Are we getting back to work?

Unemployment is at its lowest for three years. Does this signal a resurgence in the job market or is it just that people are emigrating or joining one of the Government’s job schemes?

Sat, Dec 7, 2013, 01:00

Reports of Ireland’s unemployment level reaching its lowest level for more than three years has been greeted as further evidence that the economy is stabilising. But accurately measuring unemployment can be tricky, as can extracting significant conclusions from such figures.

One gauge is the Quarterly National Household Survey, the internationally recognised standard that provides a national average of unemployment four times a year. The other is the Live Register, which is primarily a monthly administrative count of those registering for statutory entitlements and is not designed to measure unemployment.

This week the Central Statistics Office reported that 25,770 fewer people are on the Live Register compared with a year ago and that 38,060 fewer are on it compared with the year previously, giving a standardised rate of unemployment of 12.5 per cent. Last month the household survey indicated that unemployment stood at 12.8 per cent in the third quarter of 2013.

Although these two methods assess different data, the insight they provide is limited. Neither can tell us the number of people shifting in and out of work, for example, while factors such as educational programmes and emigration can exaggerate findings. So how genuine is this drop in unemployment? And does it provide a credible springboard to meet Enda Kenny’s hopes of seeing it dip below 10 per cent by 2016?

“Behind the figures there are many stories,” says Bríd O’Brien of the Irish National Organisation of the Unemployed. Among several factors that she sees contributing to the fall in the Live Register are people enrolling in activation programmes such as community employment schemes, Fás courses, Back to Education and JobBridge – though she adds that these account for an improvement of just 3,018 on last year.

There are also people who are not making the transition from jobseeker’s benefit to jobseeker’s allowance and, of course, those who are finding work.

“Some of that work would be short-term or part-time, however, so in terms of people finding full-time sustainable, decent work, that’s still a bit thin on the ground,” says O’Brien. “We also can’t assume that any increase in jobs is necessarily serving the long-term unemployed. There is a lot of movement where people are going straight from one job to another.”

One thing that O’Brien is cautious about is the household-survey sample. Until the fourth quarter is completed next year and its survey base changes, she says, we can’t make definitive statements about the sustainability of employment increases.

How people describe themselves on the survey is also a significant issue, particularly when it comes to explaining the rise of 25,000 in agricultural employment over the past year.

“Some people in rural Ireland who may have identified themselves as construction workers in the past may also have had farms in their family and now identify themselves as working in farming. Similarly, even if you have only worked three hours in the last week and see yourself as unemployed, you’re counted as employed.

“The other thing is that some figures could have been boosted by tourism. The Gathering brought huge numbers of people into the country, creating job opportunities and activities. But we won’t see until next year whether this increase is real or how much of it is due to statistical blips.”

Emigration is primarily responsible for the number of under-25s on the Live Register dropping below 60,000 for the first time since 2008, says James Doorley of the National Youth Council of Ireland. He points to a recent study by University College Cork that found that 47 per cent of Irish people were employed in full-time jobs before emigrating – 13 per cent worked in part-time roles – so freeing up positions in the domestic labour market when they left.

“Internships are also contributing, because a lot of young people recognise that they need to be circulating in networks for when jobs do become available,” says Doorley. “There are some inroads being made in the economy, but I think there is still a long way to go in relation to there being sufficient work for a lot of people.”

“I think emigration goes a long way to explaining why we’re seeing stronger job growth for older workers who are more embedded in the Irish labour market and are less mobile,” says John McHale, head of economics at NUI Galway, who sees this pattern as part of a broad improvement. “But I think as time passes, and younger workers see job opportunities improving here at home, the tendency towards emigration will decline.”

Scarring effect
One economist who feels less optimistic about the effect of emigration is Ray Kinsella, a professor at the Michael Smurfit graduate school of business at University College Dublin. In 2011 he cowrote a report entitled The Rise and Rise of Long-term and Youth Unemployment in Ireland: The Scarring of a Generation.

The study analysed people who had been unemployed for more than a year, concluding that they were less likely to re-enter the labour market at anywhere near their previous level or salary.

Kinsella also found that the sociological damage of long-term unemployment and the emaciating effect it has on a skilled labour force are overlooked by Government authorities.

