John FitzGerald: Sectoral mix of employment has changed since the crash

Ireland suffered an unprecedented loss of employment in the crash but the economy has now rebounded to attain pre-crisis employment levels.

Research presented at this month's Dublin Economics Workshop conference explored what has happened to those who lost their jobs since the crash. Alongside contributions from established researchers and academics, economists from the Irish Government Economic Service (IGEES) demonstrated the value to policy of having this in-house analysis capacity.

IGEES's Fiona Kane showed how the sectoral mix of employment has changed since the crash. Jobs lost in construction have been replaced by jobs in the public sector, ICT and finance.

Dermot Coates of the Department of Employment and Social Protection examined what happened to the 200,000 construction workers who lost their jobs in the 2008-2010 period.

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Research by the Central Bank had already shown that we do not have a reserve of unemployed skilled construction workers available to expand output in this sector. What this paper answered was the question of what happened to those who had lost their jobs.

About half were back in work in Ireland in 2017, while over a quarter had gone abroad and stayed away.

About one in eight were still unemployed, others were on a pension or a disability payment. Only a tiny share of the building workforce went into education after being laid off.

Most of the younger emigrants, those under 25 when they lost their jobs, were Irish. However, about two-thirds of the older more experienced workers who left Ireland after the crash were not Irish – the great majority of them were from Eastern Europe. Ten years on, Polish building workers who have returned home, or tried their luck elsewhere when they lost their jobs, are now unlikely to return to Ireland, even though there are good opportunities here, and we could do with their skills.

The research also found that younger construction workers who lost their jobs were faster to find employment in the recovery at similar wages to before the crash. Having been lower-paid, they were quickest to bounce back to their pre-unemployment place on the earnings ladder. However, older building workers found it much more challenging to achieve pre-recession earnings.

In other research on job quality in the recovery, Ms Kane found that the level of temporary employment in construction was higher than pre-crisis levels.

Welfare claimants

Other research presented by the ESRI's Elish Kelly at the conference examined the effectiveness of the Back to Work Education Allowance scheme, which supported unemployed and other welfare claimants to return to either second or third level education, paying them a weekly allowance while doing so. This scheme was part of a programme to encourage those who were unemployed to actively seek new opportunities, including education.

Between 2007 and 2012 the numbers availing of the scheme rose from 6,000 to 25,000. However, she found that participants on the scheme were substantially less likely to be in employment four to six years after starting back in education than those who didn’t go on the scheme. The quality of the courses on offer was not the issue.

Whatever the educational and other social benefits to scheme participants, the scheme was not achieving its stated aim of getting people back to work. Indeed, for some it became a revolving door to more courses – having completed one two-year PLC course, returning to take a further PLC course. However, there was some evidence that the scheme helped move people on to further study after the end of their payments.

These results are surprising as in the 1990s a rather similar scheme was introduced to encourage people to return to education; subsequent research suggested that it was successful in its objectives. The experience of the Back to Education Allowance scheme shows that good intentions are not enough, and that getting the detail of such programmes right is critical.

In today’s tight jobs market there is a focus on unlocking the potential of those currently economically inactive, including people with disabilities, those in home duties, and the early retired.

Job experience

Cathal McDermott of IGEES examined the supply of skills and job experience these groups could bring. He found that most of the “inactive” had work experience, but a lot of it out of date. The highest skilled were the early retired, but they were also currently the most comfortably off, with less incentive to return to the workforce.

The research findings showcased at the conference illustrate the real value to public policy of enhancing the analytic capacity of the public sector and of funding applied policy research and evaluation.