Economy, Resilience and Vulnerability

This work focuses on the nature of the Irish economy, its underlying strengths, areas of vulnerability. It examines various ways in which resilience can be understood and framed, in the face of continuing turbulence and fundamental crises of climate change and biodiversity loss. Below is a short excerpt from Understanding the Irish Economy in a Time of Turbulence, the Council Report based on the findings of this work:

“Since 2020, Ireland’s economy has experienced a sequence of significant shocks: the COVID-19 pandemic, the cost of living crisis, and the invasion of Ukraine. Over that time, the public policy system has demonstrated flexibility, responsiveness, and effectiveness.

Government and the policy-making system responded to the immediate pressures that arose from these shocks, and found ways to prioritise and address the needs of the most vulnerable. The National Economic and Social Council (NESC) seeks to complement that ongoing work by focusing, in this report, on both the immediate future and beyond, in order to provide an understanding of the economy in what truly are turbulent and unpredictable times.

First, the report provides an overview of the key forces affecting Ireland’s economy today, namely the climate and biodiversity emergencies, demographic shifts, geopolitical change, the rising cost of living, and maintaining national competitiveness.

Second, the report examines the important features of Ireland’s enterprise economy, outlining the nature and structure of the enterprise base, its export orientation, the role of foreign direct investment (FDI), and supports for enterprise; and provides a high-level discussion of competitiveness and productivity. It also discusses some of the key performance outcomes, such as growth in employment and incomes, and improvements in equality and poverty.

Third, the report considers challenges and vulnerabilities. The Council highlights the presence and impact of a capacity challenge across the Irish economy, which adds to vulnerability and lowers resilience. This includes infrastructure, service, and labour constraints in key areas such as housing, healthcare, childcare, and transport.

Then, building on its long-held belief in the synergy between the economy, society, and environment, the Council argues that there is what might be termed a cohesion challenge between the economy and the wider society. An analysis of unemployment, poverty, weak labour-market attachment, low pay and productivity, and precarity of work suggests that cohorts remain that are weakly connected to the enterprise economy due to these issues.

Fourth, the report argues that having a vision and a number of core, supportive lines of action are an essential means of working in this era of turbulence. The report sets out a vision, based on previous NESC work:

Ireland will become a resilient, sustainable, thriving net zero economy, environment, and society, using innovation
and collective preparedness to shape the future we want to achieve (NESC, 2020).

The report argues that three core areas of economic action and ambition will help ensure that Ireland continues to transition towards this vision and the enhanced resilience that it encompasses:

1. Fiscal sustainability and investment;
2. Acting to realise net zero; and,
3. Making work attractive.

Finally, the report makes a number of specific recommendations for actions in each of these areas, to be progressed by the policy system to help realise that vision.”

This report was published on 6th April 2023. You can read it in full here.