Long-term joblessness won’t be easily solved

If the labour market continues to recover at its current rate, unemployment should hit 10.8 per cent before the year is out.

This would further push Ireland's jobless rate below the euro zone average, albeit the latter is held unusually high by the likes of Spain, where unemployment remains above 24 per cent.

And anyway a double digit unemployment rate is hardly a cause for celebration, not least when we enjoyed rates of close to 4 per cent for much of the earlier part of this century.

However, when you consider unemployment had ballooned to over 15 per cent a little over two years ago, the recent trend is significant.

The latest Live Register numbers indicate the seasonally adjusted register, which includes casual and part-time workers as well as those on jobseeker’s allowance, stood at 374,800 at the end of September, the lowest since March 2009. This represents an annual decrease of 38,620 or 9.5 per cent.

The big question, of course, is how much of the decline is due to improved economic circumstances and how much is down to emigration.

There is no accurate data on this, and commentators are left trying to juxtapose administrative data from the Department of Social Protection, which the Live Register is based on, and population statistics on emigration, which is misleading at best.

Some 220,000 young people aged 15-35 left the country in the five years to April this year, an exit rate reminiscent of the 1980s.

That said, emigration has slowed in the past two years, and therefore it’s safe to assume that a sizeable portion of the recent decline in joblessness is attributable to improved economic conditions.

This is underscored by the fact that claimant numbers in all nine of the sectors covered by the register data is falling.

Another positive is that much of the recent job growth appears to be in full-time work in contrast to last year when part-time posts accounted for the lion’s share of job creation.

This is backed up by data in the latest Quarter National Household Survey, which shows a sharp increase in the full-time equivalent (FTE) employment measure.

All of this suggests firms are committing to taking on full-time staff, a sure sign they believe the economy has turned a corner.

Nonetheless, as one commentator noted, the numbers of long-term unemployed has remained “stickier” than short-term flows.

Even with an overall annual decrease of 10,493 or 5.6 per cent, the number of long-term claimants on the register was 178,388 at the end of September.

The figures also show the number of long-term claimants increased as a proportion of the total. In September, they accounted for 48.2 per cent of all those on the register compared to 45 per cent this time last year.

History tell us that the long-term unemployment problem is not easily resolved, even when the economy returns to a more robust pattern of growth.

Nonetheless, Davy economist David McNamara points to the fact that the Live Register numbers show 133,284 or 36 per cent of claimants last held occupations under the “craft and related” and “plant and machine operatives” headings, the majority of which were likely related to the construction sector.

Equally, a further 41,240 (or 11.1 per cent) were listed under “sales”, with many relating to the retail sector.

Any significant pick-up in these sectors – and there are strong indications this is already under way – has the potential to significantly reduce the State’s unemployment further.