Jobs freeze in the public sector 'not the answer'
Retire older staff, keep younger worforce is way forward, says report
Published 02/06/2010 | 05:00
THE recruitment freeze in the public sector may not be the best response to the economic crisis, a leading private forecaster said yesterday.
Presenting the Ernst & Young Economic Eye summer forecast, economist Neil Gibson said it might be better to retire older staff and keep as many young people in the workforce as possible, even through short-term placement. The report, which covers the island of Ireland, says it will take more than a decade for job levels to recover to previous peaks.
"Unusually, this has been a recession of the young, with 56pc of the total increase in unemployment in the Republic in the age category 25-44, and 48pc in Northern Ireland. We also face the prospect of 'jobless growth' in the recovery," Mr Gibson said.
"This seems to be because fewer workers are being let go than in past recessions. It may be a combination of the cost of redundancy, firms wanting to hold on to skills, and a willingness of workers to agree to changes in pay and conditions.
"The recession could be a life-defining moment for today's young people. Improvements in economic data such as GDP will not be of much comfort to them. We can say that the worst is over on unemployment, but it will be 2022 before employment regains its 2007 level in the Republic," he said.
The report says the island is now emerging from an economic depression. The Republic's economy is expected to contract by a further 1pc in 2010, before recovering to growth of 2.8pc next year.
It highlights how dependent Irish growth is on exports, especially on the downside. Were export to fall by 2pc this year, total output (GDP) would shrink by 6pc. Were they to rise 7pc, the economy would expand by 1.8pc. The central forecast of 1pc decline is based on a 3.8pc rise in exports.
"If you had forecast a 15pc recession, you might have expected a big exodus of companies, but that has not happened. In the 1980s recession in the UK, companies could not get out of the country quick enough."
Mark Otty, managing partner of Ernst & Young for the Middle East, Europe and Africa, will visit Dublin today and have briefings on the Irish economy. "Business has got to get the message across that Ireland is dealing with its problems, including costs," said Irish senior partner Mike McKerr.
"Irish managers are doing that in the boardrooms of the multinationals, and we are doing it too. The Irish model of economic development is not finished. In fact, the opposite is the case," he said.