed “Everyday Ireland” to deal with a rapidly growing population?
This clash between Corporate Ireland and Everyday Ireland will be the main fault-line for the new government. Granted, it is a problem of economic success rather than economic failure, but that doesn’t make the solution any easier.