The Central Bank of Ireland believes that not enough migrants are arriving to have a “wage-dampening effect”, and that “if wages are not downwardly flexible” it could become a “concern”.
The Irish central bank, roughly equivalent to the Bank of England in the United Kingdom or the Federal Reserve in the United States — but less independent, insofar as it is subject to the European System of Central Banks, under the broad purview of the European Central Bank (ECB) — insisted that the country is “is likely to require significant inflows of workers from abroad over the coming years, provided the economy remains on a favourable growth trajectory”.
Reports published by the Bank recall that mass immigration “was a major feature of the Irish labour market during the period from 2004 to 2007” — before the financial crash — but that while net migration “increased to 34,000 in 2018, the third consecutive year of strong gains”, the inflow now skews towards more highly-skilled migrants, allowing wages to rise.
“As the supply of labour is scarce relative to demand, workers’ bargaining power increases and the price of labour increases,” the report notes, claiming that that “sustained increases in net inward migration will be needed in the coming years to ensure that growth will be not impeded by labour supply constraints.”
The Bank’s reports do acknowledge that mass immigration does tend to increase “both rents and prices” and that “increased numbers of migrants will create overheating pressure in other areas of the economy, and particularly in the already congested housing market” — but appears to indicate that policymakers should ultimately come down on the side of employers who insist they must retain access to large pools of foreign labour, in the name of sustaining “growth”.
The report suggests that the Bank’s preferred way to alleviate the inevitable pressure on housing would be to simply build more of it, as “continued focus on addressing housing supply shortages can help ensure that Ireland remains an attractive location for the migrants who will be needed to fill vacancies in the labour market”.
The impact on the Irish countryside, congestion, social cohesion and so on which this sort of exponential expansion of the foreign-origin population and housing stock would have appeared to receive little consideration.