Suggestions from lobby groups on resolving jobs crisis are just waffle
Fix the deficit, fix the banks and fix the cost base -- this is the only strategy that will work, says Colm McCarthy
Published 08/05/2011 | 05:00
The Government is set to reveal its job-creation initiative on Tuesday and expectations should be restrained. The country is going through a shuddering macroeconomic contraction which is not yet over. The financial background is daunting, particularly the continuing enormous budget deficit and the unresolved banking collapse. Domestic and external confidence in Ireland's economy will not be restored until these macroeconomic issues are resolved.
Since the onset of the current crisis in late 2008, the unemployment rate has reached almost 15 per cent and about 200,000 jobs have been lost in the non-agricultural sector. More than half of these job losses have been in construction and there is very little that can or should be done about this. There is now an excess supply of property under almost all headings and no credit available to add to the headache.
There have been severe job losses also in wholesale and retail distribution and in the financial and real estate categories. The financial and real estate sector outgrew the economy in line with the housing and construction bubble and contraction should be seen as necessary and desirable. The same is true for the distribution business: consumer spending enjoyed a bubble too and an economic recovery cannot be built around the stimulation of consumption and the retailing of imports.