2/9/15: House prices, rents and Irish demographics

Based on latest data from CSO, Dublin has gained disproportionately in population compared to the rest of the country in 12 months through April 2015. At the top level, Dublin population rose 30,700 in 2015 compared to overall state population rise of 25,800, which implies that ex-Dublin, the country lost population at the rate of 4,900. Dublin v rest of the state population changes were even more dramatic when one considers age distribution.

• Population aged 0-19 years rose in Dublin by 15,700 in 2015. The same group numbers increased state-wide by 19,600. Which means ex-Dublin, younger population rose only 3,900 against Dublin's 15,700. This highlights family formation dynamics in Dublin as opposed to the rest of the country.
• Younger working-age population (age 20-29) fell in Dublin by 5,700 in 2015. Across the country, the decline was 25,400. Which means that ex-Dublin, younger working-age population has declined by 19,700.
• The main cohort of working-age population (30-64 years old) has risen in Dublin by 15,700 in 2015 compared to 2014. Across the country the increase was 14,100, which implies that ex-Dublin, the state lost 1,600 adults in the main working age cohort.
• Older population dynamics were also in favour of Dublin. In 12 months through April 2015, population aged 65 and older rose in Dublin by 4,900 and it was up nationwide by 25,800. Which means that ex-Dublin, older age population rose 20,900.

The above dynamics suggest demographic support for rising property prices and rents in Dublin, as was suggested by some analysts. This may or may not be so, since population dynamics work over years, not in simple y/y terms. So let's take a look at relative changes in Dublin population compared to the rest of the state:

Dublin population, as % of state-wide population of core home ownership demographic that transacts on the purchasing side of the market (30-64 year olds) has been rising overall since falling to 27.5% in 2010 and is currently standing at 28.9%, still below 29.6% high in 1996. But the rental demographic of 20-29 year olds has shown different dynamics, reaching period trough in 2013 (at 32.3%) and rising since then to 33.1% in 2015, a level consistent with 2011. Neither suggests huge uplift in demand for rentals or owner-occupied homes.

Of course, these are cohorts of 2015. Back in 2007, when house loans were last available in plentiful supply, large share of purchasers demographic today was… err… renters. And absent credit for house purchases, as this demographic moved into purchasing age, they stayed renters.  This would suggest increased pressures on rents. But the picture is more messed up by the losses of population share in 20-29 years old group, most likely due to emigration. Longer tenure for children staying in parents' homes also should have held rents back. In other words, our traditional view of demographic distribution of buyers v renters has been messed up by the sheer duration of the current crisis.

Take 2010-2015 period. Over that time, Dublin population of 20-29 year olds fell 61,000 and across the rest of the country, this cohort numbers fell 123,000. But cohort of 30-64 year olds rose in Dublin by 60,900 against a rise of 47,600 in the rest of the country. Demand based on demographics, therefore, suggests swing from renting toward purchasing. Similar picture repeats if we take 2011-2015 cumulative changes and 2012-2015 and 2013-2015. And, still, rents were rising.

What is more mysterious is that overall working age population has been relatively mildly altered in recent years. In Dublin, working age cohort (20-64 year olds) has grown by just 10,000 in 2014-2015 period and it is up only 8,000 on 2012. The cohort is still down 13,300 on 2008. Across the country, ex-Dublin, things were much worse: since 2008 the cohort fell 62,200 and compared to 2014 it is now down 21,300. In simple terms, unless children and retirees are buying homes, there shouldn't be any dramatic uplifts in demand for property in Dublin, and most certainly outside Dublin.

Which goes to say that any claims about actual demand (based on numbers of potential renters and buyers) are a bit strained. In 2008, there were 821,200 people of age 20-64 living in Dublin. Today there are 807,900. Unemployment rose over that time too. So where is that tremendous growth in demand coming from to push property prices up? Property prices in Dublin hit a period trough in 2012. Since then, there has been a net increase of just 8,000 in 20-64 year olds cohort living in Dublin. Again, where is that spiking in demand coming from?

In my view, simple demographics do not explain Irish property prices uptick from crisis lows. Speculation and latent surplus of savings in a relatively small category of Irish residents (and ex-past), plus re-distribution within cohorts between renters and buyers are the main drivers on demand side of the equation. Supply side also contributes significantly to prices uptick. And beyond that, there has to be significant behavioural component: our addiction to property - despite all the hopes of Dublin 'planners' for an Amsterdam on the Liffey - has not gone away over the years of the crisis. The first, initial shock to the economy has had an effect of scaring us put of the markets for property. Negative equity contributed more downward momentum. But once we learned to live with our fears, we simply decided o turn back to our old model of family investment: bricks and mortar. 

30/8/15: Migration & Changes in Irish Population: Working Age Population

In two previous posts, I looked at Irish migration and population changes data from the point of:
- Top level analysis of migration and natural changes in population; and
- Migration trends by nationality.

Continuing with analysis of population data from CSO released earlier this week, let's take a look at the age composition of population.

In what follows, I define two key categories within our population:

• Working age group - population aged 20 years through 64 years. This is an approximate definition, and I prefer it to including 15-20 year olds into it, primarily because it allows for more accurate reflection of numbers in full time education. There are many caveats applicable here, so take the approximation for what it is - indicative, rather than definitive.
• Non-working age population (rest of population). Again, that is not to say that younger students do not work (at least part-time) or that people beyond 65 years of age do not work. Some do. Majority do not. When many do work, they work less hours than is required to sustain independent living, so they still rely on either pensions or social transfers or family transfers or any permutations of the three to sustain themselves.

In simple terms, mindful of all caveats, etc, a ratio of working age population to non-working age population tells so a bit about how high is the dependency weight in the society due to age distribution in population. Lower ratio means fewer working age adults having to sustain themselves and non-working age people. By sustain I mean economically sustain - by working and adding value in the economy.


