Boom spurred most new jobs in services

By the end of last year there were almost half-a-million more people at work than in 1990. It is as if for every five people who were at work then, seven people work now. Where did the jobs come from, and how can we assess whether they will stay?

The newly employed Irish of the year 2000 are not typically in Intel or Microsoft, although these have become identified as the jobs of our brave new era. We are just as likely to have found work in a bank, a shop, a creche, a restaurant, a mobile phone company or driving a truck. Services are where most of the new jobs are in the economy.

Although foreign investment in manufacturing may have been the motor for our growth, analysis of the new jobs created in the years from 1994 to 1999 shows that industry provided just 15 per cent of new jobs. When jobs created in grant-aided manufacturing industry are more closely examined, it emerges that Irish-owned industry provided two-fifths of the total.

Services which are sold overseas, such as international call centres, contributed a further 9 per cent of new jobs, of which about a third were in Irish-owned firms.

That accounts for about 24 per cent of the new jobs: where did the remainder come from? It has been a boom time for construction. Numbers in construction have almost doubled in the decade. Construction contributed 14 per cent of new jobs from 1994 to 1999, almost as much as all of industry.

Employment in agriculture, forestries and fishing fell. Employment in the public sector, having fallen during the early years of stringency in the public finances, started rising again. But public administration contributed only 2 per cent of job growth between 1994 and 1999.

Health and education (categories which include private-sector jobs) added 5 per cent each to job growth. Education, especially third-level education, was expanding rapidly over the decade with the growth in the youth population and the injection of European investment.

We are living through a consumer boom, and this is reflected in job growth: a further 13 per cent of new jobs are in wholesale and retail, including the motor industry, 9 per cent more in hotels and restaurants. The motor industry last year employed nearly 9,000 more people than five years previously. There are 2,700 more people employed in estate agents, a 70 per cent growth over five years.

Analysis of job growth in the late 1990s, the years when consumer confidence really took off, shows that of the 211,000 new jobs in the two years from spring 1997 to 1999, only 10 per cent came from industry compared with 14 per cent in wholesale and retail and 12 per cent in hotels and restaurants.

Jobs in finance and other kinds of businesses have increased rapidly, too, contributing a further 15 per cent to job growth in the 1994 to 1999 period. Jobs in computer services, which includes much of the new software industry, have grown by 22,000, contributing 6 per cent of job growth, mostly in the late 1990s. (Many of these would also be counted above as internationally traded services.)

As more women work outside the home, a growing number in turn work in the homes of others. Analysis by FAS and the ESRI of job growth by occupation reveals that by 1997 there were more than 40,000 domestic servants and cleaners, a 70 per cent increase in six years.

How good are the jobs we have created and how sustainable are they?

As the population has become better educated the quality and remuneration of jobs has improved. Professional, technical and managerial occupations have grown strongly, as have clerical and sales staff.

In its forecasts for the years to 2006 the ESRI Medium-Term Review expects that 64 per cent of all employment created will come in the skilled areas of high-tech industry, finance, internationally traded services and health and education. However, this job growth has been accompanied by increasing disparity in earnings.

This pattern of few jobs in industry supporting large numbers of jobs in services is not unusual and reflects Ireland's emergence as a more developed economy. The ESRI expects that, given the growth in population and immigration, even the job growth in construction, a typically cyclical business, can be sustained.

However, if the economy, particularly manufacturing industry, were to take a knock because of international events outside our control or if the house-price bubble were to burst suddenly, consumer confidence and spending would fall and it is easy to see how jobs which grew so rapidly over just a few years could just as easily dissipate.

According to the NESC 63 per cent of the employment growth in services from 1989 to 1998 was in businesses which do not export and are therefore largely dependent on demand in the Irish economy.