The Celtic Tiger Roars Again: Tech, Wealth, and the Irish Housing Crisis

After spending four months in Dublin, it can be said that Irish buses are neither punctual nor comfortable. One December morning at the Red Cow communication hub in Southwest Dublin, the bus headed for Dublin Airport was, not surprisingly, nearly 30 minutes late. About ten of us stood there waiting, suddenly seeing a bus approaching the corner. As it drew closer, a big “Microsoft Connector” logo could be spotted along its side. Freezing, with luggage by the feet, we observed as the commuter bus picked up one single employee and disappeared in the distance. Eventually, the public bus arrived, but by recommendation; make sure to be an employee at Microsoft if you plan to travel by bus in Dublin.

Dublin: a City of Contrasts

International corporations have gained increasing power and influence across the globe ever since they were created. During the 21st century, American tech companies have been at the top of most such rankings, and perhaps no country has been as impacted by the growing U.S. influence as Ireland. Google, Microsoft, Meta, and LinkedIn all have their European headquarters in Dublin, and Apple is not far away, with its headquarters in Ireland’s second-largest city, Cork. 

Perhaps, Dublin is not famous for its views. It does not have the rooftop bars you can find in New York or Madrid, but looking out from the Guinness storehouse, you might expect to see some of the small alleyways the city is famous for. Meanwhile, that is not what catches eyes. 

When looking out over Dublin’s rooftops, the alleyways are hidden and your gaze will catch the steel and glass from the ever-expanding tech hubs. The Eastern section of the city center is now home to Google’s new headquarters. The area that a hundred years ago was cramped with docks, warehouses and commerce supporting British trade is today cramped with shining complexes supporting the American-European tech world. As it lies by the quay, the office complex couldn’t be named anything but “Google Docks”. 

In sight of this office quarter a bridge spans over the dock, providing a well-needed wind shelter for two dirty tents. For somebody living in Dublin those tents are as common of a sight as the city’s famous pubs. The homelessness and hopelessness of the streets is striking for any visitor. The consequences of the Irish housing crisis lies literally in the shadow of the tech hub. This text will guide you through the blessing and the curse that is the development of Ireland as Europe’s tech-hub. 

The Birth of a Tiger

Apart from Malta, Ireland is the only remaining country in the EU with English as its primary language. Combined with a low corporate tax at 12,5%, this makes Ireland a perfect launchpad for international companies wishing to expand into the European market. According to data provided by the Irish center for statistics in 2022, 6000 foreign companies provided 450 000 jobs in Ireland.

Among the large investments of foreign companies, a few standout. In 2016, the Irish economy had a miraculous 26% GDP increase, half of which was made up of Apple’s direct investments that year. To compare, most European countries are happy to get 2 or 3% of  GDP growth per year. The Irish economy stands out and regardless of which measurement is used, the Republic’s economy is spectacular in a European context. For Ireland, this economic boom is not only remarkable but a paradigm shift in the country’s history. 

Abroad, you will find people with a prejudiced view of the Prefix “Irish” as a connotation for drunkenness or pub brawls. The Irish are known to be drunk, and among some, to behave badly. This is partly a racist stereotype stemming from British colonialism, but also the legacy of hundreds of years of deep poverty and despair, which is also a consequence of British colonialism. Irish poverty persisted in one form or another until the 1990s when a tiger emerged from the green grass. 

The Celtic Tiger was born, an economic miracle that transformed the green island from backwater to hub. Economists argue that this transformation comes from a wide range of factors. Firstly, political adjustments lowered taxes and laid the ground for macroeconomic stability. Secondly, the entry to the European single market, made the Irish economy more European-focused and obliged the economy to reform. Thirdly, Ireland invited companies to make investments in the country by lowering its corporate tax rate.

Those three factors aligned and corresponded to the longest period of US economic growth for decades. The American growth spilled over to Europe with the island in the Atlantic as an economic bridge between the two continents. All of these abstract changes could take place due to something very real: the ceasefire in the North. In 1998, the Good Friday Agreement was signed and the violent conflict regarding Northern Ireland was – if not solved – halted. With this, more focus could be given to the economy and the international image of Ireland changed for the better.

With peace comes stability, and stability is what investors yearn for. This period of growth, starting in the early 1990s, and ending with the global crisis of 2008 is what’s called The Celtic Tiger. The Tiger period was followed by some years of deep recession and pessimism that in the late 2010s transitioned to a new period of moderate but stable growth driven by similar factors as during the Tiger era. The foreign investment that has lifted Ireland out of poverty is represented by the skylines of the tech companies in Dublin. Irrespective of how people view it, the modern prospering Ireland we know today, is a result of Silicon Valley. 

Leprechaun Economics

As the numbers above indicate, the ongoing technological development could and should have positive long-term effects on Ireland. However, the resources generated from the tech industry are currently not being sufficiently used, and tech companies provide an interesting example of existing gaps in income and influence within the country. Employees of Apple and Google are provided with housing or at least assistance in finding housing, daycare, and health insurance at the same time as homelessness and average waiting times for healthcare are increasing. It remains unclear if tech companies play any part in the contemporary challenges to Irish welfare. 

