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Employment figures and recovery? February 28, 2013

Posted by WorldbyStorm in Economy, Irish Politics.
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It’s almost inexplicable to me how the current media comment on the latest unemployment figures, which show a net increase of 10,000 jobs in the last quarter of 2012, are being trailed as evidence that the ‘recession is over’ and the ‘recovery under way’. Take Dan O’Brien’s latest thoughts on the topic this morning.

No wait. Inexplicable? Nah… not at all. This ‘evidence’ is a response to marginal figures which in themselves are problematic and also are insufficient to give us the full context.

Yesterday O’Brien in the Irish Times has little choice but to implicitly admit to this. He references the fact that the number of those claiming unemployment benefit has declined by 20,000 since 2011. But…

Most of the decline in the numbers claiming jobless benefits was accounted for by those under 25 signing off the Live Register. Although yesterday’s figures do not estimate migration patterns, it is likely that a rise in emigration is the cause of a considerable proportion of the overall decline.

And once that is factored in and applied to employment figures then it is clear that any ‘recovery’ is built upon very significant numbers departing this state. That’s not a recovery in any real sense. Then there’s the areas that are experiencing this supposed recovery:

By region, Dublin and the south-west accounted for almost all of the Irish economy’s expansion in employment in the second half of last year. Both regions also recorded the State’s lowest unemployment rates as of the final quarter of 2012. While these regions had jobless rates of below 12 per cent, the labour market in the southeast remains the worst affected, with unemployment at almost 19 per cent.

There’s another factor, a sort of crucial factor most would think, and again O’Brien is forced to face facts:

That most of the increase in employment was accounted for by part-time rather than full-time jobs took some of the shine off yesterday’s numbers.

According to the CSO full time employment fell by 12,800 over the year and part-time employment increased by 14,000.

So we’re not really talking like and like, are we? Oddly though in today’s piece O’Brien argues that ‘as encouraging again are the kinds of jobs that are being created. Sectors that generate sustainable and/or well-paid employment are doing best’. Now it’s not a direct contradiction of his thoughts yesterday, but…

Anyhow the fact remains that our unemployment rate is 14.2 per cent. That’s 300,000 people. And as O’Brien also has to note ‘[this] remains one of the highest in Europe’ and even more importantly ‘It will take a very long time even to push it into single digits’. This is an historically disastrous figure, particularly contextualised with significant emigration figures.

There’s more than one other issue waiting in the wings. Take for instance interest rates which have been at near historic lows across the past number of years can only move in one direction, and that is upwards. I wonder what is going to happen when the already near unserviceable mortgages for a significant tranche of house ‘owners’ are extended to yet others in that demographic? What happens to discretionary expenditure? What happens to growth?

I don’t often turn to Mark Fielding of ISME for his thoughts, but he’s not far wrong when he is quoted as describing…

…the “actual increase” in employment during the year as “paltry”.
“It is a mere drop in the ocean compared to the ambitious plan to have 100,000 additional people in work by 2016.”

But then I think Alan McQuaid put it best some time back, and he is presumably no champion of those in opposition to the orthodoxy. In talking about the housing market he made the point which readily applies further afield that:

The bottom line is that Ireland remains a long way from where it wants/needs to be as regards credit demand/availability to get the domestic economy moving again. The reality is that until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will stay subdued in our view, severely hampering the overall recovery prospects for the economy as a whole in the process.”

And then we look at other pieces of the puzzle and not much sign of a recovery there. Indeed…

Total retail sales have now fallen by more than 25 per cent since the start of the recession.

.

Actually, it’s interesting to consider the unadjusted unemployment figures across Europe for Q3 2012. Highest is Spain at 25. Greece is at 24.8 (up from 12.4 in Q£ 2010). Portugal is at 16. And then it’s us. As to the UK, 8 and France 9.7 while Italy, for all the angst, is at 9.8.

*********************

Meanwhile, as noted by Jonathan in comments here…

Danny McCoy of IBEC is looking for the government to do yet more for business (and as someone notes in comments pushing the old marginal as against effective tax rates line).

The song remains the same – eh?

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1. Richard - February 28, 2013

If I might add my comment appended to McCoy’s piece, seeing as we’re on the subject of orthodoxy:

‘The other day, Fintan O’Toole asked if Ireland’s history of brutal disciplinary institutions -and how people internalised mechanisms of control from those institutions- had some bearing on Irish people’s contemporary passivity.

That explains part of it, I think. Others pointed, in response, to the immense power of Ireland’s media institutions to enforce resignation, and to ridicule and marginalise challenges to orthodoxy. That;s another part of it too.

But another piece is the mental conceptions we use, and the words we find, to understand and talk about what is happening to us. Where do these words come from? As this article shows, they come from the owning class.

