The continual process of economic change, as older products and production methods give way to new ones, brings winners and losers. The pain of those who are made redundant by these changes can have political consequences.
The Republic’s move from protectionism to free trade over the 1960s and 70s laid the foundation of our current prosperity. But one of the casualties was itss car assembly industry, which rebuilt new cars that had been dismantled for sale to Ireland. When the last of these assembly plants closed in 1981, the workers were understandably aggrieved. On the eve of an election, to defuse the situation, then taoiseach Charles Haughey offered these Talbot workers jobs for life in the Civil Service.
That was not a sustainable fix. If all redundant workers had been put on the state payroll the economy, already in difficulties, would have collapsed.
Western Europe’s long period of growth in the postwar years led to a successful expansion of manufacturing in Germany and France. Although economic growth has now slowed, nonetheless across the EU’s 27 member states, there are 15 million more people employed today than in 2008. But there has been a major change in the pattern of employment by education level: compared with 2008, there are 25 million more graduates employed, offset by a fall of almost nine million in the numbers at work with lower qualifications.
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The change in the structure of EU employment has been particularly acute in manufacturing, which has also declined in importance as an employer. Changing patterns of world trade have seen imports of manufactured goods from Asia grow rapidly. In Germany, manufacturing’s share of jobs has dropped from 28 per cent in 1992 to 19 per cent today. In France and the Republic, the corresponding fall has been from 19 per cent to 11 per cent. The composition of manufacturing jobs has also shifted. Across the EU, graduate jobs in manufacturing have risen by 3 million since 2008, while manufacturing jobs for those with just a second-level education have fallen by 4.5 million.
Overall, the EU economy has prospered by reorientating to meet the changing pattern of demand. Abandoning world trade, and attempting to recreate the factory-dominated economy of the past, would be a recipe for economic failure. But EU governments need more effective policies to counteract losses of jobs and incomes, and correct resulting inequalities.
The fall in employment for those with lower qualifications has disrupted many lives. In countries such as Germany, many who had gone the technical rather than the academic route had valuable sector-specific skills, and were well paid. Some are now working in other sectors where their skills are less valued and the pay lower, others have retired early. Either way, the incomes of these families have fallen, while the cost of living took a hike following the pandemic and the invasion of Ukraine.
In the past, displaced workers might have voted for communist or social-democratic politicians who understood their anger. However, today it is the far right that is harnessing that sense of grievance. The populist right blames immigrants for people’s loss of jobs or incomes, although they are not the root cause. The underlying changes in the structure of the European economy and the type of labour it employs are unrelated to migration.
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The rapid growth in graduate employment in Germany has been confined to the former West, while eastern Germany, which has missed out, is the bastion of the right-wing AFD. Unemployment at 8 per cent, and a drop of 800,000 in French manufacturing jobs since 2008, have proved fertile ground for the National Front. In the US, blue collar workers, who in the distant past voted Democrat, now form the bedrock of Trump’s support.
Ireland has also seen the shift from manufacturing to services, and the rise in the graduate share of jobs, while opportunities for less well educated fell. In the Republic the very strong recovery from the 2008 financial crisis was driven by the expansion in the tradable sectors of the economy – manufacturing, IT and professional services. By 2024 employment growth in those areas accounted for 200,000 additional jobs, all of them for graduates, but these thriving sectors brought few new openings for those with lower qualifications.
But in our case, the loss of jobs for those with secondary education has been more than matched by a reduction in the supply of such workers, given the big increase in the number going to college. Thus the State has been something of an outlier in how these economic trends have played out, which may account for the anaemic support to date here for the far right.
