Back in March of this year Mick Fealty wondered 'who can save Northern Ireland's economy'? I have another question: who can save the Republic of Ireland's economy?

Well all right, that's a bit too alarmist, but things aren't as rosy as the Irish government would have you believe. A recent Financial Times report [subs. required] by John Murray Brown noted that thirteen percent of the Irish workforce is employed in in the construction industry.

This is bad. Not nearly as bad as in the north of Ireland where 30 percent of the workforce is engaged in public sector activity, but still, it's an awful lot of people working in an industry that is notoriously prone to difficulties in times of economic slowdown.

Most of the stories on the Irish 'economic miracle' in the international press make much of the supposedly high-tech nature of the modern Irish economy, as if a few call centres and a Google branch office somehow made Ireland the equivalent of California's Silicon Valley. While there is a high-tech component to the Irish economy, the reality is that Ireland's over-dependence on construction is leading the country head-first into economic difficulties and whether the landing is soft or hard may not matter very much.

There is, in my opinion, an arrogance in the construction industry. When I am attempting to get comments from developers I often think I'd be better off going to the Fianna Fáil tent at the Galway Races than hitting the phones or even engaging in a bit of door-stepping. Presumably this derives from the fact that the construction industry knows that it is driving Ireland's economic expansion.

Take housing, for example - Irish property prices are absurdly high at present, unsustainably so.

A recent survey carried out by Constantin Gurdgiev, economist and editor of Business and Finance magazine, noted that the average listed price of a three-bedroom house in the Greater Dublin area was €752,734 (approx. £515,214).

The result of such over-valuation is the growth of the 100% mortgage, often over 35 years. With 100% mortgages a lot of people are just about managing to make their payments. It wouldn't take much of an increase in interest rates to set off a default spiral and a slew of forced sales, which would bring down prices and lower demand for further construction.

Meanwhile, inflation is running at 3.3 percent. Ireland's finance minister Brian Cowen recently blamed high energy costs for the rise and stated that the rate would normalise to around 2.7 percent over the course of the year. Well, maybe, but plenty of other people seem to think that energy prices are just going to continue to rise and rise.

If the Irish economy does slow down what will happen to that thirteen percent of the workforce engaged in construction and the fourteen percent of GDP for which the industry accounts?

Even without economic collapse, construction cannot continue to prop up the economy forever, at least not in the way that's going on in Ireland right now.

That said, only four percent of Ireland is urbanised, so as long as demand continues there is plenty of room for the actual building. Could this be why the government is planning on decentralising the civil service? 98,200 people are employed in public administration (although this figure does include defence) - just think of all those new houses and offices that will need to be built out in the sticks.

Let me be clear: I am not making an environmentalist criticism of construction and development. For a start, Ireland has lagged behind other developed countries in infrastructural terms for decades. It's about time someone built a few more motorways and to hell with the tourists. (I am, however, concerned about the quality of the human environments that are being built in a sellers' market by an industry that has shown time and again that all it is interested in is a fat bottom-line, not the long term development of decent built environments.)

For anyone wondering just how distorted the housing situation is in Ireland right now, consider this: I was recently told that people are commuting to Dublin from Sligo in the west of Ireland. I don't know if this is accurate or is just another middle-class horror story from the celtic tiger, but I do know that people most certainly are commuting from Drogheda, Dundalk and Athlone - 56, 72 and 130 kilometres away from the capital, respectively. Perhaps not far by the standards of the English commuter belt, but very far in Irish terms.

Cynically, one could say that any vast armies of construction workers could be put to work post-slowdown upgrading their own recent work to actually meet any new environmental standards demanded by the European Union - hey, it's work, isn't it?

The typical Irish response to talk of construction collapse, or even 'correction', is to say: "Sure, most of them are Polish and they'll all go back home or move on to wherever the building is going on."

However, this is not borne out by the facts. The significance of non-Irish workers construction is massively overstated. A recent report by the Allied Irish Banks, 'Here to Stay' [PDF], noted that: "The construction sector in no way stands out in terms of the number of non-national workers."

Employment in the construction sector in Ireland accounts for a total of 252,100 jobs- this from a total of 1,929,800 employed persons in Ireland. AIB's report, meanwhile, indicates that only 22,600 non-nationals are employed in construction. Conversely, 27,800 non-nationals are employed in manufacturing, 23,100 in the hospitality industry and 21,500 in financial and business services. Not only is the construction sector not 'flooded' with immigrants, it's not even particularly representative of what non-Irish nationals are employed to do.

One of the people with whom I carry out an e-mail correspondence recently wrote: "Actually, the ROI economy is reasonably diversified with good fundamentals."

I hope he's right.

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