Chart below shows distribution of changes in working age population and non-working age population in y/y and cumulatively from 2008:

What stands out in the chart?

1. Working age population overall has been in decline since 2010. In cumulative terms, number of working age adults has fallen 2.7% on 2008 level by April 2015 - a decline of 75,500. In 2015, the rate of decline was 0.4% - more moderate than in three previous years, but still steeper than 2010-2011 average.
2. Non-working age population remains on the rise for every year covered by the CSO series and the rate of increase in 2015 (at 2%) was the highest since 2010. Overall, over 2008-2015 period, non-working age population those 13.3% or 225,900.
3. The gap between working age population and non-working age population is now at 798,400 - the worst reading in series history and 301,400 worse than in 2008.

As the result of the above trends, ratio of working age population to non-working age population continued to fall precipitously in 2015:

In 2015, the ratio of working age population to non-working age population was 1.42 - meaning that for each non-working age person, there were 1.42 working age adults. This does not correct for the working age adults who are not in the labour force as well as for the unemployed. The best performance year in this metric was 2007 when the ratio was 1.66. In other words, in 2015, there were 24 fewer working age adults per each 100 non-working age persons than in 2007.

29/8/15: Migration & Natural Changes in Irish Population: Migration by Nationality

Having looked in the previous post at top level data for population changes in Ireland reported by CSO, now let's take a look at composition of migrants flows by nationality. This is going to be charts-heavy.

Let's start with immigration flows. Chart below shows Immigration into Ireland over the recent years:

Several interesting aspects of this jump out:

1. There has been a significant increase of inflows of people from the 'Rest of the World' (ex-EU). Numbers of those coming into Ireland from outside the EU are up at 30,400 in 2015 from 25,500 in 2014. Pre-2015, average annual inflows of immigrants from outside the EU was 15,722, so last year things were pretty much ahead of the average for the third year in a row. Much of this is probably driven by big hiring numbers from multinationals which are increasingly moving their EMEA and MENA operations into Ireland. 
2. There has been a small uptick in the number of new comers from the Accession States (EU12), the numbers of which rose to 12,800 in 2015 compared to 10,000 in 2014. This is the second highest inflow rate since the start of the crisis. 2006-2014 average for these inflows (29,078) is still significantly above 2015 figure. Again, I would suspect that much of this increase is accounted for by MNCs and also by demand for particular skills. Note: I will blogging on skills matters subsequently in a separate post.
3. There has been virtually no change in inflows of people from the UK over the last 3 years, so nothing worth spotting here in terms of trends. Rest of EU-15 immigration flows also were relatively static, up to 8,900 in 2015 compared to 8,700 in 2014. Nonetheless, this has been the busiest year for EU15 migration inflows (ex-UK and Ireland) for some time - since 2009.
4. Number of Irish nationals returning rose from 11,600 in 2014 to 12,100 in 2015. Which, kind of directly flies in the face of a number of media reports about 'returning migrants'. Apparently, the migrants are not quite returning, as current rate of immigration in Ireland by Irish nationals was the second slowest on record and much closer to the lowest year (2014) than to the third lowest (2013).

Now, consider emigration figures:

Again, few things worth a closer look:

1. Irish emigration continued to decline in 2015 for the second year in a row. 2014 emigration of Irish nationals stood at 35,300 down from 40,700 in 2014 and down substantially on crisis period peak of 50,900 in 2013. The rate of emigration is now closer to 2006-2014 average of 29,444 that before, but it is still substantially above that number. Crucially, in more normal times, emigration by Irish nationals stood at around 13,700, which is well below current levels.
2. Emigration by UK nationals out of Ireland remained pretty much stable and on-trend. Historical pre-2015 average is for annual outflow of 3,467 and in 2015 the number was 3,800. Emigration by the nationals of the EU15 states (ex-UK and Ireland) was up in 2015 at 15,600 compared to 14,000 in 2014. The rate is rising now for two years and is well ahead of 9,078 average for 2006-2014 period. This is interesting, as it reflects some shift in MNCs employment: in the past, MNCs were focusing much of their hiring on old EU markets, demanding language skills from these countries. Now, it seems the momentum is shifting toward ex-EU15 markets. Notably, pre-crisis average emigration by EU15 nationals stood at 6,667 per annum, very substantially below the 2015 figure.
3. In contrast to EU15 pattern, emigration by the Accession EU12 nationals fell significantly in 2015 to 8,500 from 10,100 in 2014. This is the slowest rate of outflow for any year from 2007 on and significantly below the 2006-2014 average annual rate of outflow of 15,478.
4. Rest of the World (ex-EU) emigration picked up, rising to 17,700 in 2015 compared to 14,100 in 2014 and against the 2006-2014 average of 9,9833. The reason for this, most likely, is the turnover of MNCs-employed tech workers and specialists who tend to stay in Ireland for 2-3 years and subsequently leave. 

So last remaking bit of analysis will have to cover net immigration / emigration:

As consistent with the number discussed above:

1. Rate of net immigration from the 'Rest of the World' (ex-EU) picked up somewhat in 2015, rising to 12,700 from 11,200 in 2014. This is the highest rate of net increase in ex-EU population in Ireland for any year between 2006 and 2015.
2. Second noticeable change in 2015 was positive contribution of EU12 (Accession states) nationals, with their net immigration at 4,300 in 2015 marking the first positive net result since 2008.
3. EU15 (ex-UK and Ireland) net emigration remained significant and increased, with 6,700 more nationals of EU15 (ex-UK and Ireland) leaving Ireland than coming into Ireland in 2015, up on 5,300 in 2014. This marks the third year of rising net emigration by EU15 nationals out of Ireland and 6th consecutive year of negative net immigration by this group of residents.
4. Irish nationals net emigration from Ireland remained very substantial in 2015 at 23,200. The number is lower than 29,200 net emigrations recorded in 2014 and the lowest reading in 4 years, but it is still well above the crisis period average. In simple terms, things are getting worse slower in this metric, they are not getting better.

