It has been a bad week in the jobs market. First came news of the closure of Packard Electric in Tallaght, with the loss of 800 jobs. Then the latest live register figures, published yesterday, showed a 3,000 rise last month at a time when the buoyancy of the economy might have been expected to lead to a decline. The only bright note was the announcement in mid week of 400 new jobs for Dublin promised by the US computer company Oracle.
In many ways the events of the week summed up the challenges and opportunities facing the Government in the jobs market. The services sector is providing increasing numbers of jobs in sectors like software, tele services and tele marketing. One task for the Government is to examine how it can help toe maximise job creation in this sector, which has traditionally played second fiddle to manufacturing in industrial policy.
However, the closure of Packard should sound a warning that many areas of industry are coming under increasing competitive pressure. Companies which have failed to adapt to the changing shape of international markets and to new competition from areas like Eastern Europe and East Asia will struggle to survive. Closures on the scale of Packard may be rare, but competitive pressure will continue to put jobs at risk in a range of industrial sectors.
The live register unemployment figures provide another disappointment for the Government. After a 3,000 fall in the number of people out of work in March, the total rose by the same figure in April. More worrying, the number of people on the live. register at the end of last month was 5,400 higher than the same month a year ago, despite a year of rapid economic growth.
The Government continues to claim that the unemployment data does not provide a reliable measure of the jobless trend. This may be correct, up to a point. Certainly the most recent labour force survey figures, which are now a year out of date, show a much lower level of unemployment. However, what the live register figures do show is that large numbers of long term employed people are not benefiting from the improvement in the economy.
More needs to be done to tackle unemployment. But the Taoiseach, Mr Bruton, was still justified yesterday in pointing to a strong increase in the number of people at work, a reflection of buoyant job creation in many areas of the economy. What Mr Bruton says deserves to be heeded. He warned that expectations are starting to run ahead of reality, particularly as the economy cannot keep up the extraordinarily strong rates of growth of the last couple of years. His message was that taking into account lower interest rates, tax reductions and pay increases, most people have seen a rise in living standards over the past couple of years. If people start to demand ever larger pay increases, then the economy will suffer.
Moderate pay increases are certainly part of the solution to maintaining steady economic growth and low inflation. However, there is also an onus on the Government to control its own spending and allow more resources to be provided for tax reform. New ways of tackling long term unemployment must also be examined. There may still be time to negotiate another national agreement incorporating these elements in an effort to sustain and build upon the strong performance of the economy over the past couple of years.