independent

Sunday 20 April 2014

Brendan Keenan: We cannot afford a system that kills off jobs

OF all the figures in yesterday's employment survey from the Central Statistics Office, the grimmest is that almost one in every three people under 25 is unemployed. The young are the most vulnerable in any employment slump -- which is the only word for what is happening.

They are often the first to lose their jobs when companies are cutting their workforces. In Ireland's case, many are among the 100,000 plus who were put out of work by the collapse of the building industry.

The number of young people looking for work also increases naturally as they graduate from school and college. Many are going straight to the unemployment queue, adding to that grim statistic.

There are plenty of other grim statistics in this CSO survey of the second three months of the year. One of them is the calculation that, with the unemployment rate largely unchanged, emigration must have been around 40,000 over the previous year. Without that, unemployment might be 20pc -- and close to 50pc for younger groups.

This is a survey of employment, rather than unemployment, but, of course, the jobless rate cannot come down until the number of jobs begins to increase. That is not happening yet.

Indeed, at first glance the second quarter of the year seems to be worse than the first. The number at work fell by almost 4,000, which was higher than the previous quarter. The first glance is deceptive, and for a controversial reason. The bulk of the lost jobs were in the public sector, where employment fell by 5pc. The Croke Park issue will not go away.

The job losses under that agreement were voluntary, and much of the rush in the second quarter was to take advantage of gold-plated redundancy and pension terms. There is no reason to feel sorry for those who lost those jobs. There may be good reason to feel sorry for those who might have filled them as they fell vacant naturally.

It is not an easy problem. There is a limit to how much the pay of existing workers can be cut.

But there is still a big question over the wholesale cutting of jobs in a public sector which is not particularly large -- although it is particularly well-paid -- in a country which will be desperate for jobs for years to come.

The problem in the private sector now is not so much shedding jobs, as not creating new ones. The fall was just one-third of 1pc, although that hides big differences. Shops continue to suffer and to reduce staff; industrial jobs are still being lost, even though multi-national operations are keeping the output figures healthy. Construction has not finished shrinking.

Who would have thought a few years ago that agriculture and food would be the biggest creator of jobs? The sector is doing well, but one suspects that some of the employment is people with farming connections doing bits and bobs. The definition of "work" in this survey is anything more than one hour a week.

Cheaper prices -- some driven by NAMA's takeover of busted hotels -- will have contributed to the rise in accommodation jobs in four of the last five quarters. It is an ill wind that blows no good, but serious job growth will have to come from more personal consumption and business investment.

One only has to say that to see the difficulty. There is still a massive loss of income as the country reduces its dependence on other people's money. Individuals are trying to reduce the burden of their private debts. The banks cannot afford any more losses and will lend, if at all, only to the safest of customers.

The second issue which will not go away is whether there are alternatives to current policies. In truth, there are precious few. Other people will not lend to us on this scale any more, and a small open economy cannot print its own money without its currency collapsing.

As Michael Noonan found out, Ireland is in a weak position even to seek restructuring of its debt because its non-debt finances are not yet in balance. The €3.5bn correction planned for December's Budget will snuff out most growth next year, and do nothing for jobs, but it will bring us close to basic national solvency. That does, at least, give us options.

The workings of the tax and welfare system, along with job training, placement and temporary schemes, are even trickier issues, but cannot be ignored. It is perfectly true that there are not enough jobs to go round, but it is equally true that we cannot afford to have a system that kills off any of them.

Irish Independent

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