Combined 2008-2015 net movements of people by nationality are shown in the chart below. Since 2008 through April 2015, there are 5,200 more UK nationals residing in Ireland, while the number of EU12 migrants rose 11,100. By far, the largest net emigration on a cumulative basis relates to outflow of Irish nationals: between 2008 and 2015, 132,400 more Irish nationals left the country than came back into the country - annual average rate of net emigration of 16,600 and in 2015 annual net emigration for Irish nationals was 6,700 above that.

29/8/15: Migration & Natural Changes in Irish Population: Top Level Analysis of 2015 data

Irish migration and population data for the 12 months through April 2015 have been published by CSO recently. It is a tough read. 

Let's take a look at overall picture (2015 here references May 2014-April 2015 period as per CSO data):

• There were 67,000 births in 2015, down on 67,700 in 2014 - a decline of 700. Compared to peak births year - 2010 - births are down 10,200.
• There were also 29,600 deaths in 2015, compared to 29,800 in 2014 which is 3,200 lower than peak year (1990), but more significantly - below 2013 and 2014 readings. 
• Which means that natural increase in population was 37,400 in 2015, compared to 37,900 in 2014. This is the lowest natural rate of population increase since 2006 and it is driven exclusively by decline in birth rate which fell to 1.445% (births as percentage of total population) from 1.469% in 2014. Current birth rate is the lowest since 2001.
• Immigration into Ireland amounted to 69,300 in 2015, an uplift on 60,300 in 2014 and the highest reading since 2009. Immigration has been increasing every year starting with 2013. Note: I will be blogging on quality of immigration and emigration separately, so stay tuned. Current rate of immigration is ahead of 2008-2014 average (64,500) but behind 2000-2007 average (80,100).
• Meanwhile, emigration slipped slightly  - the good news you heard by now, most likely - from 81,900 in 2014 to 80,900 in 2015. This brings 2015 emigration closer to 2011 level (80,600) and lowest in 4 years. However, historical comparisons are still weak: in 2000-2007 average rate of emigration from Ireland was 30,700 and in 2008-2014 period it was 75,571, which means 2015 figure is higher than either pre-crisis average (obvious, really) and crisis period average. 
• Net emigration stood at 11,600 in 2015, down from 21,400 in 2014 - a decline that is accounted for by an 8,700 increase in immigration and by 1,000 decrease in emigration. Thanks to immigrants numbers rising, we are at the lowest crisis period level of net emigration. 

Over 2009-2015, cumulated net outflows of people from Ireland stand at 153,800 - or 3.3% of our population in 2015 - close to 4 last years of combined natural increases in population (births less deaths). Over the last 6 years, average annual net emigration from Ireland stood at 25,900. During the 6 years of 1987-1992 the average was 21,050. even with 2015 decline in net emigration rate, we are still sending more people abroad in the current crisis than in the late-1980s -early 1990s crisis.

Which brings us to the 'opportunity cost' of this emigration, or in simple terms - what would our population be were it not for the crisis. 

First up, our current population estimates: per CSO, in April 2015 there were 4,635,400 people living in Ireland - an increase of 25,800 on same period 2014. The rate of increase was the highest since 2009. Which is all good news. However, the rate of annual population increase in 2015 was lower than 2008-2014 average (33,386) and was way below the 2000-2007 average of 80,100.

Now, let's take three scenarios. Starting with 1997 - the year when majority of us think Ireland's catching up with EA15 states was pretty much well underway and things were not yet fully 'mad' in a Celtic Garfield sense. This is also happens to be the year when net immigration posted the first above zero trend, with 7 year average through 1997 at 4,600 being the first positive 7 year average on record (note, 7 year average is chosen because of the cut-off period and because it corresponds to the duration of the current crisis too). Now, let's define 3 scenarios:

1. Scenario 1: take an average for net migration over 1997-2000 (capturing the period all of can agree was pre-bubble in the property markets) and take projection from 1987 through 2015 at this average net immigration rate and accounting for actual realised natural rate of population change. You get 2015 population at 4,662,700 or 27,300 more people than current official estimated population.
2. Scenario 2: take an average for net migration over 1997-2003 (7 years period), capturing the period that some think was still pretty much pre-Garfield craze and, crucially, before the Accession of 2004 that brought into Ireland significant inflows of Eastern European workers. You get 2015 population of 4,784,500 or 149,100 more people than current official estimated population.
3. Scenario 3: while a bit outlandish, let's just consider the period of the entire Celtic Garfield and take the average net immigration rate at 1997-2007. Extreme, I know, but what the hell. You get 2015 population of 5,701,300 or 1,065,900 more people than current official estimated population.

Stay tuned for more analysis of net migration flows.

27/8/2014: Irish Migration Trends by Nationality: 2014

In the previous post I covered aggregate migration and population data for Ireland for 2014 (data coverage is 12 months through April 2014). The post is available here: http://trueeconomics.blogspot.com/2014/08/2782014-migration-population-change-in.html?spref=tw

Now, as promised earlier, lets take a look at the decomposition of the migration data.

