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A welcome (if modest) increase in employment

Posted on September 02, 2013 by Tom Healy

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The publication, recently, by the Central Statistics Office of results from their Quarterly National Household Survey for the year to June 2013 has provided a welcome respite to the generally negative employment news since the beginning of 2008. Employment is now increasing across most sectors and occupations, both in full-time and in part-time employments. Notwithstanding very disappointing results for GDP in the first quarter of this year (see NERI Quarterly Economic Observer of Summer 2013) an increase in employment is welcome. In summary, the number of jobs is up by 34,000 in the year to June 2013, the numbers unemployed (as measured by ILO definitions) is down 22,000 while the numbers in the workforce (including the unemployed) is up by 16,000). The total estimated population is up slightly. Could this be the turning point? Could the austerity zealots be right after all?Doubtfully. A number of factors weigh on the Irish economies, North and South:

  • stagnant domestic demand and retail sale volumes (July is likely to be a blip in the Republic due to the '132' effect on motor sales,
  • stagnant and possibly declining demand for work as proxied by the total number of employee hours worked up to the early part of this year,
  • trouble signs in other European and Eurozone economies, and
  • the over-hang of household debt, distressed mortgages and business uncertainty with regards to investment in productive capital.

 

Other caveats are in order:

  • The CSO has made the point in their QNHS release on page 2 in regards to Agriculture, Forestry and Fishing: 'Given the continued introduction of the sample based on the 2011 Census of Population asoutlined in the note on the front page of this release, particular caution is warranted in the interpretation of the trend in this sector at this time.' Of an increase of 34,000 in total employment 16,000 is related to this broad sector.
  • Economic activity and measures of employment do not necessarily follow smooth monotonic line curves. A succession of monthly and quarterly data is necessary before anyone can confirm a definite trend and momentum. So far, the evidence since mid to late-2012 has been moderately encouraging as unemployment has fallen both in absolute and relative terms as a percentage of the labour force.
  • Continuing high levels of net outward migration are undoubtedly contributing to a significant fall in the numbers seeking work especially among the young (and better education) population.
  • Total employment has increased for persons aged 35 and over while it continues to fall for those below this age (the reasons are varied from return to education and demographics but it likely to be the case that net outward migration is the main cause of the fall in the total labour force of persons aged under 35. These trends, if they are sustained, will have profound impacts on the structure of empoyment and age-profile of the workforce for years to come.
  • There is some evidence that behind some of the employment increases there is a rise in precarious employment especially (but not exclusively) for those new to the labour market.

The regrettable truth is that after 5 years of determined and one-sided fiscal austerity unemployment is 13.5%, under-employment is close to a quarter of the workforce and job prospects for many young people - especially those with lower levels of education and skill look very poor. Were it not for net outward migration unemployment might now be closer to 20% than 13.5%.

Looking to the future, what Ireland needs is investment, growth and jobs. It will not happen automatically. And we cannot wait for the markets - international and national - and the private sector, alone, to come on board and deliver much lower unemployment (with echoes of debates in the 1930s). There is scope and urgent need for a European level fiscal stimulus and end to austerity. There is also some scope - even if limited by political and domestic economic circumstances for a pro-growth policies in Ireland.

Will Budget 2014 do more harm to employment or help accelerate the welcome, but modest, increases in employment? The choice is with our Government and we can't keep blaming the Troika forever.

Tom Healy

Posted in: Government SpendingInvestmentJobsMacroeconomics

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