Why is it many Irish people of working age don’t seem to want a job?

Cantillon: two in 10 adults of working age were out of the workforce at the end of 2015

The Central Bank has produced a new index on the number of “non-employed” in the Irish economy

The Central Bank has produced a new index on the number of “non-employed” in the Irish economy

 

It’s a figure that has left us scratching our heads. Why are there so many Irish people of working age who don’t seem to want a job?

On Wednesday the Central Bank produced a new index on the number of “non-employed” in the Irish economy – ie people of working age who are not seeking work or who work part-time but would like to work more if the opportunities were there. In effect, the “spare capacity” or slack that is there in the workforce.

It came to the conclusion that there are some 972,900 people who fall into this cohort. So who are they?

Well, the Central Bank is explicit on the reasons why some fall into the “non-employed” grouping.

Some 84,900 are working part-time – maybe in the so-called “gig economy” – and would like to work more but are not given the opportunity to do so.

Around 8,300 have been “discouraged” by efforts to find a job and have simply given up.

Others are in education (17,000), are ill (14,000) or are “passive” job-seekers (4,700) who might go back to work if an opportunity presented itself.

Yet there is still a significant cohort – more than 800,000 – of those who can potentially work but who choose not to, and will tick the Central Statistics Office “does not want a job” box when asked.

The constituents of this category are a little less clear, but are likely to include carers, stay-at home-parents and welfare recipients – the Central Bank says it does not have any information on whether or not these individuals are claiming unemployment benefit.

But what is clear is that the figure – at about 22 per cent of the working age population – is high. When considered against international norms, the State’s labour participation rate, ie the number employed as a percentage of the overall working population, is quite low, particularly when you look at the core working years of 25-54.

OECD data shows that as of end-2015 (latest figures available) the Republic had a participation rate of just 81.4 per cent in this age group, indicating that almost two in every 10 adults within this age group were out of the workforce.

This puts us third last out of EU countries, and seventh last out of the 36 OECD countries, far behind Sweden, Slovenia, Iceland and Switzerland, all which have rates above 90 per cent, and also behind the UK (85.8 per cent) but marginally ahead of the US (80.9 per cent).

Whether we should be concerned about this low participation rate – and whether or not we want more people in the workforce or want to encourage more people to stay at home in caring roles – is a broader question for society.

Yet as we approach budget day a little clarity on the reasons why people are choosing not to work, as opposed to focusing purely on unemployment rates, could be useful.