First, net migration by nationality:

• Total emigration from Ireland in 12 months through April 2014 stood at 81,900, which is down from 89,000 in the same period 2013 (a decline of 7,100). This marks the first year of decrease in emigration since 2011.
• 40,700 Irish nationals emigrated from Ireland in 12 months through April 2014, down 10,200 on the same period of 2013 and marking the first slowdown in outflows since 2008. Latest rate of emigration for Irish nationals is the lowest reading since 2010.
• Over the 12 months though April 2014, 2,700 UK nationals emigrated from Ireland - which represents a decline in emigration rate for this group of residents of 1,200 y/y. However, this decline was more than off-set by the rise in emigration of 'Rest of EU-15' residents which rose 4,100 y/y to 14,000 in the 12 months through April 2014. 
• The rate of emigration from Ireland for EU12 Accession states nationals slowed down from 14,000 in 12 months through April 2013 to 10,100 in 12 months through April 2014.
• For non-EU nationals, the rate of emigration has accelerated to 14,400 in the 12 months through April 2014 from 10,300 in the same period of 2013.

Thus, for the fifth year in a row, Irish nationals represented the largest group of emigrants from Ireland by total numbers. However, if in 2011-2013 Irish nationals represented more than 50% of the total emigration numbers, in 2014 this fell to 49.7%.

Net emigration figures, however, were less encouraging for the Irish nationals.

• Total net emigration from Ireland stood at 21,400 in 12 months through April 2014, down from 33,100 in April 2013.
• Irish nationals' net emigration rate was running at 29,200 in the 12 months through April 2014, down from 35,200 in 2013, but still above the rate recorded for any other year since 2006.
• In contrast with the trend for the Irish nationals, UK nationals posted another year of rising net immigration into Ireland: 2,200 more UK nationals now reside in the country compared 1,000 more in 2013. Rest of EU-15 group posted an increase in the rate of net emigration from Ireland in 2014 (-5,300) compared to 2013 (-2,500). This made 2014 the worst year for net emigration of this group out of Ireland on record.
• Net emigration of the EU12 Accession states nationals fell to its lowest crisis-period level of 200 in 2014, down from 3,200 in 2013.
• Non-EU nationals recorded net immigration rate of 11,200 in 2014 which represents the highest rate on record (since 2006).

Chart below shows cumulated changes in migration over the period of 2008-2014:

27/8/2014: Migration & Population Change in Ireland: 2014 data

Population and migration estimates for the 12 months period through April 2014 have been finally released by the CSO with a lag of some 4 months. The figures show some marginal improvement in the underlying trends compared to the disastrous 2013, but overall the situation remains bleak.

Let's start with top level figures first and deal with compositional details in the subsequent post.

Births numbers have fallen to the levels last seen in 2007, from 70,500 in 2013 to 67,700 in 2014. Improving labour market and deteriorating personal finances are more likely behind the trend: the former means lower incentives to stay out of labour market and lower incentives to take maternity leave protection, while the latter means increased pressure to generate second income in the family, which is, of course, automatically associated with having to pay extortionate childcare costs. Whatever the drivers are, this is the births rate peaked in 2010 and has been declining since, neatly tracing out labour markets developments. 2014 marks the first year since 2007 that the rate is below 70,000.

Deaths are running at the rate proximate to 2013 and not far off from 2012. This means that the Natural Increase in population has slowed down to 37,900 in 2014 from 40,800 in 2013 and this marks the lowest natural rate of increase since 2006 and the first sub-40,000 rate of increase since 2007.

Immigration rose in 12 months through April 2014 to 60,600 from 55,900 in the 12 months through April 2013. 2014 figure is the highest since 2009. Emigration declined to 81,900 in 2014 against 89,000 in 2013. This is the lowest level of emigration since 2011 when outflow of migrants from the country was running at 80,600.

Net emigration also moderated in 12 months through April 2014, declining from 2013 level of 33,100 to 2014 figure of 21,400. This marks the lowest net emigration rate for the entire crisis period. Which is, undoubtedly, good news. Bad news, we are still in net emigration mode.

With slower rate of net emigration outflows, net change in Irish resident population was positive in 12 months through April 2014, recording an increase of 16,500 y/y, compared to 7,700 rise in 12 months through April 2013.

A chart to illustrate:

Meanwhile, cumulated 2009-2014 emigration amounted to 479,800, cumulated net emigration for the same period amounted to 142,200. These are actual figures recorded. Taking into the account the trends in Irish migration over 2000-2007 period, the 'opportunity cost' of the crisis is the *net* loss of some 521,000 residents relative to where the population could have been were the trends established in 2000-2007 to remain in place.

A chart to illustrate:

As the result of the above changes in actual migration and natural rate of increases in population, we have the following changes in the working and non-working age populations:

• Working-age (20-64 year olds) population stood at 2,728,300 as of the end of April 2014, down 14,500 on a year ago and down 64,200 on 2008.
• As percentage of the total population, working-age population is now standing at 59.2%, the lowest for any period since 2006.
• Non-working age population is up 31,300 to 1,881,600 in 2014 compared to 2013 and up 188,900 on 2008.
• Non-working age population now stands at 40.8%, up on 40.3% in 2013 and the highest for any period since 2006.

Charts to illustrate:

23/9/2013: Sunday Times 08/09/2013: Irish Demographic Dividend Reversal

This is an unedited version of my Sunday Times article from September 8, 2013.


Back in the heady days of the Celtic Tiger, Irish economics commentariat and banks experts were extolling the virtues of Ireland's 'demographic dividend'.  A confluence of high birth rates, declining mortality and robust inward migration was propelling Ireland toward perpetually rising population counts. With these, the argument went, Ireland faced the ever-lasting expansion of domestic demand and labour supply.

Less than a decade later, the dividend has all but vanished in the maelstrom of rampant emigration. More ominously, as the latest trends suggest emigration is now reaching well beyond the traditionally at-risk sub-categories of the recent newcomers to Ireland and the long-term unemployed. Instead, outflows of professionals and middle-class families are now also on the rise.


