London and inequality
Dublin has already moved up the hierarchy of international financial centres. At least at the moment however, London remains Europe’s only global city. After the ‘Big Bang’ of deregulation in 1986 London became Europe’s undisputed financial services centre. While the gurus of globalisation were announcing the end of geography, London demonstrated how the business of money concentrates in very specific places. By 1991 there were already over 600,000 people employed in financial services in the Greater London area – more than the total population of Frankfurt!
This employment has involved increasing numbers of very well paid individuals. This in turn has expanded the demand for personal services, from nannies to up-market restaurants. Importantly too, Big Bang not only meant the end of ‘gentlemanly capitalism’, it was the end of the domination of London by British employers. Banks – and increasingly other services such as corporate law – are disproportionately ‘international’ (which usually means American).
Once upon a time in Ireland, FDI meant assembly plants which employed local workers, sometimes with a few foreign managers. The major rationale for FDI was of course to provide jobs for the existing workforce of the country. Yet the changed structure of FDI has also meant the large scale importation of skilled labour. By the 1990s the software sector was relying on skilled immigration (Wickham and Bruff 2008). At the moment the internet sector (Google, Paypal etc.) recruits extensively from outside Ireland. Revealingly, the previous government’s Action Plan for Jobs set a ‘medium term target’ to ‘meet 74% of ICT skills demand with domestic supply by 2018' (Department of Jobs 2016: 109)!
Relocating financial service activities from London to Dublin would mean relocating jobs – many of them for high earners from outside Ireland. Already financial services is one of the employment sectors most concentrated in Dublin. Most jobs in financial services are well paid. However, earnings within the sector are also more unequal than in other sectors. While the largest group of employees earn between €400 and €800 a week, a significant number earn over €2,000 per week (Chart 1).
|Chart 1: Financial services: Income distribution|
Attempts to gauge how attractive Dublin will be to such people involve issues like the quality of education, which means whether there are good private schools, or the quality of facilities, which can include whether there are good high quality (and expensive) restaurants.
Another dimension of the attractiveness of a city to mobile financial services is the quality of infrastructure, in particular of transport. Does the city have an international airport? Is it is easy to move around the city? Will the new workers be able to reach their new workplaces easily from their new homes?
Investment in urban public transport always benefits some groups more than others. Heavy rail projects – such as Dublin’s DART – tend to be most successful when they serve relatively affluent areas. However, the more they enhance the public transport network the more they contribute to overall mobility for the city as a whole. Thus tackling Dublin’s notorious public transport deficit will make the city more attractive to mobile financial services, but – unlike an expansion of the city’s more expensive restaurants – would benefit the citizenry as a whole!
Partly because it has been seen as crucial to London’s international competitiveness, investment in London’s public transport has been shielded from the recent austerity cut-backs. Crossrail, one of the biggest transport infrastructure projects in Europe, was approved in 2007; the very first stage is already operational. When the whole line is in service in 2019 there will be a heavy rail link from Heathrow and Reading in the West to Shenfield and Canary Wharf in the East.
Oh dear. By then construction on Metro North linking Dublin city centre and the airport will still not have started. Even worse, DART Underground, Dublin’s own Crossrail, will presumably still be a dream, even though according to Irish Rail, if construction had started as planned as 2010 it could have been operational by…2018. Unlike Metro North, DART Underground would tie the still fragmented public transport of Dublin together. With the addition of a main line spur to the airport it would enable direct rail travel from the airport to the city centre and even onwards to Cork and Galway.
London has Transport for London and a directly elected Lord Mayor. Dublin City - a fraction of course of the real city of Dublin – has a fairly powerless city council and the post of Lord Mayor is largely decorative. Public transport in the city is determined by the National Transport Authority. Indeed, it is argued that Dublin City Council has less autonomy than thirty years ago. Cities that are globally competitive usually have a strong city government. So if we really want Dublin to become London on the Liffey, we don’t just need more expensive restaurants, we need proper public transport and grown up city governance – both things that could benefit all Dubliners.
On London as Europe’s global city, see Chapter 6.4 of my book Unequal Europe (Routledge 2016).
On the powerlessness of Dublin City Council, see most recently Louisa McGrath, ‘Councillors dream of more money…’, Dublin Inquirer, August 2016.
Department of Jobs, Enterprise and Employment (2016). Action Plan for Jobs 2016. Available at: https://www.djei.ie/en/Publications/Publication-files/Action-Plan-for-Jobs-2016.pdf
Wickham, James and Ian Bruff (2008). 'Skill shortages are not always what they seem: migration and the Irish software industry.' New Technology Work and Employment 23.1-2: 30-43.