• During the recession, the rate of employment growth has tracked the rate of economic growth with very little lag. The economy now appears to be coming out of recession, but only at a relatively slow pace. The jobs market is likely to recover even more slowly.
• Employment has fallen by over a quarter of a million since the recession began with the latest figures show employment declining 5.5% (108,000) year-on-year to 1.86 million in Q1 2010. As a result, the employment rate (the employment rate is the percentage of the population aged 15-64 who are in employment) fell to 60% in Q1 2010, the lowest it has been since 1998.
• The sectors which experienced the largest increases in employment during the ‘second wave’ of the employment boom that began in 2004, namely construction and wholesale and retail, have also accounted for biggest falls in employment over the last two years.
• Despite the jobs downturn, part-time employment continues to rise (up 8,000 year-on-year) implying that the use of reduced hours (as an alternative to fully laying off workers) has been an important element in the cost-reduction strategy of some employers during the recession.
• Meanwhile unemployment rose by 52,000 between Q1 2009 and Q1 2010. As a result the number of people out of work has tripled to 275,000 since the end of 2006. Of particular concern is the doubling in the numbers of long-term unemployed between Q1 2009 and Q1 2010 to 112,600.
• However, year-to-date unemployment statistics provide some tentative evidence that overall unemployment has begun to stabilise. The increase in the Live Register has decelerated significantly this year, rising 16,000 year-to-date to 445,000 in June compared with a rise of 113,000 for the same period in 2009. However, there has been a significant increase of 12,000 in the Live Register in the last two months.
• While redundancies are down 20% year-on-year, they are still running well above levels seen in all years prior to 2009. Similarly, while vacancies notified to FAS are up 16% year-to-date, they remain at depressed level compared to the pre-recession period. Most of the year-on-year increase has been driven by a substantial rise (56%) in the number of vacancies for sales workers, which is consistent with the upturn in retail sales volumes that has taken place so far this year.
• Assuming an export-led economic recovery, then a recovery in employment growth is likely to be delayed, as the export sector is less labour-intensive. That said, given the extent to which employers have shed labour, they may have to increase working hours and/or employment relatively quickly in response to any increase in output. On balance, we are forecasting employment to go on declining into next year with average employment falling by 22,000 (1.2%) from 1,842,000 in 2010 to 1,820,000 in 2011.
• While the rise in unemployment has decelerated appreciably, it is not certain that it is close to a turning point and recent unemployment trends need to be interpreted with caution, especially after the rapid acceleration that took place in 2009. While the range of uncertainty is wide, on balance, we expect the unemployment rate to average 13.4% this year and to fall only modestly to 13.1% in 2011. To the extent that the unemployment rate does decline, it will be due to falling labour force participation and continued emigration.
• The number of long-term unemployed is, however, expected to continue to increase significantly. Such a rise in long-term unemployment implies an increase in structural unemployment which is much harder to reduce during an economic upswing than cyclical unemployment.
ENDS
Download FÁS Quarterly Labour Market Commentary, Spring/Summer 2010:
FÁSQuarterlyLabourMarketCommentarySpringSummer2010.pdfFor further information please contact: Mr Brian McCormick
Tel.: (01) 607 0517, Mob.: (087) 268 0301, Email: brian.mccormick@fas.ie.
