September 26, 2013 12:57 pm

Rural Ireland feels the pinch as Dublin bounces back to life

On a cold, drizzly evening Milford’s Gaelic football club meets for training. The team should be celebrating its success in a local cup competition but instead the mood is sombre as two star players are moving to Canada.

“The reason why I am emigrating is purely for work,” says Anthony McPaul, a 28-year-old construction worker. “I’ve tried to get a bit of work here but I could only get a day here or there.”

Irish economy

Irish economy
Sign of the times

More

On this topic

IN Global Economy

Mr McPaul is one of 41 club members, who will have left Milford since Ireland’s financial crisis struck in 2008. Many emigrated to Australia and Canada while others moved to Dublin, which is finally showing signs of economic recovery just as Ireland prepares to leave its international bailout in December.

New data show Ireland pulled out of recession in the second quarter, unemployment is falling and property prices are rising again after halving in value over five years. But the economy is fragile and there is evidence of a two-speed recovery with cities like Dublin, Cork and Galway growing while regional towns and rural areas stagnate.

House prices in Dublin have increased by 10 per cent in the past year and estate agent CBRE is forecasting commercial property prices could rise by up to 20 per cent in 2013. But outside Dublin property prices are still falling and tens of thousands of houses and retail units lie vacant.

In Dublin the unemployment rate is 12 per cent, compared with a regional high of 18.3 per cent in Ireland’s southeast. The last county by county analysis, which was carried out in mid-2011, showed one in four people out of work in Donegal, a rural county in the northwest.

A walk down Milford’s main street, which is littered with boarded-up shops, to let signs and a derelict hotel with broken windows and peeling paint, illustrates how recovery has not yet reached the area.

“The town is dying on its feet. The two banks have closed, ripping the commercial heart out of the town,” says John McAteer, editor of the Tirconaill Tribune, a local newspaper.

“Milford is just a microcosm of a wider malaise in rural Ireland. In Donegal the only export we have is our young people,” he says.

Emigration has been a feature of Irish life for generations but the construction boom during the Celtic Tiger boom provided well-paid jobs, enabling young people to live in rural areas where they grew up. The property bust changed that. Construction jobs dried up, the government imposed recruitment embargoes on public service jobs and the service sector shrank.

Every six minutes a person emigrates from Ireland – the highest number since records began in the 1980s. This is leading to depopulation in rural areas, particularly among the economically active 18-65 years age group.

“The social fabric of community life is at risk,” says Pat Curley, chairman of Milford Gaelic football club, who sees local clubs in regional locations struggling to field teams. “The government needs to act,” he says.

Conscious of the weak domestic economy, Dublin is considering easing up on €3.1bn austerity measures planned in next month’s budget. But it faces opposition from its international lenders, which are concerned rowing back on prior commitments could damage investor confidence.

This argument finds little support in areas where jobs are scarce. Last week 1,000 people applied for 15 retail jobs at Shaws department store in Longford. In Fossa, a small town in County Kerry, 435 people applied for 15 apprenticeships at a crane manufacturer.

The employment situation is more positive in Dublin and Cork where Ireland’s state investment agency is attracting record levels of projects, particularly in the technology sector. Three-quarters of the 144 new multinational investments last year were located in Ireland’s two biggest cities while just one was located in Donegal.

“We chose to set up in Dublin primarily for the talent and we knew we could source good engineers,” says Fidelma Healy, chief operating officer, Gilt Ireland. “There is a great young vibe in the environment here. And there’s such a cluster of other companies Google, Twitter, LinkedIn, eBay,” she says.

Dublin’s formerly dilapidated docklands have been transformed by an influx of internet companies. Shiny glass-fronted office blocks compete for space with trendy hotels and bustling coffee shops in the area, known as the “Silicon Docks”. Young professionals, many recruited overseas, earn high wages, boosting the local economy.

“Cities are the drivers of employment growth and they’re doing much better than the rural areas [where] there is no sort of what I would call big benchmark employers,” says Anne Heraty, chief executive of recruitment firm CPL Resources.

Poor road, rail and broadband infrastructure make counties such as Donegal less attractive to foreign investors than cities. The big overhang in retail, hotel and residential property in regional and rural areas acts as a drag on investment and construction activity.

Letterkenny, which was Ireland’s fastest growing town during the boom, is littered with ghost estates and half empty retail parks. Shopkeepers have suffered a huge drop in business since the crisis struck in 2008 and are not yet seeing a recovery.

“The economic bounce is happening in Dublin all right and there is rumour that it might happen in the rest of the country and we are optimistic but it hasn’t happened yet,” says Alfie Greene, founder of Greenes Shoes.

Like many business owners in Letterkenny, Mr Greene wants the government to ease up on austerity in the budget.

“If there was a little bit of stimulus in the budget next month it might help things along,” he says.

Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in