Cutting across this nirvana of consensus permeating the Irish society around 2004-2006, few dared to suggest that something major was amiss in the aforementioned theory. Yet, the risks to Ireland's 'demographic dividend' were visible even at the time of the boom. At the peak of the Celtic Tiger and since the beginning of the Great Recession, I wrote about them in Irish media, including in these very pages. The first threat to our long-term population trends even in 2004-2006 period related to the risk of a structural economic slowdown. The second one came from the demographic ageing of the core European states and the resulting inevitable rise in wages premium for younger workers in these economies.

With the onset of the Great Recession, increased job markets uncertainty and declining disposable incomes have acted to boost Ireland’s birth rates, seemingly supporting the argument of some analysts that the demographic dividend was still alive and well then. In 1995-2007, there were 56,423 annual births on average in the Republic. In 2008-2009 average annual number of births stood at 74,183. Changes in the incentives for having children offered by the Great Recession were clearly the factor pushing fertility up. Alas, the latest data covering the twelve months through April 2013 shows that this process is now exhausted with 2013 births counts down 8.7 percent on 2010 peak.

Offsetting the initial rise in births, the Great Recession pushed Ireland back into becoming a net emigration nation once again, for the first time since 1995. Data published by the CSO last week shows that in 12 months through April 2013, total of 89,000 people have left the country. This is the highest number since the records started in 1987. There was a small increase in immigration driven primarily by importation of specialist foreign workers by the booming ICT and IFSC sectors, plus the return of students working on 1 and 2-year visas abroad. Despite this, 2013 marks the fourth consecutive year of net emigration.

Current rates of emigration are running ahead of the 1987-1995 period average. Back then, net emigration from Ireland averaged 14,811 per annum. Over the last four years, the average net outflow of people from this country stood at 30,600 annually.

The twin squeeze of declining birth rates and strong net emigration has resulted in 2013 posting the weakest overall population changes in 23 years. In 12 months through April 2013, Irish population grew estimated 7,700 - one seventh of the annual average for the 1991-2007 period. This brings us dangerously close to a rerun of the 1980s-styled demographic collapse when Irish population actually declined in three years through 1990.

Truth be told, we are probably caught in this 'back to the future' demographic warp already.

Our official statistics show inflow of 29,400 immigrants, excluding the returning Irish nationals and the immigrants from the Accession states, in the 12 months through April 2013. Majority of these are likely to be foreign workers brought into the country temporarily by the MNCs. Moreover, the current CSO estimates are based on PPS numbers, foreign visas issuance, as well as household surveys. These methods are potentially underestimating the numbers of those Irish nationals who have left the country, but still have close family remaining here. Last, but not least, our data is probably also underestimating outflows of the EU12 Accession states’ nationals.

Controlling for the above factors, it is highly likely that we are already experiencing a reversal of the ‘demographic dividend’ and the onset of the zero-to-negative population growth in Ireland since 2011. This has meant that our population today is some 436,000 below where it would have been if the trend established between 2000 and 2007 were to continue.


Ireland's emigration flows and population changes by age and nationality are retracing the structural collapse of our economy: the story of our paralysed and polarised society burdened by debts, taxes, unemployment, lack of opportunities for career advancement and fear for the future.

From 2010 through 2013, the numbers of Irish nationals opting to leave the country net of those returning from abroad have been rising steadily. The net outflow of Irish nationals more than tripled between 2010 and 2013. If between 2006 and 2008, some 32,100 more Irish people returned home than left Ireland, over the subsequent 5 years, 90,700 more Irish people emigrated from the island than moved here.

In addition to the above, there are some new undertones that are emerging in the data over the last two years.

Official data on population breakdown by age groups shows that the bulk of population declines over the crisis in Ireland took place in the 15-29 year olds cohorts. However, since 2011, the 30-39 year olds cohort is also posting declining numbers. These age-related trends are now pushing us toward twin age dependency scenario where the numbers of old age-dependent residents and young age-dependents peak at the same time. Top productivity cohorts - ages 34-54 - grew by 124,000 since 2007, while old and young age dependents cohorts are up 203,600 over the same period of time. Working age cohorts (20 years of age through 64 years of age) accounted for 62.4 percent of Irish population in 2007. This year the ratio is 59.7 percent.

Compared against the age distribution of the unemployment, the latest trends suggest that jobs losses are no longer the sole drivers of emigration. Instead, it appears that emigration is increasingly afflicting those groups of population that are generally more secure in their jobs. The potential reasons for this are household debt overhang and lack of promotional opportunities open to the younger workers here.

While the numbers of emigrants between 15 and 24 years of age remained basically unchanged over 2011-2013 period, the numbers of emigrants between 25 and 44 years of age rose by a third. With this, there was a corresponding rise in families relocating abroad.

With banks starting to move more aggressively against distressed borrowers, these sub-trends are likely to strengthen over time.

Economic and social losses arising from debt crisis are also likely to increase as migrants due to debt and/or career considerations are more likely to carry with them above average skills, productivity and earning potential. In addition, these migrants are less likely to return to Ireland, especially if the debt they leave behind remains on the record against their names.


The impact of the current wave of emigration on our society and economy is likely to be more long lasting than that of the previous emigration waves. This conjecture is supported by a number of considerations.

