About two years ago Donnacha Minogue, a 55-year-old builder from Kilruane, Co. Tipperary, was able to sell his houses before they were even built. Then, a few months back, he noticed that demand had dropped, and his houses would sell while they were at foundation level. Today, he says, sometimes they don't sell until a few months after they have been finished.
The downturn in the Irish construction industry - one of the engines of the economy over the last few years - has been so dramatic that builders like Minogue are becoming increasingly nervous. A report from the Irish government jobs agency FAS said that a quarter of all construction workers will lose their jobs by next year.
Figures released from the Central Statistics Office reveal that employment in the construction sector had fallen to its lowest level in over four years. And that same week, it was reported that the number of builders on the dole had more than doubled in the past year, from 12,000 last year, to 24,500 this year.
Joe Ryan, 29, an electrician living in Dublin, was let go from his job about three weeks before Christmas. But he is one of the luckier ones. Because he has a trade, he is more in demand than others such as laborers. Shortly after Christmas, he was rehired with another firm. "The fellow I am with now seems to be doing okay," he says. "But it's hard to tell. The current job I'm on will last for another six weeks or so. I've no idea whether the boss has more work after that. I'll just have to keep the head down and see."
Rossa White, chief economist with Davy Stockbrokers, says that problems began in the late summer 2006, when "we moved from a situation where the market was very hot to a situation where the builders have turned off the taps." Housing, says Martin Whelan, head of public affairs with the Construction Industry Federation, has been particularly hard hit. "The market has stalled quite dramatically," Whelan says. "We are currently at our lowest levels of house building in 14 years."
And as White points out, even though developers have been cutting prices aggressively, the knock-on effect of the banks crisis has made mortgages much more difficult to access.The government argues that the downturn is mainly due to external factors, and in particular, the global credit crunch.
But TD (member of Parliament) Leo Varadker, opposition party Fine Gael's spokesman on enterprise, trade, and employment, disagrees."Fianna Fail has made a bad situation worse," he says, pointing to tax breaks for property developers that helped overheat the market. Furthermore, the government should have tried to keep credit under control, he says. Today, there is tighter regulation for mortgage lending, but Varadker argues that this is "closing the stable door after the horse has bolted."
The situation is not entirely gloomy, however. "Besides housing, there are other aspects of construction in Ireland that we are fairly optimistic about," says Eric Fleming, the construction branch organizer with Ireland's largest trade union, SIPTU. Fleming points out that much remains to be done as part of the National Development Plan, a government infrastructural investment program due to finish in 2013. Some firms are already adjusting to the new environment.
"Fortunately, big infrastructure projects are still high on the government's agenda," says Sebastian Widel, a 32-year-old construction engineer. Widel, originally from Poland and now living in Dublin, says that a few months ago some staff within his company moved from the building structures department to the roads and bridges department, and that the company is now hiring more people in the former department than the latter.But the capital investments currently underway in Ireland - which may themselves be under threat because of deteriorating public finances - will be of little comfort to laid-off workers who were employed in the housing sector.
According to Brid O'Brien, a senior policy officer with the Irish National Organization of the Unemployed, one in five males Irish workers is employed in the construction industry, which has been a particularly important source of employment in rural and working-class urban areas.O'Brien says that those in this sector who are made unemployed should be retrained. "In a changing labor market, a lot of people won't know what they will be working in, say, 10 years time," she says.
Because many of those who work in construction in Ireland are migrants, this group is particularly vulnerable. Aki Stavrou, the director of Integrating Ireland, a network of organizations working with migrants, estimates that in the last six to nine months, around 40,000 migrants have gone back to their home country.
He says migrants are particularly vulnerable. Already, homeless agencies are reporting an increase in the number of non-nationals who are availing of their services.Over the coming year, says Stavrou, more and more Eastern Europeans are likely to return home or go elsewhere, as these economies - notably Poland - pick up.