Employment figures and recovery? February 28, 2013Posted by WorldbyStorm in Economy, Irish Politics.
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.”
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.
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?