Will long-term unemployment linger like last time?

Rapid turnaround in labour market may not be enough for certain jobless categories

Dole queue outside Bishop Street in Dublin back in 2010. Unemployment has dropped from 15.2 per cent in January 2012 to just 6 per cent last month, its lowest rate in nine years. Photograph: Aidan Crawley

Dole queue outside Bishop Street in Dublin back in 2010. Unemployment has dropped from 15.2 per cent in January 2012 to just 6 per cent last month, its lowest rate in nine years. Photograph: Aidan Crawley

 

Another month, another fall in the State’s headline rate of unemployment. The almost unbroken sequence of employment growth since 2012 represents one of the swiftest turnarounds in contemporary economic history.

It has seen unemployment drop from a post-crash high of 15.2 per cent in January 2012 to just 6 per cent last month, its lowest rate in nine years.

While the initial decline was aided by emigration, the more recent drop has coincided with a period of net inward migration, and is indisputably linked to the ongoing pick-up in domestic conditions.

Long-term joblessness is perhaps one of the biggest risk factors in any post-crash economy, however. It lingered long after the economic crash of the late 1980s, even when a rapid expansion in exports earned Ireland the moniker of Celtic Tiger.

During the boom years, the long-term unemployment rate – the percentage of the total workforce out of work for more than a year as measured by the Quarterly National Household Survey – fell to a record low of 1.3 per cent.

Long-term claimants

However, when the economy fell headlong into the financial crisis after 2008, long-term joblessness rose sharply. As unemployment peaked in 2012, long-term unemployment reached its highest level of 9.5 per cent. At the time, more than 200,000 people were classified as long-term claimants – some 30 per cent were former construction workers.

The latest Quarterly National Household Survey for the second quarter of 2017 put the long-term unemployment rate at 3.1 per cent, which corresponds to 68,900 workers.

This represents a significant improvement and contrasts with what happened previously in the 1990s when it remained elevated for several years after the economy had shifted gear.

Nonetheless, 68,900 workers represent a sizeable part of the labour market and it’s unlikely they’ll be filling roles in financial services and IT, where most of the demand is. Placing these people, many of whom are not young, back into meaningful employment may require more sophisticated reskilling programmes. Programmes we haven’t adopted to date.