TOPICS > Economy

Global Economic Downturn Slams Ireland, Spares Poland

February 4, 2009 at 6:30 PM EDT
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The economic slump is affecting European Union member countries very differently. In Ireland, companies are laying off workers, while the Polish economy is growing. Special correspondent Jeffrey Kaye reports.
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JEFFREY KAYE, NewsHour correspondent: The Irish Celtic tiger is roaring no more. That was the name given to the economic phenomenon that, beginning in the 1990s, turned Ireland into one of the fastest-growing and wealthiest countries in Western Europe.

Low taxes and government subsidies attracted multinational high-tech companies. Even when the firms moved on to lower-cost areas of the world, the economy was propelled by a construction boom.

Much of the labor was performed by immigrants, many from Poland. Poles and Irish people can work in each others’ countries with no restrictions, because both nations belong to the European Union.

The Rockhouse Restaurant in Cashel prides itself on traditional Irish food. One of its chefs, Krzysztof Matuszewski, came from northern Poland in 2007.

Do you have a favorite meal?

KRZYSZTOF MATUSZEWSKI: I still prefer Polish food.

JEFFREY KAYE: You prefer Polish food?

Matuszewski earns up to $750 a week.

KRZYSZTOF MATUSZEWSKI: It’s the same as I earn here per week, in Poland, I need to work a whole month for it.

JEFFREY KAYE: You’re making in a week what it would have taken you a month to make in Poland?

KRZYSZTOF MATUSZEWSKI: Yes. Yes.

JEFFREY KAYE: It’s the same story for Matuszewski’s friend, Dominika Rydwelska, a shop assistant. She has almost daily Internet video calls with her mother in Poland, to whom she regularly sends money. Her mother told me that she wouldn’t mind emigrating herself, but doesn’t speak enough English.

However, with the Irish economy in recession, the immigration picture is changing. Developer and broadcaster Neil Prendeville has had a bird’s-eye view of fading Irish luck.

NEIL PRENDEVILLE, broadcaster/developer: We had our time in the sun, and we spent like drunken sailors.

JEFFREY KAYE: Prendeville says the construction boom couldn’t be sustained.

NEIL PRENDEVILLE: You know, in Ireland, what was happening was everybody wanted to buy a house. Money was cheap; interest rates were low; banks were shoveling money out to people.

Companies moving to Poland

JEFFREY KAYE: In Limerick, Dell Computer, the country's second-largest employer, is laying off 1,900 people. Dell is shifting production to its plant in Poland.

In contrast to Ireland, the Polish economy is growing. As it does, many Poles are returning home. Patryk Zub worked for two years as a forklift driver in an Irish warehouse. He's been back in Warsaw for a year.

PATRYK ZUB: It's getting better. It's getting better. There's more jobs here, and you can choose some jobs here, and you're not going anywhere and they say, "No, no, we don't have job."

JEFFREY KAYE: Since joining the European Union in 2004, Poland has seen economic growth and falling unemployment. It has benefited from E.U. subsidies and as a European trading partner.

Polish officials are successfully wooing foreign investors. And places such as Lodz, Poland's third-largest city, are being transformed.

Since 1991, Philips, the Dutch electronics giant, has been moving operations from Western to Eastern Europe, among them this so-called back office business in Lodz. Some 50 dealmakers run a $300-million-a-year purchasing operation.

JEFFREY KAYE: Arkaviaz Rahofzic runs Philips' global sources services. Buyers here earn $21,000 to $28,000 a year.

It's basically -- it's less than half per person what you would be paying in Western Europe?

ARKAVIAZ RAHOFZIC: Correct. Correct.

JEFFREY KAYE: And is that the reason then that this center is here?

ARKAVIAZ RAHOFZIC: That's not only this one.

JEFFREY KAYE: Other reasons include millions of dollars in benefits in the form of subsidies and tax reductions that the Polish government provides investors.

PAWEL KACZMARCZYK, University of Warsaw: I would argue that the Polish economy is in relatively good shape...

JEFFREY KAYE: Compared to...

PAWEL KACZMARCZYK: ... compared to, for example, to British economy or Irish economy.

JEFFREY KAYE: Pawel Kaczmarczyk, of the University of Warsaw's Center for Migration Research, has been tracking the movement of people and corporations to Poland.

PAWEL KACZMARCZYK: It has a lot to do, obviously, with costs of labor and the quantity and quality of human capital. And I think this is why Central and Eastern Europe is so popular among Western European and also American enterprises.

Some Irish moving to Poland

JEFFREY KAYE: In addition to reverse migration, Poles moving home, Poland's economic growth has also attracted a growing number of Western Europeans.

PAUL JACK, Irish immigrant to Poland: The countertop has to be completed and the appliances fitted completely.

JEFFREY KAYE: And a sink has to go.

JEFFREY KAYE: Paul Jack moved his wife and teenage daughter from outside Dublin to Lodz in 2007, as opportunities faded in Ireland and grew in Poland.

So where do you consider home? Is this home?

PAUL JACK: No, I think my heart is still in Ireland. I'm sure that will diminish over time.

JEFFREY KAYE: Jack works as a technical manager for Amcor, an Australian-owned packaging company. It has shifted production from Western to Eastern Europe. This plant, one of three in Lodz, prints plastic bags for snack foods.

Like his father before him, Jack grew up in the printing industry. He had hoped to stay in Ireland, but Amcor closed two plants, one in Belfast, the other in Dublin.

PAUL JACK: Well, within Ireland, the printing industry has died, and it was necessary for me to travel if I wished to stay within the industry.

I have colleagues in France and Germany. And so I think that, once again, the Irish are dispersing themselves all throughout Europe.

Irish construction collapsed

JEFFREY KAYE: At an Irish pub in Warsaw, we met Cathel Moynihan, a construction worker who had arrived the day before from Dublin.

CATHEL MOYNIHAN, Irish immigrant to Poland: I'm a qualified bricklayer. I was working for a company there for five or six years, and no more work left over there.

JEFFREY KAYE: He'll earn around $700 a week, less than he made in Ireland.

CATHEL MOYNIHAN: It's a smaller drop. It's not that big of a drop, really. You're talking -- in euros, you might be talking losing about maybe 200 euros in the week, but it's much cheaper to live here.

JEFFREY KAYE: The Polish government hopes low taxes and other financial incentives will keep foreign investors coming.

But back in Ireland, entrepreneurial expert Michael O'Connor, who works with high-tech startups, has a warning.

MICHAEL O'CONNOR, chief executive: Watch this space, because what...

JEFFREY KAYE: Watch this space?

MICHAEL O'CONNOR: What happens over time with economic development is price costs rise, and therefore the move to delocalize is a constant pattern that happens. Any gain that somebody has through a cost basis is only transitory.

Early signs of Polish downturn

JEFFREY KAYE: For now, though, Eastern Europe seems like the right place for many expatriates.

So what are your plans?

IRISH IMMIGRANT: My plans? I'm going to finish this beer.

JEFFREY KAYE: After the beer?

IRISH IMMIGRANT: After the beer, OK, after the beer. My plans are to keep -- maybe stay in this part of the world, not necessarily Poland, for at least another two years.

JEFFREY KAYE: An Irish pub in a foreign land may seem like a legacy of a bygone era when Ireland couldn't support its population. Times are not nearly as dire today, but still, as was the case for much of the last century, many Irish people are once again saying farewell to their homeland.

JIM LEHRER: But, for the record, even Poland is not weathering the economic storms trouble-free. The Warsaw stock market has hit a five-year low, and some major international corporations have announced layoffs.