Republican News · Thursday 24 April 2003

Soft landing for whom?

BY ROBBIE SMYTH

Unemployment will rise over the next two years, with another 19,000 people set to be signing on in the 26 Counties. The economy is growing, with record exports in some areas. However the benefit of this wealth will be lost to the Irish economy. And prices are still rising and any fall will be conditional on further wage rises for workers so in two years most Irish households will be worse off.

This scenario is a "soft landing" according to the Economic and Social Research Institute (ESRI) who published their latest economic forecast for the 26-County economy last week. Their economic quarterly report makes interesting reading, as it highlights not just the failures of the government in dealing with basic economic problems - it also shows the failures of academic economists in producing an analytical commentary that is actually reflective of the real economy we all live and work in.

What you won't find, for example, in the ESRI report, is a forecast for house building, with say, figures for homelessness or housing waiting lists and whether these figures will rise or fall over the next two years. Also missing are figures on whether school dropout rates will fall over the next two years, or will literacy rates improve. No mention either of hospital waiting lists.

What is mentioned in an almost casual manner is the vast of amount of wealth leaving the Irish economy. There are two measures of economic growth available to the academic economist. They are Gross Domestic Product and Gross National Product. The difference between them is that GDP includes figures for what are Called "net factor payments".

These are mostly made up of the profits of multinationals made in our economy but taken out and invested in other regions. Last year this amounted to over §24 billion, according to the ESRI. It will rise to over §25 billion this year. It means that, according to this measure, nearly one fifth of the wealth created in the state is leaving the economy.

It is clear that someone is indeed having a soft landing when it comes to reaping the benefits of the Irish economy. It is clear from the ESRI report that it will not be Irish workers or their families. Why do they find it so difficult to comment on that?