Ireland's second biggest employer defects to Poland

Fears for workers as vulnerable economy is hit by defection of Dell

The Irish Republic's precarious economy was dealt a hammer blow yesterday with the announcement that one of the country's biggest employers – the computer giant Dell – is to shed almost 2,000 jobs, a huge setback by Irish standards.

According to one estimate, Dell contributes around 5 per cent of Ireland's GNP and 4 per cent of all expenditure in the economy. In addition to Dell's own jobs, thousands more are dependent on the company.

Describing it as "one of the blackest days we've ever had in Limerick City", Mayor John Gilligan said many workers had taken on large mortgages. He added: "These people are out of a job. Unless we do something positive about it they'll also be out of a house as well. People who are jobless should not become homeless."

Dell employees complained of their redundancy terms and of a lack of information. One told journalists outside the plant: "It's sickening, it's a disaster. It's very very upsetting – for Dell to go from Limerick – Limerick is finished."

The company is relocating its manufacturing to Lodz in Poland largely due to lower labour costs, despite a visit to Texas by Irish government ministers who sought to change the mind of chief executive Michael Dell. Minister Willie O'Dea said yesterday: "He told us politely but bluntly that Dell's competitors in the PC industry had all out-sourced their manufacturing, and if Dell didn't do likewise then the company had no future."

The transfer of manufacturing to Poland is something of a bitter irony for Irish workers since recent years have seen a flood of immigrants into Ireland from Poland and other countries. Ireland today holds more than half a million non-nationals, making up 15 per cent of the workforce.

The only silver lining is the fact that Dell will maintain 2,000 non-manufacturing jobs in the counties of Limerick and Dublin. Although the job losses had been widely expected, it still sent reverberations through an economic and political system which is braced for a downturn. The news came just three days after Waterford Wedgwood called in the receivers.

The sense of crisis is probably even sharper than that in Britain, since the much smaller Irish economy is seen as particularly vulnerable to the international financial downturn. Ireland has been living the high life for more than a decade. The "Celtic Tiger" economic boom delivered unprecedented prosperity, bringing with it a major rise in living standards and home ownership.

Last year 40,600 people lost their jobs in Ireland, pushing the unemployment rate to almost 8 per cent. Now the Chartered Institute of Personnel and Development has predicted there will be 2,270 redundancies a week up to Easter, and the jobless rate will head into double figures.

The return to less affluent times will be painful to a young population which has little memory of the days when money was less plentiful and jobs were hard to find. During the house-building boom many took on large mortgages which they will find difficult to sustain as unemployment grows.

The government is now turning its attention to the possibility that job losses may introduce new difficulties. Conor Lenihan, the Integration Minister, said: "Irish people haven't been competing for jobs in the hotels and hospitality sector but now, because of redundancies, they are beginning to.

"There is potential for tension because people project their anger on to ethnic groups when they see their friends, uncles and aunts losing their jobs. We have to guard against this."

The economic predictions are uniformly bleak. Overall, experts are forecasting sharp falls in GNP, consumption, investment and employment. One recent prediction is that, in contrast to the pattern of recent years, this year could see a net outward migration of around 50,000.

One indicator that has certainly fallen is that of the government's popularity, which according to opinion polls has plummeted in recent months. This reflects the widespread feeling that Brian Cowen, who became Prime Minister last year, has yet to get a handle on the crisis. Several months ago his government produced a cost-cutting budget which was roundly criticised as being mishandled and ill-conceived. Thousands took to the streets in protest against cuts affecting education and health care for the elderly.

Mr Cowen and other ministers regularly issue grim warnings of how difficult things will be in 2009. He warned: "We are facing the biggest economic challenge in a generation."

Logged off: Dell's employees

Denis Ryan, 53

"You have to get up and get on with it. Like everyone, I have a mortgage to pay. There are a lot of families with two incomes in there. I feel sorry for those people and people who have car loans and things like that. What can you do? This has to turn around at some stage."

Sharon Kelly, 27

"I don't think they [the Government] have done anything; they line their own pockets and are not thinking about the smaller person. But you can be guaranteed they won't be getting any big pay cuts, they won't be out of a job and don't have a thing to worry about. They go on trips and do what they like and we are left to suffer here so yeah, I do blame the government."

Thomas McNamara, 28

"I have a daughter who is a year-and-a-half old, but I'm one of the lucky ones because I don't have a mortgage. I would have been shocked if I was told our jobs were safe, but there is a lotof anger. I don't plan to emigrate because of my daughter but I might have to."

Daniel Higgins, 27

"I live at home and had planned to get a mortgage but everything is put back now. What can you do? If there are no jobs here, I might have to emigrate. I have cousins in Australia and I might go out there; I might have no choice now."

Dominic McNamara, 23

"I previously worked in the building trade as a qualified plasterer before that went belly up, and I came here and this has gone belly up now. There is nothing out there. I'll have to see what way it goes now."

Reporting by Barry Duggan in Limerick

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