Economic Expansion

As was observed in a special feature in The Economist magazine in October 2004, with reference to Ireland: “surely no other country in the rich world has seen its image change so fast”. A number of explanations were offered as to the reasons for the economic expansion. The Industrial Development Authority had been successful in attracting foreign investment and the education system had supplied a corpus of skilled workers who made a significant contribution to the IT sector; in fact during the Celtic Tiger period over one third of all personal computers sold in Europe were manufactured in Ireland and it was the world’s biggest software exporter, highlighting its globalisation.  Pharmaceutical and health care companies also found Ireland an attractive base. For these foreign companies, a well educated English-speaking workforce combined with low corporation and capital gains taxes, made Ireland highly desirable and by 2004 there were over 1,100 multinationals in the Republic which exported goods worth $60 billion a year.

Low taxes were a boost to home grown enterprise, while women’s participation in the workforce increased dramatically. With the European single currency, lower interest rates became the norm. However The Economist also identified problems in 2004, principally the lamentable state of some public services and a “dangerous obsession with property”; average house prices in Dublin had quadrupled over the previous decade. Nonetheless it concluded that “Ireland has grown up”. It is debatable whether Ireland’s low tax, low public debt economy and the development of social partnership were the result of the Celtic Tiger rather than its cause.

 

Social Partnership

For its champions, social partnership was a crucial factor in creating the stability and industrial peace to sustain economic expansion, but many critics believed it was about a smothering protectionism between privileged groups. At the end of the 1980s, social partnership had been seen as a necessary response to despair about the Irish financial crisis, resulting in the Programme for National Recovery (1987-90), an agreed strategy to escape the cycle of stagnation, rising taxes and unmanageable debt. Partnership was continually widened and the benefits of industrial peace were much touted; it created an interesting interdependence but also complacency and aspirations that could not always be delivered on as well as problems of monitoring. The title of the agreements in the early twenty-first century give an indication of how the partnership mission was officially viewed: Prosperity and Fairness (2003-5), Sustaining Progress (2003-5). Towards 2016, agreed in 2006, was effectively abandoned due to the economic crisis after 2008 and the imposition of pay cuts in 2009.