I was in Ireland earlier this month for a business trip and you learn a lot more from talking to drivers and locals in the pub than you learn from the mainstream media. Walking around Dublin, I was struck by the sheer volume of signs on every corner criticizing the austerity measures previously agreed to (which incidentally, the referendum went to vote today so we’ll soon find out whether the Irish accept or reject the pact which is required for future assistance from the EU/IMF).
Ireland is reeling from a prior business/investment/housing bubble that burst much like the rest of the world. The Irish have been rather stoic and matter-of-fact about it compared to southern Europe. Rather than rioting in the streets, burning their cities and coordinated labor strikes, for the most part, the people have accepted that their government forced them down a road of austerity, which many view as an out for banks at their expense. They’re not happy about it and it appears as though there’s a movement afoot to overturn prior commitments, but at the same time, the Irish seem to be more mature and thoughtful about their predicament and reaction compared to the Greeks, Spain, Italy and (I predict…Portugal, France and more as the years progress).
In talking to locals and employees from our subsidiary, I learned of how the country is very much comprised of two economies. Unemployment in Ireland is relatively high, at 14.7%. Compare this with California, which is at 11% (vastly understated due to workers that dropped out of the equation after giving up). With unemployment this high, you’d think people would be content to hang on to their jobs right? Wrong, in Ireland they’re struggling with retention, losing employee after employee to other biotechs and pharmas moving into the area. See, as a low tax rate jurisdiction, Ireland is a magnet for multinationals. So, our subsidiary is seeing employees (especially people under 30) in highly skilled areas jumping to other companies for more money. They mentioned that IT and web startups are real hot their too. Yahoo, Google and other tech outfits all have a rapidly growing presence there and they can’t hire programmers and IT personnel fast enough. Meanwhile, people in the old bust industries like construction and old economy manufacturing are suffering with very high rates of unemployment with very little chance of those jobs every coming back.
On the tail of the recent Facebook IPO (and I did warn you to RUN!), this very much reminds me of California. California is arguably the most screwed up state in the entire union. They run enormous deficits, greater than many sovereign nations. They tend to pass any and all manner of laws and regulations to appease virtually any special interest group or voting block, regardless of practicality or effectiveness. The public schools are quite bad, the politics are a theater of the absurd, the taxes are virtually the highest in the union, and yet, there’s a component of the economy that is completely thriving – social media and web startups in general.
California and Ireland in this regard are very similar. If you’re in the right sector of the economy, you can write your own ticket. If you’re not in the 2-3% of constituents that happen to be in the hot sectors, you’re screwed. Much of the world is headed in this direction – the old economy and new economy jobs. It’s tough as a young twenty-something trying to pick an employer or a teen selecting a college major to discern the difference between a truly in-demand degree or job vs. walking into a bubble that’s about to burst. In some regards, it requires a leap of faith.