Concerns for recovery as jobs growth slowed to snail's pace in first half of year
Published 27/08/2014 | 02:30
There have been slews of good news on the economy over the past year. But those hoping for more of the same were disappointed yesterday. The number of people at work barely grew in the first half of the year compared to the end of 2013.
Despite some positives in the sheaves of figures on jobs published by the state's statisticians, the single most important indicator of the health of the economy contradicts most other indicators, which are pointing firmly towards a quickening pace of economic expansion.
The near stagnation of jobs numbers in the March-June period, coming on top of a similar underwhelming performance in the first quarter of the year, puts something of a damper on hopes of a rapid recovery.
Consider this: if the rate of employment growth in the first half of the year doesn't strengthen, it will take until 2037 - another 23 years - to get the numbers at work in the Irish economy back to 2007 levels.
While it is worth noting that there was no jobs growth in Ireland from the 1950s to the 1980s (employment levels stagnated at around 1.1 million for decades), there is no reason to believe that such a poor performance will be repeated in the future. Thankfully, there is more reason to believe that things will turn out to be considerably better than those dismal decades.
With a much more educated workforce, a regaining of some of the competitiveness lost during the bubble and continued success in attracting lots of foreign investment, medium term prospects are good for growth.
The strengths of the Irish economy were to be seen most recently in the quite astonishing surge in employment that took place from the middle of 2012 - the low point in the post-crash era - until the end of last year. In that 18-month period, numbers at work grew by around 65,000, which was the most rapid rate of employment growth in the EU.
On balance, a range of factors points to a pick-up in jobs growth over the remainder of the year and beyond. Those factors include: improving conditions in the economy more generally; rising confidence levels; strong recoveries in both the UK and the US; and the likelihood that Mario Draghi, the president of the European Central Bank, will conjure up some growth-enhancing monetary magic as early as next week.
Another reason to be upbeat is the geographically broad spread of the labour market recovery since the bottom was hit two years ago - frequent claims that only the capital and its surrounding counties are benefiting from the upturn are plain wrong.
Six of the country's eight regions have enjoyed growing numbers at work in the two years to mid-2014. Moreover, the border counties, the Midlands and the South-East have had the fastest rates of jobs growth, all exceeding the rate in Dublin over the same period.
If anyone outside the Pale does have cause for disgruntlement it is the folk of the Mid-West, the only region which has seen no real signs of recovery. Collectively, the numbers at work Clare, Limerick and north Tipperary continued to fall into 2014.
That dismal performance comes on top of the region having had a less "boomy" boom than others, leaving it alone among the State's regions in which fewer people are at work today than in 2002 when the property bubble began to inflate.
If inhabitants of the Mid-West have good reason to feel they are less fortunate than others, then so too do those who are tying to get their careers started. While younger workers, who tend to have fewer contacts and less experience in the world of work, usually fare worst in bad times, the callow really got clobbered in Ireland's bust - from one million under-35s in employment in 2007, the number had fallen by a third by 2012.
Despite the pick-up in the labour market over the past two years, things have improved only a little for 25- to 34-year-olds and not at all for those younger - just over one in four 15- to 24-year-olds had a job in the April-June period, a proportion that is actually down slightly on two years earlier.
The lack of opportunities for the young are a central factor in the three-fold rise in emigration since the recession began - around 30,000 people departed each year before 2007, rising to a peak of 89,000 in the year to April 2013. But a small bright spot in yesterday's figures was a fall in the numbers emigrating in the year to April 2014, all of which was accounted for by Irish nationals.
That 10,000 fewer Irish people emigrated between spring 2012 and spring 2013, compared to the same period a year earlier, is a reflection of improved labour market conditions. So too is the increase in the number of immigrants over the same time period. That the numbers arriving in Ireland increased by more than 5,000 (to a little over 60,000) suggests that those eyeing opportunities from abroad see prospects here improving.
Some of the demographic data published yesterday also proved noteworthy. Because more people have been leaving than arriving since the crash, net migration has been negative. That has slowed the rate of population growth, which, incidentally, has passed the 4.6 million mark for the first time since the 1850s. If net outward migration does not stop, Ireland's population could be on course to start falling again.
Yesterday's figures showed another substantial drop in the birth rate. As recently as 2008, almost 17 children were born for every 1,000 people living in the country. Now, there are fewer than 15 newborns per 1,000 people. That may seem small, but in demographic terms it is a big and rapid change.
The birth rate is approaching the threshold that keeps the population stable excluding migration. It could be that the Ireland is moving much more quickly than expected towards the very low fertility rates in most of our peer countries.