EU/IMF have valid concerns about Irish unemployment – economist
The latest quarterly report from a team of European Commission/ECB/IMF inspectors has given Ireland a good report as regards its efforts to get its budgetary situation under control.
Indeed, the team now expects Ireland’s budget deficit to be 8.6pc of Gross Domestic Product (GDP) in 2012 as against its previous forecast of 8.8pc.
The Commission left its main economic forecasts for Ireland unchanged, but lowered its projected unemployment rate for this year to 14.3pc from 14.5pc before.
However, it warned that the rising figures for long-term unemployment needed “considerable attention” as the country’s unemployment rate has gone from around 4pc at the height of the economic boom to 14.4pc now. Furthermore, with the world economy slowing down, the likelihood is that things will get worse before they get better on the jobs front.
We should have a better picture of the current labour market condition when official employment statistics for the second quarter are released by the Central Statistics Office next Thursday.
While the underlying trend is likely to show an improvement from the previous quarter, the figures are once again expected to highlight the poor state of the jobs market at present.
Last week the governor of Ireland’s central bank, Patrick Honohan, said that any recovery in Ireland’s economy was likely to have little impact on the labour market in the short-term, and it is hard for me to disagree with that. The worry is that the sharp rise in unemployment is not just cyclical but structural.
The government is well aware that there is no easy fix to the unemployment problem, and things are unlikely to improve on the jobs front until the economy starts to grow again on a sustained basis.
Recent newspaper reports suggest the Fine Gael/Labour coalition wants to use the proceeds from the sale of state assets to fund job creation schemes.
Dublin plans to raise €2bn from the sale of non-strategic assets and the government is hoping that its creditors at the EU, ECB and IMF will allow the proceeds to be re-invested for jobs rather than pay down debt.
Today’s comments from the “troika” indicate that they wouldn’t necessarily be opposed to such a suggestion.
If consumer confidence is to be restored in Ireland then the employment situation needs to improve dramatically and any initiatives that can be taken by the government (particularly with the blessing of the country’s creditors) to boost the labour market can only be good news in the long-run.