Today’s emigrants are conditioned by their education, past employment experiences and social values systems to accept the mobile nature of their future careers. In other words, having left Ireland they are unlikely to look back at their homeland as a natural home. Increasingly, Irish emigrants are setting their sights on geographies that are more remote from Ireland than the UK and continental Europe. This puts more stress on their ties to Ireland. The latest data showing that emigrants to countries like Australia, New Zealand and Canada tend to show lower returns in recent years. In addition, debt legacy will hold many of them back from returning to Ireland in the future. Age-related considerations with further reinforce this effect, with many emigrants in their mid-30s and 40s today facing a prospect of never again being able to secure a mortgage in Ireland were they to attempt a comeback. Lastly, a major factor in today’s emigration from Ireland is that it involves greater proportion of emigrants who enter their host destinations legally, thus increasing their chances at future naturalisation.

Overall, CSO data confirms the above observations, as fewer and fewer Irish nationals are today returning back home.


Far from being a solution to our economic woes or a temporary safety valve for the economy saddled with high levels of unemployment, current wave of emigration from Ireland is undermining the prospects of economic recovery here. More crucially, by removing more politically and socially disenchanted and activist younger people and families, the emigration is acting to mute the voices of dissent here. With them, the raison d’etre for the robust political, social and economic changes is slipping away too.

BOX-OUT:

Markit-Investec Purchasing Manager Indices for Irish Manufacturing and Services have both posted significant gains in August, compared to July. August PMI for Manufacturing came in at 52.0, showing the fastest pace of economic activity growth for the sector since November 2012. Meanwhile, Services PMI reading of 61.6 was the highest since February 2007. Both indices are subject to significant distortions from the multinational companies based here. However, Services PMI is subject to more severe skews due to the tax arbitrage activities by companies operating in international financial services, ICT services and auxiliary business support services. Nonetheless, caveats aside, the latest data strongly suggests that Ireland has moved out of the triple-dip recession in Q3 2013 and will post growth in GDP for the three months through September. Aside from this, however, the PMIs continue to signal relative weakness in the domestic sectors compared to exports and employment growth signals have weakened in both sectors of the economy. Finally, additional good news were signaled by the improved profit margins in Services, now third month running and marking the first sustained upward momentum in profits in five years. This, however, was not the case in Manufacturing, where input costs rose against basically unchanged output prices.

12/9/2013: Actual v Potential Emigration from Ireland

In recent weeks, I have seen a number of figures mentioned relating to the extent of emigration from Ireland over the recent years, ranging from 300,000 to 400,000 emigrants. Here is the summary of the data:

Actual levels of Emigration from 2009 through 2013 stand at 397,900 cumulative emigrants. Actual recorded Net Emigration from Ireland over that period stands at 120,800.

Taking into the account the trends for inward and outward migration from 2000 through 2007, Net Emigration reflective of pre-crisis trend stands at around 436,700. This number, however, assumes that the trend for inward inflow of people into the country as well as the trend for outward outflow of people from the country established over 2000-2007 were to continue into 2009-2013 period as well. As such, this number (loosely) represents the potential loss of population due to rising emigration and reduced immigration. Most of this effect is driven by reduction in the inflows of people into the country relative to trend.

While the last number is only indicative and an estimate, it does show that the true demographic cost of the crisis to Ireland is in the region of 436,700 fewer residents in this economy than could have been expected under the pre-crisis trends.

30/9/2012: Ireland's Demographic Dividend Turns Negative?

Ireland has one of the highest and healthiest birth rates in the advanced economies club, a fact that remains valid even today, amidst the economic downturn. In the past, this has prompted some economists and commentators to label this trend 'the demographic dividend'. I always pointed to the fact that if this indeed is a 'dividend', then retaining it within the Irish economy (society) is as important as generating it in the first place. Alas, over the recent years, our demographic dividend has been largely squandered away by the combination of a cyclical downturn (temporary loss of jobs) and more importantly by the structural recession (longer term loss of jobs). I highlighted the top line trends in our migration in the previous posts (here and here).

Here, let's take a quick look at the 'demographic dividend'.

With many caveats, let us define two groups of population: those in active working age group (20-64 years old) and those outside this group (0-19 years old and over 65 years old). The reason for these definitions is that younger people  under 20 years of age are significantly engaged in education systems and although some of the students do work, they are not engaged in career-enhancing work and/or work part time. Similarly, some of the people in age category over 65 are still very much gainfully employed, but vast majority of people in this age category either work part time, or do not work at all. Again, all of this relates to formal employment, so we omit household work, which is important in the economy as well, but is hard to quantify.

With caveats, then:

• Between 2006 and 2009 working age group population in Ireland grew by 189,100 and in the period of 2010-2012 it shrunk by 27,000. Quite a reversal in the 'demographic dividend' if you ask me.
• The same group share of total population grew by 0.1 percentage point in 2006-2009 period and contracted by 1.0 percent in 2010-2012 period.
• Meanwhile, the opposite side of the 'dividend' performed in exactly the opposite direction: non-working age population grew in 2006-2009 period by 114,500 and then again expanded by 57,700 in the period of 2010-2012. 
• The share of total population that is captured by the non-working age population shrunk by 0.1% in 2006-2009 period and grew by 1.0% in 2010-2012.
• Let's sum this up: in 2006-2012 period, working age population expanded by 150,800, while non-working age population grew 201,600. If this is a dividend, so far it is coming up negative. Proportion of working age population as a share of total population shrunk 1.5% and proportion of non-working age population expanded by 1.5%.

Charts to illustrate:

The above, of course, leaves out the account of unemployment. But even abstracting away from this, Ireland is now at risk of suffering from rising twin dependency: fewer working-age people funding more non-working-age people. All because of emigration. Dividend...

29/9/2012: Detailed analysis of Irish migration by nationality

On foot of some comments to my earlier post on Ireland's migration flows, here are three charts to show in more details nationality breakdown of the core flows: Data refers to April-April data, so 2012 references period of April 2011 - April 2012.

Annual immigration:

• Total immigration peaked at 151,100 in 2007 and declined to the low point of 41,800 in 2010. Since then, it bounced somewhat back to 53,300 in 2011 and to 52,700 in 2012.