“To move away from the catharsis that’s happened in the labour market will be the work of a generation,” he says. “The idea that different schemes or purely financial metrics is going to get us there is foolish.”

Kinsella believes that third-level education has become prohibitively expensive, that activation programmes such as JobBridge are inadequate and that emigration has become a safety valve to ease the pressure of the labour market. The economic cost of this, he adds, will be with us for some time.

“I think what governments often underestimate – and international literature bears this out – is that when youth emigrate, it’s assumed there’ll be an instant flow back into the system when the economy begins to move. But actually it’s a hugely lagged effect. One of the key advantages in the competitiveness of the Irish economy, in terms of attracting multinationals and holding investment here, is a well-qualified workforce.

“But when you look at the outflow of graduates over the last four years, it’s much higher than the Government estimated, and therefore the damage to the labour market’s competitiveness is proportionally much higher. You don’t roll back to the status quo just because the economy improves. It doesn’t work that way.”

In February the Government published Pathways to Work 2013, a 50-point plan to combat long-term unemployment. Minister for Social Protection Joan Burton has since appointed a Labour Market Council, comprising industry and policy experts, to steer its implementation. A spokeswoman for the department acknowledges that with more than 391,000 people remaining on the Live Register, sustained job creation will be crucial to tackling unemployment, but says that this week’s figures represent further evidence that progress is being made.

Such progress is constrained not just by fiscal austerity but also by having a common currency, says Brendan Walsh, who was professor of national economics at UCD for 25 years. “We are trying to become more competitive without being able to devalue,” he says. “So we have to engineer an ‘internal devaluation’, which really implies wage cuts, et cetera. Given the depressed situation in the main European markets, I think we have done better than expected. If the UK economy gathers momentum, this will be a big help. Of course, I hope unemployment will fall to 10 per cent or below by 2016, but, based on how long it took for unemployment to fall in the 1990s, it could be a long haul.”

Looking up and down: Two jobseekers tell their stories
Dan Silverlock, a 32-year-old web designer from Greystones, Co Wicklow, lost his job a year ago when the agency he worked for could not attract enough business.

After an unsuccessful spell job-hunting early in the year, followed by a stint of freelance work to develop his portfolio, Silverlock returned to the job market this autumn to find improved prospects.

“It was certainly different from what I had seen at the start of the year,” he says. “After getting a sense of the opportunities out there and the kind of skills companies were looking for, I realised I had to study a few new things to get the sort of job I wanted. I was confident, but I had no idea that towards the end of the year there would be as many opportunities as there were.”

Contacting recruitment agencies produced four or five opportunities a day within his skill range, he says, eventually leading him to his new job, at Firstcom, a digital-communications agency in Sandyford Industrial Estate, in south Dublin, where business is flourishing.

“For my industry it’s easier now than it was maybe two years ago. Development companies were trying to get high-skilled workers for roles that were beneath them. It was almost like they were taking advantage of the job market, looking for people who would have held senior positions in better times but, because of the market, were applying for junior roles. Now there seems to be a minimum of two jobs coming through a day, and that’s just within my skill set.”

Fionn O’Brien, a 31-year-old engineer from Portmarnock, in north Co Dublin, has been unable to find a full-time position in his field since he graduated from Dublin Institute of Technology, in 2007.

“From my class in DIT, I’d say nearly all have emigrated,” he says. “The ones who are still here have moved away from engineering into financial and tech-based areas.”

O’Brien has since completed a master’s degree in structural engineering and mechanics, as well as a part-time research project at Trinity College Dublin. But he has spent much of the past two years seeking work both in Ireland and abroad.

“This time last year I think there may have been one suitable engineering role I could apply for every three months, whereas now there might be five or six. That might not sound great, but I can see there is a slight improvement.

“I’ve been applying around the UK and Germany, getting more phone calls in the last few months, but some say you need to be [living] there first.”

O’Brien’s last interview was in May, and, given the paucity of career opportunities, he has considered the JobBridge scheme (though has found nothing worthwhile) and has begun to apply for data-analysis roles as well as various entry-level positions.

“People coming out of statistics or dedicated maths courses are going for these data-analysis jobs, so I think [employers] have the pick of the bunch, and I’m not really hearing anything back,” he says.

“Things are looking a little bit better in Ireland in general, but I think something more needs to be done. It’s hard to know what to do.”

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