Reading this piece by the employers’ body, IBEC, you notice it’s full of the phrases and clichés that permeate so much of the speech of political representatives, political correspondents, economics experts, and so on. This shows that the priorities of business, and the priorities of the political establishment, are expressed in the same language of economic rationality. They talk about ‘growth’, ‘sustainable recovery’, and the ‘flexibility of the labour market’. The last one is interesting, because it automatically accepts that labour is a commodity to be bought and sold in the same way as Tesco Frozen Burgers.

How can a political alternative come to the fore if people see society in terms that emanate from the owning class? Let me give a quick example: here, IBEC’s Danny McCoy talks about ‘overcoming our debt burden’. You can see the overlap with the ICTU protests that called for the burden to be lifted.

Now, it’s wrong to imagine the priorities of ICTU and IBEC are the same. A massive debt burden for workers can be an excellent thing for employers and capitalists. Indebted workers can be kept docile, and cutting public debt is an excellent alibi for privatising public services, and for private firms to get their hands on rich seams of income from the provision of essential public services, as Danny McCoy advocates here. But the ICTU leadership and IBEC use roughly the same language: one that disputes neither the legitimacy of the debt nor the legitimacy of the institutions that imposed it.

Political alternatives can only come through breaking with this language. That’s a difficult thing to do. But we could get things off the ground by saying, first of all, to the likes of Danny McCoy: it is not our debt, and what is more, you are not one of us.

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WorldbyStorm - March 1, 2013

Richard, ythats a fantastic deconstruction of his piece, not least in the following:

“How can a political alternative come to the fore if people see society in terms that emanate from the owning class?”

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2. CMK - March 1, 2013

Good analysis, and interesting to read it after having seen ‘Primetime’ where, in the bit I watched, four right wingers in a row were on for about 10 minutes: George Lee, Pat Kenny, Dan O’Brien and Cormac something or other who used to be in the PDs. None of them making any sense at all and while Lee did mention demand he didn’t follow it through to its logical conclusion that to get the economy moving you need to starting paying ordinary workers more. On unemployment figures: net emigration to April 2012 was 34,000. I’d be stunned if net emigration to April 2013 isn’t more than that. If it is, that’s close to 70,000 people gone in the space of two years who, we must presume, largely left to find work abroad. Since 2010 that would equate to a net loss through emigration of around 125,000. If that level of migration were maintained we’d lose about 325,000 from 2009 to 2019. Not far off the ‘lost decade’ of the 1950’s where 500,000 or so left. If the rate of increase between 2011 and 2012 is maintained over the next few years then the ‘Lost Decade’ will likely be replicated.

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3. CL - March 1, 2013

Michael Noonan:
“We are very nearly at the end of our journey. We have re-engineered the country to be a modern competitive economy, …
We have cut costs right through the economy with an internal devaluation of 15pc or 16pc and we are now highly competitive.”-

http://www.telegraph.co.uk/finance/financialcrisis/9898920/EU-Troika-rule-in-Ireland-worse-than-British-Empire.html

This re-engineering Noonan talks about was ‘successful’ because of mass unemployment.

‘internal devaluation’ is economistic speak for reducing wages. Working class living standards have been severely depressed making a greater economic surplus available to be appropriated. The function of the government is to facilitate this massive transfer of wealth. The Labour Party has degenerated into a collection agency for finance capital.

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4. Gewerkschaftler - March 1, 2013

+1 CL.

‘We are nearing the end of our journey…’

The end of the journey is when wages and living conditions are ‘competitive’ with those of Bangladesh.

If you are going to tell a lie, tell a big one.

There will pie in the sky the year after next throughout this depression / transfer of wealth period.

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CMK - March 1, 2013

Patricia Callan of IBEC has made the point on ‘Primetime’ that countries like Bangladesh are our competitors. Obviously it’s not an idea they want to publicise widely, but that’s where there thinking is at.

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5. Branno's ultra-left t-shirt - March 1, 2013

ISME not IBEC

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CMK - March 1, 2013

Ebola and Anthrax.

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6. Gewerkschaftler - March 1, 2013

Correction: Italian unemployment is 11.7%. Youth employment 38.7%. Austerity is working there as well.

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7. Gewerkschaftler - March 1, 2013

(Official figure) unemployment in the Eurozone is 11.9%. Gods know what the real figure for unemployment or underemployment is. Probably at least twice that.

But the official figure translates as 19 million women and men, the talents of whom are being deliberately wasted and who’s lives are a misery, in this best of all possible worlds.

And we’re only at the beginning of the ‘journey’.

