John FitzGerald: Challenges to the Irish labour market

The financial crash and the mayhem that it produced had a scarring effect on all those living in Ireland. Between 2007 and 2011, the State's unemployment rate rose by 10 percentage points. For many it looked as if the Irish economic model was permanently broken.

The effects of the crisis on the labour market were relatively uneven. Because the crash disproportionately affected the male-dominated construction sector, the male unemployment rate peaked at 18 per cent while the female rate peaked at 12 per cent. However the labour market for graduates did not sour in the same way as it did for the rest of the population: even during the bad years of 2008-2012, it continued to grow. Since the economy turned the corner in 2012, the growth in graduate employment has accelerated to average 4 per cent a year.

Steady growth

Overall, employment has grown by a steady 3 per cent a year since 2012, and the latest data for 2019 show no signs of a slowdown. This has almost exhausted the supply of those currently available to work. The underlying population of working age has grown by only 0.6 per cent a year, and employment has grown at twice the rate of growth of the labour force. To date, the increase in employment has been sustained by substantial immigration, mainly of graduates. This has accounted for up to half the additional jobs. The rising educational attainment of the population has also significantly raised the proportion of women who are working. A high proportion of women graduates, who can earn more, have worked continuously over their adult lives, while women who didn’t go to college were more likely to stay at home when they had children. However, the significant rise in labour force participation of women aged 35-50 shows a growth in the share of non-graduate women now at work.

Both men and women are now staying in work for longer, with a more striking rate of increase among women. Since 2012, the share of men aged 55-70 in the labour force has increased by more than five percentage points. The proportion of women aged 60-64 who are working has risen from 35 per cent to 45 per cent over the same period, and the share of women aged 65-70 at work is up by five percentage points. It’s unlikely that participation increases on this scale are driven by the increase in the State pension age. It suggests that many people want to work longer, including women who left the workforce to rear their children.

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Accommodation constraint

Over the coming decade, labour supply problems may force a slowdown in the economy, even if Brexit or other disasters don’t intervene. Because housing supply is a real constraint on growing the workforce via immigration, in the short run growth may be more readily achieved by focusing on economically inactive groups already living here, including homemakers, the over-55s and people with disabilities. Flexible working arrangements, as well as pay, will be crucial in attracting those groups to return to work or to continue in employment.

One positive result of the crash is that a higher proportion of children are staying in school to do the Leaving Cert, and a majority of these go on to third level. Until 2008, many boys left school early, to take work in construction. However, when those jobs dried up, they continued in school or college, something which will give them a significant payback over their lifetimes.

With the recovery in the economy, the demand for workers in the construction sector has grown rapidly. However, young males are now choosing to stay in full-time education rather than take up an apprenticeship in the building trade. That industry has yet to catch up with this new pattern in how it recruits and trains young workers. While the minimum apprenticeship requirements are to be aged 16 or over with a Junior Cert, the industry can no longer rely on a flow of recruits at this minimum: it must look to those with Leaving Cert or higher qualifications.

The continuing gender imbalance in construction is another blockage to expanding its workforce. While girls are being encouraged to study Stem subjects, there has been no significant effort put into recruiting girls to work as plumbers, painters or electricians. A major barrier to attracting young women into the sector is its perceived culture. While we may have award-winning women architects, the sector as a whole is not seen as welcoming to women. Changing the culture of what has been a predominantly male environment is a big challenge that may take some time.