Annual emigration:

• Annual emigration hit bottom in 2006 at 36,000 and rose steadily to 49,200 in 2008. Thereafter, total emigration rose to 72,000 in 2009, dropped slightly to 69,200 in 2010 and shot up in 2011 (80,600) and 2012 (87,100).

Cumulated flows for 2006-2012:

• Cumulated net inflows for the period of 2006-2012 stood at 153,500 in April 2012.
• Irish nationals represent the only category of residents that registered net cumulated outflow (-23,400) in the period of 2006-2012.
• In 2006-2008, there were cumulated net inflows of 32,100 for Irish nationals and in 2009-2012 this was reversed to a cumulated net outflow of 55,500
• In 2006-2008, there were cumulated net inflows of 11,400 of UK nationals into Ireland, which was reversed to a cumulated net outflow of 2,300 in the 2009-2012 period
• In 2006-2008, there were cumulated net inflows of 14,100 for 'Rest of EU15' nationals and in 2009-2012 this was reversed to a cumulated net outflow of 5,800
• In 2006-2008, there were cumulated net inflows of 152,900 for EU12 nationals and in 2009-2012 this was reversed to a cumulated net outflow of 27,300
• In 2006-2008, there were cumulated net inflows of 30,600 for nationals from the rest of the world and in 2009-2012 there was a shallower net cumulated inflow of 3,600.

28/9/2012: 2012 Emigration hits record levels

Latest data from the CSO on Migration and Population changes estimates for the 12 months period April 2011-April 2012 shows that during the period of so-called 'economic turnaround' marked by the officially 'EU-average growth' attained in Ireland, Irish emigration has hit new post-1990 record levels.

Top line numbers are:

• In April 2011-April 2012 Ireland registered 74,000 new births - a number representing the fourth highest number of births in any year since 1987.
• Over the same period, the number of deaths stood at 29,200, implying the natural rate of increase in Irish population of 44,900 - also the fourth highest rate in history of the series, tied with the identical rate achieved in 2008.
• In April 2011 - April 2012 52,700 people migrated into Ireland well below 69,900 average for 200-2006 period.
• Over the said period 87,100 people left Ireland - a historical record level, beating 80,600 record set in April 2010 - April 2011 period and more than tripple the average rate of outward emigration (28,500) for 2000-2006 period. Overall rate of emigration is now 23% above that attained in the peak pre-crisis year of 1989.
• Net emigration reached 34,400 in April 2011 - April 2012, marking the third highest rate of net emigration in history of the series. In 2000-2006 we averaged 41,400 net immigration per annum, implying a downward swing of 75,800 per annum. Net emigration hit the post-1990 record in the 12 months through April 2012.
• As the result, Irish population expanded by only 10,500 in April 2011 - April 2012 period - the slowest rate of growth since 1990. In 2000-2006 period, Irish population grew on average at the rate of 71,200 per annum.

Charts to illustrate these trends:

Breakdown of net emigration by nationalities shows that the principal driver of emigration from Ireland is outflow of Irish nationals from the country, confirming the trend established in 2011.

Referencing the trends in migration that existed prior to the crisis, the current crisis period is associated with potential net loss of 219,300 persons in the period of 2008-2012. In gross numbers terms, 358,100 people actually emigrated from Ireland in 2008-2012.

If there is such a thing as 'demographic dividend' Ireland today is running at a massive demographic 'loss'.

28/3/2012: Sunday Times 25/3/2012 - Irish emigration curse

Below is the unedited version of my article for Sunday Times from 25/03/2012.

Last week, as Ireland and the world celebrated the St Patrick’s Day, close to fifteen hundred Irish residents, including close to a thousand of Irish nationals, have left this country. In all the celebratory public relations kitsch, no Irish official has bothered to remember those who are currently being driven out of their native and adopted homeland by the realities of our dire economic situation.

According to the latest CSO report – covering the period from 1987 through 2011, emigration from Ireland has hit a record high. In a year to April 2011 some 76,400 Irish residents have chosen to leave the country, against the previous high of 70,600 recorded in 1989. For the first time since 1990, emigration has surpassed the number of births.

Given the CSO methodology, it is highly probable that the above figures tell only a part of the story. Our official emigration statistics are based on the Quarterly National Household Survey, unlikely to cover with reasonable accuracy highly mobile and less likely to engage in official surveys younger households, especially those that moved to Ireland from East Central Europe.

For example, emigration numbers for Irish nationals rose 200% between 2008 and 2011, with steady increases recorded every year since the onset of the crisis. Over the same period of time, growth in emigration outflows of EU15 (ex-UK) nationals from Ireland peaked in 2008-2009 and halved since then. Prior to 2010, Irish nationals contributed between 0% and 10% of the total net migration numbers. By 2010 and 2011 this rose to 42% and 68% respectively. Meanwhile, the largest driver of net migration inflows prior to the crisis - EU12 states nationals - were the source of the largest emigration outflows in 2009, but their share of net outflows has fallen to 39% and 13% in 2010 and 2011 respectively. There were no corresponding shifts in Irish and non-Irish nationals’ shares on the Live Register. In other words, unemployment data for non-Nationals does not appear to collaborate the official emigration statistics, most likely reflecting some significant under-reporting of actual emigration rates for EU12 and other non-EU nationals.

There are more worrisome facts that point to a dramatic change in the migration flows in recent years. Back in 2004-2007 there were a number of boisterous reports issued by banks and stockbrokerages that claimed that Irish population and migration dynamics were driving significant and long-term sustainable growth into the Irish economy. The so-called demographic dividend, we were told, was the vote of confidence in the future of this economy, the driver of demand for property and investment, savings and consumption.

