Jobs meltdown much worse than it appears
With almost a third of Irish companies expected to be worth less than their combined balance sheet debt and liabilities this year and corporate insolvencies rising from less than one to four per day since 2007, is it any surprise that Ireland is bleeding jobs at a rate of 1,200 a day?
Not really. But as the latest figures from the CSO suggest, January's accelerating collapse in employment in this country is only the beginning.
In the year to December 31, 2008, the seasonally adjusted Live Register increased by 121,100, with a rate of increase accelerating dramatically in the second half of the year.
In the year to January 31, 2009, the increase was 146,500 -- a pace that is much faster than the worst monthly increase in 2008, pushing standardised unemployment from 8.3pc in December 2008 to 9.2pc in January 2009. All in, 293,500 were claiming unemployment benefits by the end of last year.
Yesterday's figures for January paint an even darker picture of things to come, implying that up to 400,000 might be on the dole by the end of 2009.
Yet, the reality is likely to be even worse than the depressing CSO figures suggest. This is because, alongside jobs, Ireland is bleeding its younger and foreign workers in thousands.
Due to the CSO's inability to collect meaningful statistics on the numbers and composition of people residing in the country, we can only imperfectly gauge the trend of the return of outward emigration of Irish residents from the island.
There is plenty of indirect evidence, however, to indicate that such a trend is accelerating.
By the second half of 2008 we were officially in the situation when outflow of workers (both Irish and foreign-born) from the Republic was already exceeding the inflow of newcomers. In addition, the composition of inflows has changed, shifting away from the traditionally more skilled sub-groups of non-EU nationals to less skilled and less experienced workers from the marginal EU12 accession states, like Bulgaria and Romania.
On the outflow side, highly educated younger Irish workers and the more employable foreign workers were leaving Ireland in droves, lured by better jobs prospects in Australia, the Middle East and Eastern Europe. Even the UK and US -- in the throes of recession -- are becoming net recipients of people from Ireland. This is the 1980s Redux.
Using CSO data for 2002-2007, only approximately 45pc of all foreign nationals with PPS numbers issued in 2004 were in employment in 2007. This number drops to 33pc for those who registered to work here in 2002.
Overall, the relationship between the year of registration and the employment status suggests that the proportion of foreigners obtaining a PPS number and staying in employment peaked in 2006 and started falling as early as 2007.
Undoubtedly, this process whereby Irish immigration flows are attracting decreasing quality migrants (in terms of their prospects of finding a job here) has become only more pronounced since then.
All of this suggests that we are in for a shocker in 2009. If in December 2007, 23,234 non-Irish nationals were on the Live Register, a year later this number rose to 54,455 -- an increase of 134pc in one year.
I estimate that for each non-Irish national signing on to the Live Register, two more workers leave the country.
This implies that in addition to almost 150,000 jobs officially lost in this economy between January 2008 and today, some 65,000 more jobs were lost without as much as a blip on the Live Register radar.
This suggests Ireland is losing around 18,000 jobs per month, or over 600 jobs per day.
We are in jobs meltdown mode, and the Government is out of its depth on what needs to be done. In fact, they have not a single idea as to what can be done to reduce the dole queues.
Let's face it -- our dynamic policy trio of two Brians and one Mary has not a clue what job creation looks like. Real job creation and replacement in the recession depends not on the Government's willingness to tax and spend, but on the Government's ability to cut barriers to investing in workers.
The latter includes: PRSI, minimum wage, health and other Government levies, benefit-in-kind taxes and local charges, and red tape.
Dr Constantin Gurdgiev is adjunct lecturer in finance at Trinity College Dublin