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8. gfmurphy101 - March 1, 2013

Thanks to WBS for the analysis, I was going to do something similar myself but did’nt have time
There are some more issues with the figures that need explanation such as the “The largest annual increases in employment were in the 45-54 (+9,100 or +2.3%) and 35-44 (+4,400 or +0.9%) age
groups. The increases in employment in older age groups were offset by the decreases recorded in the 20-24 (-12,800 or -9.3%) and 25-34 (-8,900 or -1.7%) age groups.”(this is quite unusual and could be due to reasons other than people getting actual jobs) particularly when the figures don’t match up “The number of employees in Q4 2012 was 1,543,100, down 7,600 (-0.5%) over the year. The number of self-employed persons increased by 3,600 or +1.3% to 291,100.”
Further analyis is needed as to the ramifications of this “The total number of persons in the labour force in the fourth quarter of
2012 was 2,143,500, representing a decrease of 18,000 (-0.8%) over the year. This compares with an annual labour force decrease of 6,700 (-0.3%) in Q4 2011. The number of persons not in the labour force in Q4 2012 was 1,453,000, an increase of 19,800 (+1.4%) over the year.”
Now if one takes the live register figures (released the following day) http://www.cso.ie/en/media/csoie/releasespublications/documents/labourmarket/2013/lreg_feb2013.pdf
some pieces of the puzzle may begin to fall into place . Figures for “Live Register Activation Programmes” have increased from 80,076 in Jan 2012 to 83,332 in Jan 2013 and there has been almost a doubling of the numbers on Tus and Jobbridge, 5,996 in Jan 2012 to 10,290 in Jan 2013.
All of the above could point to issues such as
High emigration (backed up by figures released here http://www.cso.ie/en/media/csoie/releasespublications/documents/environment/2013/sdi_2013.pdf (page18)
People taking taking early retirement and not claiming SW as they would not get much and perhaps they have a working spouse, therefore ‘dropping out of the labour force’
Public sector workers on early retirement and pension
Do people on Tus and Jobbridge consder themselves ‘employed’ ??
Its no wonder that CSO gave the health warning “Note: Please see background notes for discussion on the interpretation in the volume of persons who are employed,unemployed etc” and it is a good idea to do so. It seems even the CSO are a bit wary of their own findings!

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WorldbyStorm - March 1, 2013

gfmurphy, your analysis is better again, you should post it up definitely. The point about people not taking up SW is critical, as is the Tus and Jobbridge.

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9. D_D - March 1, 2013

Dan O’Brien is the ‘Irish Times’ propagandist-in-chief for austerity. Relentless.

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10. Paddy Healy - March 2, 2013

There are lies, damn lies and statistics says the lay person. THe statistician replies: “Statistics do not lie, but some damn liars abuse statistics”
Richard Bruton is being given soft interviews in the media and being allowed to mislead.
What is signified by the recent “in employment” figures issued by CSO?The category “In Employment” includes not only employees but also self employed and family members working in farms and businesses. An employee is a person over 15 years of age employed for at least 1 hour per week(ILO criterion)
CSO QNHS is a survey of 39,00 households which roughly equating to 80,000 to 100,000 over 15 persons
The probable error is therefor ,at a minimum, 0.3%
There are approximately 1.85 million people “in employment)
The figures given by CSO recently with probable errors are:
Total in employment (Q4 2012)=1.8489 million +or – 5,500
Full time 1.3987 million +or -4,200
Part-time 0.4502 million +or-1350

The year on year changes to December 31, 2012 are:
Q42012-Q42011
Overall +1,200
Part-time +12,800
fulltime -14,000
The overall change in the numbers in employment at 1,200 is well below the probable error on the survey. (the decline in the year on year change to 31 September at 4,300 was also below the probable error)
The increase in part-time workers at 12,800 is however well above the probable error at plus or minus 1350
The decrease in full-time employment at 14,000 is also well above the probable error at plus or minus 4,200.
If we assume that on average 1 part-time worker =0.5 X full-time worker (in reality it is considerably less than 0.5)

Loss in full-time equivalent workers = 14,000-6,400 = 7,600

For the year from Q3 20011 to Q3 2012(sept 31, 2012) the figures were: Loss in Fulltime Equivalents 16,300-6000 =10,300

The objective conclusions from the CSO Quarterly National Household Survey therefore are for the year to December 31, :
There is no measurable change in the overall number “in employment”
The number of full time workers is declining by a small amount
The number of part-time workers is increasing by a small amount
There is a small loss in the number of full-time equivalent workers and this loss, though smaller, is statistically the same as that which occurred in the year to Sept 31 2012
I will deal with the change in the number of paid employees (not the same as the change in the numbers “in employment”) in the near future when I have more up to date information

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11. Paddy Compare - April 1, 2013

More uncertainty for Irish retailers!…

More mixed news for Irish retailers this week as the Central Statistics Office announced 0.3% increase in sales in February compared to January this year. Further investigation revealed a range of results as sales in food, drink and tobacco stores grew…

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