Ireland Drowning in Private Debt (3 of 4)

Paul Sweeney: Employment is the key indicator of a successful economy. Unemployment is very high at 14.6%. This is up from 4.3% for many years. Employment peaked at 2.1m but is now down to 1.77m. The number of unemployed was 325,000 persons at Q3, 2012.

Emigration is taking the heat of increased unemployment. The number of job losses was 360,000 down from peak in 2007. 87,000 people left Ireland in year to April 2012 and 53,000 entered, leaving a net figure of 34,000.

Labour market participation is down as people are staying at home or in education. A key indicator of unemployment is those who would like to work but who stay in education or at home because they are discouraged workers. The total of those who would like to work was up to 25.6% at end September 2012 as Figure 2 shows.

FIGURE 2:

Source: CSO, Indicators of Potential Labour Supply in QNHS QNQ32

We have seen that industrial employment has been in decline each year since the Crash of 2008 and it has not stabilised yet. If we are lucky, we may stabilise on job losses in 2013.

However, the real issue here and in Europe is that there is a growth of precarious employment, as the following graph (Fig 3) shows. As full time jobs declined – rapidly and by 360,000 since peak in 2008 – there was a rise in part time employment. Indeed, one could believe that many once full-time jobs had become precarious jobs. It can be seen that the rise in part time jobs was around 15 per cent while full time jobs fell by over 21 per cent.

FIGURE 3: Growth in GDP, GNP, Full-Time & Precarious Employment

Source: CSO National A/Cs & QNHS

This growth of long term unemployment is illustrated in the following graph.

FIGURE 4: Growth in Long Term Unemployment, 2007-12

Source: CSO & M Collins, NERI

The future outlook is hardly encouraging. It appears to be for more or less jobless growth, according to official data including the IMF as Table 1 below shows:

TABLE 1: Unemployment Projections and Estimates of the Unemployed, 2012-2017

Source: NERI QEO Autumn (2012:9) and M Collin’s calculations.
Note: Estimate assumes the labour force remains constant to 2017 at the average level for the four quarters of 2011 (2,113,975 individuals).

The key issue is how are we dealing with the unemployment problem? The shift to active labour market policies is welcome, but we in the unions constantly ask, what is the point in training people when there are few jobs? We are constantly told by workers who have been trained that it is really demoralising when they end up with no jobs after “training”.

Policy should be informed by the existing situation, its likely duration and the composition of the workforce. All economic forecasts in recent times do appear to be overly-optimistic and that should inform a realistic outlook on employment.

Figure 5 below shows that the jobs being created and found by young people in Europe are not exactly high-paying, with most jobs being in catering, shop work, personal care and domestics.

FIGURE 5:

Source: EU Vacancy Monitor Jan 2012

In 2010, the latest data available, on average approximately 4.9 million people aged between 18 and 29 found a job in the EU27. Interestingly, the top four occupations for young people in 2010 were the same as for all age categories. While these jobs have relatively ease of entry and so offer prospects for new entrants (youth) to the labour market, they are not the best jobs. Significantly, 23 of the 25 top jobs for young people were also in the top 25 occupations in terms of job-finders for all age categories.

An important indicator is the job vacancy rate. The chart below (Figure 6) show that there are 7.4 unemployed per job vacancy in the EU27, but in Ireland, there are 31 unemployed. It is not as bad as Portugal, Greece, Spain and Latvia, but this scale of unemployment is at a dangerous level.

FIGURE 6: Vacancy Rate in European Countries 2010


If all the jobs were filled instantly, 30 of the 31 in Ireland would still be unemployed; i.e. there are so few jobs that no amount of training will have a significant effect. This illustrates the depth of the crisis; it would be different if we were close to full employment.

In conclusion, this indicator of growth and employment reinforces the view that it is demand which is required.

Paul Sweeney     @paulsweeneyman

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a President of the Statistical and Social Enquiry Society of Ireland, former member of the Economic Committee of the ETUC, a member of the National Competitiveness Council of Ireland, the National Statistics Board, the ESB, TUAC, (advisor to OECD) and several other bodies. He has written three books on the Irish economy and two on public enterprise, including The Celtic Tiger; Ireland’s Economic Miracle Explained and Selling Out: Privatisation in Ireland, chapters in other books and many articles on economics.