Wednesday 23 October 2019

Dan O'Brien: 'Given all the challenges we face, new employment figures show jobs market working very well indeed'

Ireland is in the happy position right now of having low unemployment. In fact, over the past half-century, joblessness has only been lower than it is now in the pre-crash noughties. Stock image
Ireland is in the happy position right now of having low unemployment. In fact, over the past half-century, joblessness has only been lower than it is now in the pre-crash noughties. Stock image
Dan O'Brien

Dan O'Brien

The mantra of politicians in most democracies is "jobs, jobs, jobs".

When unemployment is high, that issue almost invariably tops all others in political debate. When it is low, it moves down the pecking order of priorities, but not by much.

Ireland is in the happy position right now of having low unemployment. In fact, over the past half-century, joblessness has only been lower than it is now in the pre-crash noughties.

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Because of the amount of "creative destruction" in the labour market, there are always jobs being destroyed and new ones being created. A healthy labour market creates more jobs than are being destroyed. Thankfully, the Irish labour market has been healthy since 2012, with employment up by close to half a million.

It is always worth contrasting the past seven years with the first seven decades after Independence to show what an unhealthy labour market looks like.

During the 70 years from the 1920s, there was no net increase in the numbers of people at work in the Republic. Jobs were created, of course, but only enough to replace those lost. From Independence to the early 1990s, employment levels were depressingly stagnant, at around 1.1 million.

Seven years of strong employment growth has meant that the numbers at work currently stand at 2.3 million, more than twice the level during the long stagnation of the 1922-1992 period.

But there is no room for complacency. The share of the adult population in employment is still below its previous peak of a decade ago, and Ireland is far behind peer countries, such as Britain, Sweden and Denmark, in the proportion of adults who work.

As the accompanying chart shows, the numbers of people over 15 years of age who are not in the workforce has grown by more than a quarter of a million since the crash. The numbers in the labour force have grown by just a fraction of that over the same time frame.

More students and pensioners account for a large part of the growth in the adult population that is outside the labour force, but the scarring effects of recession are still evident. All of this means that compared with a decade ago, each person working is now supporting - directly or indirectly - more people who aren't.

These are issues that will take years to address. In the shorter term, things are looking good. Tuesday brought quite stunning and somewhat surprising news on jobs.

The Central Statistics Office's (CSO) employment numbers for last year had been showing a slowdown in the pace of growth over the course of 2018.

With many businesses braced for the shock of a no-deal Brexit at the end of March, my expectation was that jobs growth would be even weaker in the first months of this year, on the basis that companies would hold off on hiring at a time of such uncertainty.

Not only did a slowdown not materialise, the first three months of 2019 clocked the fastest rate of jobs growth (on a quarter-to-quarter basis) in 13 years, according to the CSO's Labour Force Survey. In only two quarters since records began (in 1998) has employment jumped by more in a single quarter.

These first comprehensive figures on what is happening in the jobs market in 2019 may be revised by the State's statistics in the months to come to show jobs growth was not quite as super-heated as the first estimates show.

But even if future revisions make the picture look a little less rosy, they will not change the positive picture of continued growth in jobs, which is not only the best indicator of how the economy is performing, but is also the most important for quality of life and standards of living.

In that regard, a few other things jumped out from Tuesday's dump of data on the labour market.

One was the continued fall in unemployment and the particularly welcome fall in the numbers who have been seeking a job for a year or more.

In the first months of the year, 40,000 were in this sorry situation, a fraction of the 215,000 at the worst of the depression. Just 1.7pc of the workforce is in long-term unemployment. That is close to, but not quite back to, pre-crash levels.

What the jobs figures are showing regionally is always worth keeping an eye on. Over the 12 months to the first quarter of this year, employment was up in all eight of the nation's regions.

As usual, there is considerable variation, with Mid-East seeing a surge recently, but - as this column likes to remind readers on a regular basis - no region is being left behind. Over the seven years since growth returned, every region recorded jobs growth well into double digits.

In the context of the much-discussed issue of precarious employment, the figures show that the numbers who are self-employed have grown much more slowly than the numbers who are employees, both since the economy turned around and over that longer two-decade period. As of the first quarter of this year, just 14pc of people at work in Ireland were self-employed, the lowest share since records began.

Another indicator of precariousness in employment is people who are doing part-time work but who want to be full-time. Again, the latest raft of jobs figures shows that fewer than one in 20 people at work is in that position. That is sharply down from the height of the slump and back to the proportion of 2008 when statisticians first started counting part-time workers in this way.

So while there is still a lot that could be improved in Ireland's labour market, there is a lot that is working well.

If the short-term threats to the economy don't materialise, that should continue to be the case.

Irish Independent

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