Thursday 29 September 2016

Don't believe the myth there is no recovery beyond the M50 - look at the facts

Published 26/05/2016 | 02:30

'Click image to enlarge'
'Click image to enlarge'

The number of people at work in Ireland grew at one of the strongest rates since the crash in the first three months of the year. Almost every region of the country is enjoying employment growth and almost every sector of the economy is contributing to the jobs expansion.

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This is all very good news. What happens in the labour market is the single most important indicator of what is happening in the Irish economy, and much more important than Ireland's increasingly dodgy GDP figures.

Although the jobs measure shows we still have a number of years to go before the economy recovers to its pre-crash peak of 2008, Tuesday's quarterly jobs report from the State's statisticians points to quite a head of steam in the recovery.

The increase in the numbers at work over three months was 15,400 when adjusted for seasonal volatility and fluctuations.

In percentage terms, the growth since the 2012 trough amounts to an increase of 9pc. While this is far less than the growth in GDP over the same period, it amounts to one of the biggest increases in the rich world over the past four years.

It brings the net gain in jobs since the depression reached its deepest point to 160,000, which, it is worth pointing out, is more than the increase in employment recorded between the first post-independence census in 1926 and the last census of the 20th century in 1996.

A hugely important aspect of the jobs figures is the regional breakdown. There has been a great deal of talk in recent years about the supposedly uneven geographic spread of the recovery. Some politicians have been all too happy to generate a sense of grievance among rural dwellers by making wild claims, such as that the recovery has not extended beyond Dublin's M50 ring road. Such claims are blown away by the facts.

Almost every shred of evidence at county and regional level shows that recovery has been taking place across the length and breadth of the country.

Nonetheless, things are a long way from being back to acceptable levels, something which probably explains why people may be minded to believe the claims of grievance-fostering populists that rural Ireland is being left behind.

Tuesday's jobs figures for the first three months of 2016 underscore yet again how the jobs recovery has been broad-based, with one exception. Since the economy hit bottom in 2012, seven of the country's eight regions have enjoyed jobs growth. What's more, and as the accompanying chart shows, Dublin isn't even the region that has enjoyed the strongest expansion.

That accolade goes to the midlands. Remarkably, that region has recorded a truly impressive increase of more than 15pc in the numbers at work since its low point five years ago. Also outdoing Dublin in the jobs growth league are the border counties, not a group always thought of as dynamic when it comes to employment creation. The number of people working in the six counties bordering Northern Ireland is up more than 14pc since their trough in 2012.

Employment in Dublin has grown by almost as much, so the widely held perception of a booming capital is on the money. That has been the case in recent times in particular. If we consider only the year to the first quarter of 2016, jobs growth in Dublin outstripped all seven other regions.

In the bottom half of the league table are the south-west, mid-east and mid-west. But while these three regions have recorded jobs growth below the national average since their turnarounds, their rates of growth have been impressive by historical standards. The only one of the three regions which might raise a concern is the mid-east - its labour market recovery appears to have run out of puff over the past year.

And so we come to the solitary part of the country that has yet to experience employment growth. In the western region, comprising Galway, Mayo and Roscommon, job destruction continues to outpace job creation. As of the first quarter of this year, employment hit yet another post-crash low, and is stuck at the level it was at in 2003. Delving deeper into the region's numbers shows that none of its industry sectors is showing much sign of life. When it comes to jobs, the west is not yet awake.

Panning out to look at which sectors are driving the employment recovery nationally, we see that nearly every one of the 14 sectors covered in the jobs statistics is on the up, but that the performance varies considerably.

Three very traditional industries - agriculture, construction and the hospitality sector - have accounted for just over half of the total net increase in employment since the economy turned around. These three sectors all continue to recover strongly. The information technology sector is also doing well and the number of professional jobs is growing solidly too.

The wholesale and retail trade is the country's single biggest sectoral employer. Despite a very sharp increase in the amount of stuff being purchased in shops, according to retail sales figures, there has been a somewhat mysterious sluggishness in jobs growth in the sector. But recent quarters give cause to believe that distributors might finally be getting into hiring mode again - in the first three months of this year employment in the sector hit a four-year high.

Another huge employer is manufacturing. In line with much of the rest of the developed world, the numbers employed on production lines is in long-term decline (owing to technological changes and cheaper foreign goods).

This decline has been in evidence in Ireland since the turn of the century. In the eight years of the boom up to 2008, around 30,000 jobs, or 10pc of the total, were lost in the sector. After the crash another 60,000 jobs disappeared, and in a much shorter period.

But the good news is that since the bottom was hit in 2012 employment growth in the sector has been recording rates last seen in the late 1990s.

Almost 20,000 net jobs have been added, bringing the total to a quarter of a million. That augurs well for out-of-work blue collar workers.

Overall, the latest jobs news augurs well for the entire economy. Such is the momentum in the labour market that the economy can be expected to continue its expansion well into the second half of 2016.

Irish Independent

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