Croke Park deal an obstacle to job creation

Fri, Mar 2, 2012, 00:00

‘THERE ARE no jobs out there.” It’s a statement frequently heard these days as the rate of unemployment hovers at just above 14 per cent, one of the highest rates in the developed world.

It is understandable that many people believe it, and all too true that there are not nearly enough jobs in the economy. But below the headline rates of unemployment and employment, a huge amount of job creation and job destruction happens at any given time. The good news is that tens of thousands of jobs are being created every month.

As the accompanying chart shows, the number of new jobs created in 2006 and 2007 averaged 450,000 according to fresh data put together by the Central Statistics Office. These figures may need some refining, but they are a good reflection of fluctuations in the labour market.

The number of additional jobs fell dramatically as the economy went into a tailspin but, even in 2009, when the biggest contraction occurred (GDP shrank by a massive 7 per cent in that year), more than 200,000 jobs were created. Employment creation rebounded strongly in 2010 to more normal levels and is likely to have been somewhat better again last year.

As jobs are being created all the time, so too are they being lost – an entirely normal process that takes place in any economy. This organic process only becomes problematic when the rate of the latter exceeds the former. It has become acutely problematic since the bubble burst, even if developments in 2010 (the latest available data) show that job destruction slowed considerably from the nightmare year of 2009.

This picture of labour market dynamics is essential background for assessing the Government’s Pathways to Work package, unveiled last week. The plan fleshes out a reform process that – more than four years into the jobs crisis – has been almost criminally slow in its formulation and implementation.

Minister for Social Protection Joan Burton has accelerated that process. Pathways, if fully implemented, should modernise the welfare-training-activation experience for someone without a job so it feels more like the well-designed systems of northern Europe.

Organisationally, it puts the onus on a civil servant – Anne Vaughan – to execute the changes. And it will bring in outsiders with relevant expertise to oversee implementation on a quarterly basis (the soon-to-retire head of the OECD employment department, John Martin, would be an ideal candidate to lead the proposed oversight committee).

Philosophically, it is underpinned by a coherent approach which matches rights with responsibilities to ensure that the welfare safety net does not – via the law of unintended consequences – become a trap for those who fall into it, or a tempting hammock for the minority who are better at exercising their rights to access benefits than at fulfilling their responsibilities to get back to work.

The main criticism of pathways is that it is not radical enough in addressing the jobs crisis. Helping and – when necessary – pressuring jobseekers to find work is not possible if there are not enough experienced case officers. Even with the folding into the Department of Social Protection of staff from elsewhere, the ratio of jobseekers to case workers will be far higher than in countries with serious activation structures.

If the system had gone into emergency mode when the jobs emergency started – four years ago – the institutional capacity would now be in place to help those on benefits find their way around myriad training options, to profile claimants’ skills, to help hone job searches, to improve how jobseekers sell themselves in interviews, to encourage the discouraged and to weed out those who are abusing the system. But that was not done.

With so many in need of help, more time cannot be wasted. In order to ramp up capacity quickly, private firms specialising in recruitment and personnel should be contracted to provide these services.

Pathways is vague and short on ambition in doing this, stating “the Department of Social Protection is examining the potential of contracting with the private sector as a means of complementing its own resources”.

The reason the department is still merely “examining” the option is because the Croke Park agreement cossets the public sector. In effect, those with secure jobs are stymieing efforts to help those with no jobs get back to work. That is a travesty.