Perhaps the greatest success of the Irish economy in recent years has been the strength of the jobs market. Total employment has increased by almost 500,000 since the start of the decade to reach a record high of over 2.8 million, a remarkable rise. In recent years the economy has been at or close to full employment, even if policy still needs to support those who do not have the skills to participate.
Recently, however, there have been signs of the market softening. Data from the Central Statistics Office (CSO) shows that total employment appears to be topping out. Unemployment, while still low, has increased, notably among younger people. And the technology sector is going through a period of retrenchment, as shown by the recent announcement of redundancies at e-commerce giant Amazon.
The extent to which artificial intelligence (AI) is responsible for this is unclear, but it is certainly playing a role. Of concern is that this may affect the prospects of younger people entering the workforce in particular. They may also be hit by some signs of weakness in areas like restaurants and hospitality, though further evidence is required here to judge what exactly is going on.
Some sectors do continue to hire. And a recent Ibec survey showing that more than 8 out of 10 firms were still suffering from skills shortages shows that demand is there in many sectors for people with the right qualifications. It is also a sign that Ireland has not paid enough attention to this area of policy during the time of strong employment growth and record low unemployment.
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More policy attention is needed here. And as well as the third level and research sectors, it also needs to put more emphasis on the whole concept of lifelong learning, particularly given the impact of AI in many sectors. There is still debate about how fundamental the impact of AI will be on employment, but on any rational assessment it looks bound to be substantial. Work is also needed to see whether the high youth unemployment rate can be lowered by training, skills and placement policies.
Policy faces other challenges, too. One is doing as much as possible to protect existing jobs, some of which are being lost to Ireland due to high costs. The much-discussed area of housing and economic and social infrastructure development is also crucial, both to underpin investment and jobs and to improve people’s lives.
There are other threats from the policies of Donald Trump and the risks of a transatlantic trade war. Ireland can do little enough to influence what happens here. But by addressing the infrastructure and costs agendas and focusing on education and skills, it can do what it can to underpin jobs in the longer term. The time to consider these issues and act on them is now, when unemployment remains relatively low.