Regardless, the tech companies have played an interesting role in the modern Irish economy, leading to the 2015 paradox “Leprechaun economics”. This term was mockingly coined to explain how Ireland could have one of the highest GDP per capita in the EU and one of the fastest GDP increases – without it being reflected in employment, housing or income rates.

How could this be? Was there a logical explanation or were in fact leprechauns involved? It turned out that due to Ireland’s low corporate tax, many of the world’s largest tech firms (including Apple, Google and Meta) decided to set up subsidiaries in Ireland, and commonly sold their intellectual properties to these subsidiaries despite the products being developed and sold elsewhere. Hence, the money Apple makes can be seen in the U.S. but are also registered in Ireland, explaining the GDP inflation and money magically appearing and disappearing. In other words, Ireland did have a large GDP increase, just not as big as the statistics showed at the time.

The Housing Crisis

One of the most salient phenomena upon arriving in Dublin is the city’s housing crisis, a reality that became increasingly evident during our daily commutes. Each afternoon, as we left campus, we’d see five or more people setting up tents or curling into sleeping bags along the banks of the Liffey River, preparing for yet another night in the cold. And the rumors about the Irish rain? They are absolutely true.

Just minutes later, as we boarded the bus out of the city centre, it was like something from a movie, where contradictions are highlighted so that the viewer cannot miss them. The tents and sleeping bags continued throughout the city outside of abandoned buildings, most of them beautiful, old structures; some overtaken by ivy and vines creeping from every crevice. The fact that these houses remain vacant with homeless people sleeping outside of them is hard to comprehend. The question is: why? Why aren’t these buildings being repurposed and made habitable?

While landlords in Ireland are taxed for owning so-called “vacant properties”, the cost of restoring these old buildings often outweighs any potential profit. Without strong government intervention, the restoration task largely falls on private companies. However, most of the time, the decision is made to tear these buildings down to make way for commercial development, such as office spaces, rather than having them repurposed for housing. Economic growth is also ironically part of the problem. As Ronan Lyons, associate Professor in Economics at Trinity College Dublin, writes: 

“Such rapid growth in employment and incomes has also led to ‘growing pains’, in particular around infrastructure, including housing, and public services. Perhaps in the context of many decades of stagnant or even falling population, Ireland’s policymakers have been reluctant to plan for rapid growth, meaning housing targets — as well as other targets, including relating to healthcare and education — have been way behind the underlying need.”  

The housing crisis in Ireland is dire and has reached alarming levels with accusations that the Irish state is failing to meet its international human rights obligations by not ensuring adequate housing for those in need. By September 2024, a record 14,760 people were registered in emergency accommodation, of which 4,561 were children. This figure does not include those living on the streets or in unregistered accommodations. Between 2015 and 2018, homelessness in Ireland surged by nearly 96%, while child homelessness skyrocketed by 227%. The Covid-19 pandemic only exacerbated these numbers, pushing more families into precarious living situations due to income losses. 

Meanwhile, what about the gorgeous, vacant buildings with the vines that we saw everyday? Currently, there are around 160,000 vacant buildings across Ireland out of which 50,000 have been vacant for more than eight years. We don’t know if all of these buildings are beautiful, but the point is all of them could become homes if the effort was made. The Irish government has set a modest target of making 2,500 of these properties habitable by 2026. While this number might sound low, as the Irish housing market is primarily run by private corporations, the responsibility for addressing the housing crisis lies largely within the private sector.

Tech companies clearly play a significant role in Ireland’s economy. They contribute substantially to its GDP, provide job opportunities, innovation and social protection – and their influence transcends beyond Ireland, shaping global development. In spite of Ireland’s impressive economic turn and development, its welfare state is less comprehensive compared to countries like the Nordic nations. Individual healthcare, job security, and living standards are largely determined by employers, rather than politicians.

This reliance on companies as welfare providers, coupled with a low tax rate, reveals a complex dynamic. The government supports these companies who in turn, are expected to extend that support to their employees. This system is one where wealth generates wealth, and with consideration and state intervention, tech companies can play a part in a sustainable and generous welfare system.

Ireland’s move from an economically struggling nation to the primary tech hub of Europe is truly remarkable. The Celtic Tiger may have reincarnated in a uniquely contemporary manner, but its prosperity has not reached everyone. The gleaming glass towers of Apple and Google stand in stark contrast to the tents lining the streets of Dublin.

The Irish economic model, a phoenix rising from the ashes, one wing made up of foreign investment, the other of low corporate taxes, has created a prosperity illusion where the wealth has not yet translated into welfare. As Ireland’s economy continues to grow, the challenge remains; can the government utilize the new wealth and expertise to allocate more resources to its less privileged citizens? Or will the Celtic Tiger’s second roar be nothing more than an echo for the large masses?