The evidence suggests that young people, especially young women, those with lower levels of education, those working in occupations with relatively low skills requirements and those working in sectors shutdown by decree (Accommodation and Food, Wholesale/ Retail & Construction) have been most likely to be negatively impacted by covid. However, there is evidence to suggest that over the medium-term other, more high-paying sectors such as Information and Communications, Professional, Scientific and Technical and Financial, Insurance and Real Estate activities may well be of concern to policymakers with a substantial proportion of those on supports from these sectors not expecting to return to their employment.
NERI’s annual labour market report is out this week and provides a time-series analysis of labour market trends in the Republic of Ireland with a special focus on 2020. At the time of writing the government is gradually opening up after 16/17 months of restrictions related to the global covid pandemic. As such, it may still be six months until the ‘dust settles’ and a further six months until we can see the full-impact of lockdowns on the labour market.
In last year’s NERI labour market report the analysis described the labour market as it existed directly before the first lockdown and provided evidence that in many important respects, conditions were yet to recover from the impact of the financial crisis of 2008, especially for young people. For instance, both the employment rate and participation rate had quite a way to go to return to pre-crisis levels, particularly for younger age groups. The data also showed that almost every indicator of precarious work available showed elevated levels of precarity for younger workers relative to conditions before the financial crisis. This includes part-time work, underemployment, temporary contracts and more. Labour Force Survey (LFS) data also showed over qualification rates to be a persistent issue in Ireland relative to other high-income EU countries, with little improvement in ten years. The data showed little improvement in the occupational profile for the population under 35 since 2012 either (the share of employment in occupations requiring tertiary education remained steady, for instance) and particularly strong growth in employment in the Accommodation and Food sector (the most precarious sector with the lowest average earnings in the Irish economy) in more recent years. The analysis also showed significant inequality in earnings growth since 2010, with the occupations associated with the highest wages and training driving moderate average wage increases for the economy as a whole as wages for much of the bottom half of workers stagnated.
The year 2020 is clearly an outlier in terms of the impact on labour markets. There is no comparable year for analysis. Large parts of the labour market and economy were/are shut down entirely by decree and many firms have not been operating at 100 percent.
There are a number of complicating factors to be considered when assessing the longer-term implications of the coronavirus on the Irish labour market; the churn between lockdown and opening up; unequal ability to work from home in some sectors, occupations and even in some regions relative to others; earnings supports and subsidies for employees to employers hoping to open up again but not sure at what capacity; and future consumer demand (for example in Hospitality due to restrictions of international travel). This leaves many of the headline indicators difficult to interpret or less relevant in a time-series analysis, given the context.
The 2020 data does give us a glimpse (and an idea going forward perhaps) of the unequal impact the pandemic has had on various groups. The evidence suggests that young people, especially young women, young married women, those with lower levels of education, those working in occupations with relatively low skills requirements and those working in sectors shutdown by decree (Accommodation and Food, Wholesale/Retail & Construction) have been most likely to be negatively impacted by covid.
However, there is evidence to suggest that over the medium-term other, more high-paying sectors such as Information and Communications, Professional, Scientific and Technical and Financial, Insurance and Real Estate activities may well be of concern to policymakers with a substantial proportion of those on supports from these sectors not expecting to return to their employment (see Social Justice Ireland’s Employment monitor 2021).
Approximately 1 in 5 workers affected by covid said they didn’t expect to return to the same job (almost 1 in 4 women). That’s approximately 255,000 Irish workers (more than 10 percent of Irish employment as it was in the final quarter of 2019). Over half of these (an estimated 155,000) were in the top half of sectors by average pay; Information and Communications (44,000), Financial, Insurance and Real Estate Activities (35,000), Professional, Scientific and Technical Activities (25,000), Education (20,000) and Human Health and Social Activities (31,000). Similarly, 23,000 Industry workers don’t expect to return to their jobs though hours worked in the sector increased in 2020.
In this context, the figure for Accommodation and Food (the lowest paid, most precarious sector in Ireland) is relatively insignificant at 18,700.
The focus post-pandemic to tackle the unemployment crisis should be to promote decent work with decent pay that provides a decent standard of living. Any job won’t do. Aggregate demand from the market economy is likely to slow significantly with unemployment numbers up and the uncertainty of economic conditions going forward, as was the case in 2008. Current signals from policymakers do not inspire confidence that the lessons of 2008 have been learnt. The focus on low wage and precarious employment in hospitality and tourism in public discourse, the commentary around the level of PUP payments and claims by employers of not being able to attract workers and the announcement recently of an updated version of Jobbridge are all suggestive that policymakers are again prioritising keeping wages low over promoting decent work with decent pay. Internationally, there has been a paradigm shift and an acknowledgement (by many) that the austerity post 2008 was a terrible mistake. There is a burgeoning consensus (The IMF, OECD and ESRI to name just a few), that now is time to borrow for capital projects to support employment. The German government are even suspending their own borrowing rules.
In Ireland, many policymakers seem more concerned with protecting their failed records of austerity.
The financial cost of borrowing is highlighted but the economic cost of not borrowing is completely omitted from the conversation.
The state must intervene to support employment growth (and even to create direct public sector employment) in strategic sectors, in particular in relation to a Just Transition to a low carbon economy. A state led retrofitting programme to modernise the social and pubic building stock is one area with low investment requirements and high returns for the Irish economy, state and society. Public R&D spending is extremely low in Ireland relative to our peers in Europe and could be increased to realise the potential of wind and tidal energy technologies (among others) creating decent jobs.
Without significant intervention, the labour market will take years to recover. Working conditions still hadn’t recovered by 2019 from the crisis of 2008 even with hundreds of thousands of young people forced to leave the country. This time they will have nowhere to go.
The country can’t afford another lost decade.