Business

Friday 29 August 2014

Building blocks are in place for further jobs growth

As hiring volumes pick up pace, 2014 could see unemployment dip below 10 per cent, writes Richard Eardley

Richard Eardley

Published 29/12/2013 | 02:30

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2014 could see unemployment dip below 10 per cent
2014 could see unemployment dip below 10 per cent

Though we confidently state that Ireland's economy is on an upward track -- a confidence underlined by our bailout exit -- it is the sustained growth in employment numbers that should lend legitimacy to our optimism as we head into 2014.

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What makes the jobs growth of 2013 remarkable is not only that is has been accompanied by a significant fall-off in joblessness, thus giving us good net figures, but that it has come in some surprising sectors where both our needs and our ability to meet demand are greatest. What makes it more encouraging is that there is every indication of it continuing into 2014.

Job creation is both a symptom of and a factor in economic growth. There has been much talk of a jobless recovery, but this masks the truth.

Until this year, the relatively low level of job creation was obliterated by job losses. That stopped this year.

November figures from the CSO show standard unemployment pegged back at 12.5 per cent in the third quarter of 2013, down from 13.6 per cent in Q2, bringing us back to where we were in July 2009.

To put it another way, three-and-a-half years of job destruction have been reversed over the past 12 months.

So, as we both reflect on the past and consider our immediate future, it is worth considering just where this job growth has come from and what we can say about the prospects for this continuing (or even improving) in 2014.

If we go back to July 2008 we see just 6.5 per cent unemployment. Is there any prospect of us getting to that level by this time next year?

Where have the jobs come from? We've heard plenty of the global war for talent in the technology sector. Any consideration of the employment market must include the startling success of Ireland's tech and social-media industries, but the more important news is outside of the hip-and-happening environs of Barrow Street and can be witnessed simply by looking up.

Cranes are back on the skyline; scaffolds surround buildings on an increasing number of construction sites around the capital and beyond, and we've seen a statistically significant shift in numbers employed in that much-maligned and least-fashionable sector: the construction industry.

There are now over 102,000 workers in the broad church of construction. That's way off the unsustainably high levels of 2007, when we had well over a quarter of a million people engaged in building and related works.

But this shift in direction means we are at last creating jobs that we have the skills on hand to fill. Unlike the tech sector, where we have to scour the globe to bring in the latest talent, the people who will be filling the construction jobs live next door. Importing workers is a boon to an economy in whatever cycle it is in, but creating jobs for folk currently living off the State is a double-whammy success.

Hiring volumes in construction are up 36 per cent over the past 12 months. This covers short-term labour requirements, up nearly 60 per cent and long-term permanent hiring, up eight per cent.

We see firms with urgent short-term needs and, tentatively at first but increasingly confidently, a return to demand for permanent staff.

Architects and designers, engineers and surveyors, are all smiling again as projects roll on to the drawing board. The sector has survived on the meagre rations of minor school-refurbishment projects and a run of domestic extensions.

Now there are more exciting projects on hand.

Vacant, high-spec office space is at a premium as the last few blocks around Dublin's Grand Canal Square fill up and the city centre has nothing. If we're going to continue to bring in the FDI that has been our lifeblood over the past few years, we need first-rate offices to show them.

The signs are that, with Nama doing business and foreign investors stumping up the cash, we'll see a return to a level of speculative commercial developments that we haven't had for nearly a decade.

Large infrastructure projects such as Grangegorman and the National Children's Hospital will finally get going in 2014 and these too will create huge numbers of jobs for the sector.

Alongside construction, we've seen a big uplift in workers in both agriculture and food production and in the labour-intensive food and leisure sectors. Again, these are 'worker friendly' jobs -- skilled but not hi-tech and thus accessible to a broad range of people who have been eagerly awaiting such opportunities for a long while now.

Granted, this latter category may be partly due to a bounce from The Gathering, but the trend looks sustainable. We've 20,000, or 20 per cent, fewer unemployed in craft-related work than we did two years ago, so it's more than just a one-year fillip.

Technology dominates the job-creation headlines. A glance through the Silicon Republic's top 50 job announcements reveals both familiar and unfamiliar names. The likes of Novartis, HP and EMC have all announced significant new jobs in 2013 and they sit alongside the less familiar names such as Phlok, Overstock, Squarespace and Qualtrics, all bringing high-value jobs.

It is this juxtaposition of global giant alongside entrepreneurial start-up that makes Ireland such an attractive ecosystem of opportunity for the tech community.

So, add up the numbers and we should see a good percentage of these flow through to additional employment in 2014 and beyond.

Construction, food and agri-produce, and technology will be the engine room of job creation. The significance of growth in these sectors has a knock-on effect in other job markets. Every large scale construction project requires input from legal, finance, HR, marketing, sales and administration. We are seeing incremental demand in all these sectors and double- digit growth in some. It is this long-tail stretch on job creation that gives most cause for optimism.

Ibec's chief economist Fergal O'Brien predicts we'll have 60,000 new jobs next year, which would bring our unemployment rate to about 11 per cent. I think we might do better than that. Some 100,000 jobs would be a good target and get us under 10 per cent.

Not quite the 6.5 per cent of 2008, but a much better place altogether than where we have been for the past five years.

Richard Eardley is MD of Hays in Ireland

Irish Independent

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