A COMMON theme in the pre-election campaigns of the Government parties was the promise to create jobs. That hasn’t happened. Nearly 14,000 additional jobs were lost between April and June of this year and the only reason the unemployment rate has remained below 15 per cent is because of net outward migration.
Nearly 190,000 people have been unemployed for more than a year, seven times more than in 2007. A bursting property bubble, unrestrained banking and unwise taxation policies brought about economic collapse but the repair work now being undertaken by Ministers is too slow and uncertain.
The Government deserves credit for its work in modifying the terms of the financial bailout agreed with the troika. But the situation regarding the public finances remains “very difficult”, according to the latest ESRI report, and there is little sign that Ministers are prepared to take necessary, tough decisions. Failure to withdraw unwarranted public service allowances was deeply damaging at a time of cutbacks. And a special meeting of the Croke Park implementation group, convened by Taoiseach Enda Kenny to discuss “accelerated” savings, is unlikely to reassure a sceptical public.
The outlook is not entirely gloomy. The ESRI has raised its GNP growth forecasts for next year. Despite difficult world markets it expects exports to grow by more than 6 per cent. Strong inward investment by the high tech sector, particularly in the areas of communications, software and back office support services, is predicted. But unemployment is likely to remain above 300,000 – an unacceptably high figure.
In the short term, job creation within the domestic sector will depend largely on Nama investments in residential and commercial construction and on a Government stimulus package involving projects in health, justice, education and transport.
Funding for the latter projects is to be raised through the sale of State assets and from foreign investment. The ESRI expects most of the impact of this stimulus programme to be felt in 2014. But, if projects go ahead promptly, the effects could be felt as soon as next year. Before the summer break, Minister for Public Expenditure and Reform Brendan Howlin spoke of selling the National Lottery licence, along with elements of Bord Gáis, the ESB and Coillte to raise the necessary cash. Nothing has been heard since then. The fiasco over public sector allowances makes it all the more important that early progress is achieved.
Job creation and job preservation are being affected by a shortage of credit for small and medium enterprises. The ESRI notes that, even where funding is provided through bailed-out banks, a lending rate of 6.3 per cent applies, compared to 3.6 per cent in Germany. It urges that new measures to increase SME lending should be introduced. Existing policies are not capable of combating the scourge of unemployment in the short term. New ideas and training programmes are required. Ministers also need to rediscover the sense of urgency they displayed in opposition.