In 2006, one illustrious stockbrokerage research outfit produced the following conclusions: “The population [of Ireland] is forecast to reach 5 million in 2015… The labour force is projected to grow at an annual average 2.2% over the whole period 2005 to 2015. Combined with sustained 3% annual growth in productivity, this suggests the underlying potential real rate of growth in Irish GDP in the five years to 2010 could be close to 5.75%. Between 2011 and 2015, the potential GDP growth rate could cool down to around 5%.”

Since the onset of the crisis, however, the ‘dividend’ has turned into a loss, as I predicted back in 2006 in response to the aforementioned report publication. People tend to follow opportunities, not stick around in a hope of old-age pay-outs on having kids. In 2009, only 33% of new holders of PPS numbers were employed. Back in 2004 that number was 68%. Amazingly, only one third of those who moved to Ireland in 2004-2007 were still in employment in 2009. Almost half of those who came here in 2008 had no employment activity in the last 2 years on record (2008 and 2009) and for those who came here in 2009 the figure was two thirds.

In more simple terms, prior to the crisis, majority (up to 68%) of those who came here did so to work. Now (at least in 2009 – the last year we have official record for) only one third did the same. It is not only the gross emigration of the Nationals and Non-Nationals that is working against Ireland today. Instead, the changes in employability of Non-Nationals who continue to move into Ireland are compounding the overall cost of emigration.

In order to assess these costs, let us first consider the evidence on net emigration in excess of immigration. In every year – pre-crisis and since 2008, there were both simultaneous inflows and outflows of people to and from Ireland. In 2006, the number of people immigrating into Ireland was above the number of people emigrating from Ireland by 71,800. Last year, there was net emigration of 34,100. Between 2009 and 2011, some 76,400 more people left Ireland than moved here.

Assuming that 2004-2007 period was the period of ‘demographic dividend’, total net outflows of people from the country in the period since 2008 through 2011 compared to the pre-crisis migration trend is 203,400 people. In other words, were the ‘demographic dividend’ continued at the rates of 2004-2007 unabated through the years of the current crisis, working population addition to Ireland from net migration would have been around 2/3rds of 203,400 net migrants or roughly 136,000 people. Based on the latest average earnings of €689.54 per week, recorded in Q4 2011, and an extremely conservative value added multiplier of 2.5 times earnings, the total cost of the ‘demographic losses’ arising from emigration can be close to 8% of our GDP. And that is before we factor in substantial costs of keeping a small army of immigrants on the Live Register. Some dividend this is.

This is only the tip of an iceberg, when it comes to capturing the economic costs of emigration as the estimates above ignore some other, for now unquantifiable losses, that are still working through the system.

In recent years, Ireland experienced a small, but noticeable baby boom. In 2007-2007, the average annual number of births in Ireland stood at just below 60,000. During 2009-2011 period that number rose by almost 25%. 2011 marked the record year of births in Ireland since 1987 – at 75,100. In the environment of high unemployment, elevated birth rates can act to actually temporarily moderate overall emigration, since maternity benefits are not generally transferable from Ireland to other countries, especially the countries outside the EU. Even when these benefits do transfer with families, new host country benefits replacement may be much lower than the benefits in Ireland. Which, of course, means that a number of emigrants from Ireland can be temporarily under-reported until that time when the maternity benefits run their course and spouses reunite abroad.

Even absent the above lags and reporting errors, net migration is now running close to its historic high. In 2011, there were total net emigration of 34,100 from Ireland against 34,500 in 2010. These represent the second and the first highest rates of net emigration since 1990.

At this stage, it is pretty much irrelevant – from the policy debate point of view – whether or not emigrants are leaving this country because they are forced to do so by the jobs losses or are compelled to make such a choice because of their perceptions of the potential for having a future in Ireland. And it is wholly academic as to whether or not these people have any intentions of returning at some point in their lives. What matters is that Ireland is once again a large-scale exporter of skills, talents and productive capacity of hundreds of thousands of people. The dividend is now exhausted, replaced by a massive economic, not to mention personal, social, and political costs that come along with the Government policies that see massive scale emigration as a ‘safety valve’ and/or ‘personal choice’.

Charts:

Box-out:

On 14^th of March, Governor of the Central Bank of Ireland, Professor Honohan has told Limerick Law Society that Irish banks should be less inhibited about repossessing properties held against investment or buy-to-let mortgages. This conjecture cuts across a number of points, ranging from the capital implications of accelerated foreclosures to economic risks. However, one little known set of facts casts an even darker shadow over the banks capacity to what professor Honohan suggests they should. All of the core banking institutions in the country currently run large scale undertakings relating to covered bonds and securitizations they issued prior to 2008 crisis. Since 2008, the combination of falling credit ratings for the banks and accumulation of arrears in the mortgages accounts has meant that the banks were forced to increase the collateral held in the asset pools that back the bonds. In the case of just one Irish bank this over-collateralization increased by 60% in the last 4 years. This is done in order to increase security of the Covered Bond pool for the benefit of the Bondholders and is achieved by transferring additional mortgages into the pool. In just one year to December 2011, the said bank transferred over 26,000 new mortgages into one such pool. As the result of this, the bank can face restrictions and/or additional costs were it to foreclose on the mortgages within the pool. Things are even worse than that. In many cases, banks now hold mortgages that had their principal value pledged as a collateral in one vehicle while interest payments they generate has been collateralized through a separate vehicle. The mortgage itself can potentially even be double-collateralized into the security pool as described above. The big questions for the Central Bank in this context are: 1) Can the banks legally foreclose on such loans? and 2) Do the banks have sufficient capital and new collateral to cover the shortfalls arising from foreclosing mortgages without undermining Covered Bonds security?