Global Crisis Crushes Expectations of Boom Years
Tuesday, March 17, 2009; Page A08
LIMERICK, Ireland -- Niall O'Donoghue grew up in a rich country. He got an architecture degree, a top-paying job with a pay raise every year and a bonus at Christmas.
O'Donoghue and his wife bought a house in the city and another in the country. They have two cars, two mortgages and two children under age 2. Then a month ago, O'Donoghue, 33, was laid off, jobless for the first time in his life, another well-dressed victim of one of the world's fastest and deepest economic reversals.
"It's a bit of a shock to the system, especially for my generation," O'Donoghue said one recent morning, waiting in the cold with dozens of other people in line outside the Limerick unemployment office. "I don't think things will ever be as good as they were in the last five, six or seven years. That's the bitter truth of it."
Young Irish people accustomed to economic boom times have suddenly found themselves living a bleak page out of Irish history. Many in their 20s and 30s -- a generation raised on the assumption of jobs and prosperity at home -- have had their expectations crushed by the global economic crisis.
On the gloomiest St. Patrick's Day in years, the national jobless rate stands at 10.4 percent, more than twice the rate at this time last year. More than 354,000 people signed up last month for unemployment benefits, an 87 percent increase over the previous year.
After 20 years of roaring growth during Ireland's "Celtic Tiger" economy, the government is bailing out teetering banks; the construction industry, which had driven the boom, is at a standstill. Property prices have crashed and stores and factories are closing.
Young professionals who bought houses -- and often second homes as far away as Spain and Bulgaria -- are stuck with mortgages worth more than the properties.
Well-educated young workers are losing jobs they assumed were safe, and finding it hard to adjust to problems they thought belonged to their parents and grandparents.
"This was the last thing I expected," said Joanne Martin, 24, who pulled up to the unemployment office in a sporty two-seater Mazda.
Martin said she graduated from college with degrees in bioengineering and biotechnology and interned with NASA in Florida. But she is still out of work after applying for at least 100 positions in at least 20 different companies. "I never thought it would be like this."
Older Irish people remember recessions of the past when the most reliable route to a job was to emigrate to Britain, the United States and beyond.
"It's part of our experience as a nation, successive generations have done that," Prime Minister Brian Cowen said in an interview in Limerick last week. "The fact that the recession is global means those gateways aren't available at the moment."
Even though Irish citizens can move and work freely in any European Union nation, there are few jobs anywhere. During Ireland's boom, people from Eastern Europe came to work in construction, farming and other industries. Many of them have left; others are collecting unemployment here.
Cowen, who is visiting the White House on Tuesday, said he would urge President Obama to considering granting Irish workers visas doubling the time they could remain in the United States to two years. To increase the flow of people and trade between the two countries, Cowen also said he would propose changes in Irish law to allow more Irish Americans to claim Irish citizenship.
Cowen noted that young Irish people have "lived in a different Ireland" from their parents, and "their fortunes have changed very quickly."
Outside the unemployment office, Eamonn Aherne, 48, said he was collecting "the dole," as unemployment benefits are called, for the first time in 20 years.
Aherne, a laid-off electrician, said he is divorced with grown children and lives in a small trailer in the countryside. He said he'll budget his $265-a-week unemployment payment the way he did during the recession of the 1980s: on cheap clothes, groceries, a little gas for his motorcycle and not much else.
"We got through that, we'll get though this, too," he said. "I pity the young people who have never seen this. They have no idea what they are going to go through."
Aherne said many young professionals are in for a jarring drop in their standard of living. "The young people, going out four nights a week to the restaurants and the clubs -- that's over," he said.
Limerick Mayor John Gilligan said he had heard of young lawyers driving taxis, and that the number of people waiting for public housing had swelled to 2,000.
"These young people are genuinely scared because they do not have the skills on how to survive," Gilligan said. "They're going to have to change the type of food they eat, and how they cook it. Every single cent is going to have to be accounted for, and they have never had that before."
Gilligan said young professionals had become accustomed to getting mortgage loans worth 120 percent of the value of their homes, which he said was an extremely reckless practice.
Limerick, on the River Shannon in southwestern Ireland, was recently rocked by the news that U.S. computer giant Dell will cut 1,900 local jobs starting in April.
Dell, which is Ireland's biggest exporter, second-largest company and accounts for about 5 percent of GDP, said it will move its European manufacturing hub from Limerick to Poland, where wages are lower.
The company will keep 1,000 or so jobs in Limerick, but Gilligan said the city would be "devastated" by the Dell job losses. He estimated that the "knock on" effect would mean a loss of perhaps 10,000 jobs dependent on Dell, from caterers to bus drivers to pizza delivery drivers.
"Unemployment in Limerick is 10 percent now, and a year from now it will be 20 percent," Gilligan said. "You're looking at a disaster."
A new McDonald's restaurant near Limerick hung up a "Now Hiring" banner last month, and within 10 days, 500 people applied for 50 jobs. A Limerick hotel advertised to fill 45 positions, and 2,500 people applied.
At 8:30 a.m. one recent weekday, O'Donoghue stood outside Limerick's unemployment office on Dominic Street. He was second in a line of more than 30 people waiting for the office to open at 9:30.
He said he has come to believe that the boom times were the exception in Ireland, not the rule. "It was just a peak -- a complete abnormality -- even though it wouldn't have felt like that for my generation," he said.
O'Donoghue said he and his wife, a teacher, are adjusting as they try to live on her salary and his unemployment benefits.
He said he is trying to sell his Jeep, which he bought for about $17,000 two years ago, for $6,500, but no one has called.
He said they also want to sell their home, and move into their smaller second home. But in the current market, he said, there is virtually no chance of selling his house.
"If we didn't have my wife's job, we'd have to leave Ireland," he said. "But there's no work anywhere else, either."
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