Long-term joblessness rising fast, says OECD

IRELAND COULD face a protracted period of stubbornly high long-term unemployment, the OECD warned yesterday in its annual report on the jobs outlook across its 31 members.

While Ireland’s economy may have stabilised, the share of those classified as long-term unemployed was rising fast, the report stated, reaching 38 per cent in the final quarter of 2009, well above the pre-crisis proportion.

The report of the Paris-based organisation also noted that Irish employers were more likely to cut jobs than reduce hours compared to many of their counterparts in other member countries.

“The limited role of average hours reductions in labour demand adjustment in Ireland is likely to reflect the relatively low cost of hiring and firing, and the large concentration of job losses in the highly labour-intensive and low-skilled construction sector,” it stated.

The Organisation for Economic Co-operation and Development (OECD) expressed concern at the effects on work incentives of the “relatively generous and time-unlimited” nature of welfare benefits, especially for low-skilled workers. It went on to warn that, if benefit levels are not reduced in line with market wage developments, “already weak work incentives” would be further eroded.

Job-search incentives and programmes to keep the long-term unemployed connected to the labour market will be required to deal with Ireland’s rising unemployment rate, it said, and stricter job-search requirements in return for receiving benefits.

Ireland made “some progress” in this regard in the late 1990s, the report said. Renewed focus on compelling welfare recipients actively to seek employment will be required by the authorities, the OECD believes.

More effective job-search assistance is also required, the report said, with sufficient resources allocated to deal with the rise in the number of people seeking assistance from State agencies such as Fás. The report did, however, note the budgetary constraints being faced by the Government.

The note did not repeat concerns raised in previous reports about the effectiveness of Fás or the fragmentation across agencies of responsibility for labour market policy implementation.

Internationally, the OECD believes the depth of the recession means a significant decline in joblessness is not yet at hand and unemployment in developed nations will remain above 8 per cent at the end of 2010.

The OECD’s director for employment, labour and social affairs, John Martin, said any recovery “was unlikely to be sufficiently vigorous to reabsorb rapidly high levels of unemployment”.

The organisation urged governments to preserve labour-market changes and go further in the move to a more flexible workforce.