Categories
Economic Performance

Labour Market Trends

The publication by the CSO on Friday of the Quarterly National Household Survey (QNHS) sheds light on recent developments in the labour market.  Naturally the headlines were grabbed by the fall over the year of almost 87,000 or 4.4% in the numbers at work.  Even larger proportional decreases were recorded among men and full-time workers.  A small decrease was recorded in the participation rate, which is reflected in a rise in the number of “discouraged workers” (outside the labour force, but expressing some interest in employment).

So these figures do not in any way modify the gloomy picture of recent economic trends available from other sources.

Nor does a comparison of the QNHS data with the more up-to-date Live Register (LR) releases give any cause for optimism.  In fact, the contrary is the case because – somewhat surprisingly in my view – the QNHS shows unemployment (measured on an International Labour Office basis) rising faster than the numbers on the LR.

Comparing September-October-November of 2006 with the same months of 2008, the QNHS measure of unemployment rose by 89% (114% for men, 50% for women), whereas the LR measure rose by 69% (88% for men and 42% for women).

It might have been expected that the LR would show a bigger jump in the earlier stages of the recession, as short-time working and other partial-employment arrangements lead the increase in full unemployment and the latter are more likely to be reflected in the LR than in the QNHS numbers.  However, there is no evidence of this trend in a comparison of the two data sources over the past year.

Looking ahead, since the LR numbers showed a very large increase in December 2008 and January 2009 over the corresponding months one year earlier, it is to be expected that the next QNHS will display even gloomier trends that those revealed on Friday.  Using the LR data, the CSO estimates that the standardised unemployment rate for January 2009 was 9.2% (compared with only 4.2% in the last quarter of 2006).  When the next QNHS data are released (and they will be based on normal quarters from now on), the estimate of the standardised unemployment rate is likely to be revised upwards.

8 replies on “Labour Market Trends”

Bell and Blanchflower have a recent (Feb 2009) IZA paper on the unemployment situation in the UK that is worth reading

http://ftp.iza.org/dp4040.pdf

They argue for a substantial jobs focused fiscal stimulus. In particular, they propose a substantial increase in the incentives available to young people to train and work. They also argue that the minimum education leaving age should be raised to 18. There are several proposals in the document on increasing training and providing “shovel-ready” projects that will increase employment quickly. There are many other proposals in this document that should be read and debated in the irish context.

Brendan. I wonder if the bigger jump in the survey measure reflects the fact that this recession is affecitng segments of society that previously had little exposure to the unemployment benefit system. Many may be reluctant to sign on, and are getting by by running down savings. This does not bode well for the LR later in the year.

Liam, thanks for the lead on a very interesitng article. It provides a timely counterpoint to growing momentum to front load the deficit reduction. It is also a cautionary tale about how the burden of recession falls especially heavily on young people.

Depressing reading. The sectoral spread of the job losses is pretty wide – construction and production industries losing the most but also retail trade and hotels and restaurants and financial and business services.
While Eastern European workers are particularly hard hit, the losses extend to Irish born workers in very large numbers.

Also, the losses fall particularly heavily on craft workers and production workers among men and clerical, sales and service workers among women. Given that these occupational groups are often married to each other there is a potential here for a nasty concentration of the effects of job losses – although that would obviously take some further examination. There seems to be a strong rationale here for the kind of jobs focussed stimulus that Bell and Blanchflower discuss (thanks for the link) and for further education, training and related schemes.

The job losses are also particularly bad among younger male and female workers, those most likely to be carrying negative equity in their homes and the heaviest mortgage payments. All kinds of potential problems there – and a strong prima facie argument for planning to prevent foreclosures.

http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf

Is it not a somewhat encouraging sign that young people are not running to join dole queues, but instead living from savings, perhaps considering emigration, reskilling or self-employment as opposed to the abject resignation which unemployment benefit inevitably represents?

There is clearly still a lot of energy and potential in the young labour force we have. The key will be to tap into that as quickly as possible.

One of the things that has to happen, in my opinion, is that rents will have to come way down. They have fallen but are still ridiculously high compared to where our economy is headed.

Nothing quite convinces property owners that vacancy is painful like a residential property tax – this would thaw the frozen property market out in a hurry and get our young, enterprising people into vacant units where they can learn and work.

John: I think the suggestion that younger generations are less familiar with the culture of “signing on” is interesting. During the 1980s the LR figures became notoriously inflated relative to the truer measure of unemployment provided by the Labour Force Survey (as it then was – now the QNHS). The comparative trends in the two measures of unemployment will bear further monitoring.

The LR started trending upwards from late 2007 – a few months ahead of the take off in QNHS unemployment – and increased more in absolute terms (by about 95,000 in the year to October 2008 ) compared to around 70,000 increase in QNHS employment over the same period. This seems consistent with your assumption that short term working etc might lead the increase in full time unemployment

The higher rate of increase you identify in the QNHS rather than LR reflects the LRs much higher starting base in the denominator.

Broadly however the QNHS trend is following that of the LR. So the very steep increase in the LR over the last three months (66,000 October to January s.a.) – is very likely to be reflected in QNHS unemployment in the next release. If half this increase was reflected in the QNHS it would bring that rate to 9.2% while if all of it fed through it would hit 10.7%. And that is without taking into account the extra month to be covered in the next QNHS ( tomorrow’s LR for February will give some indication here))

In rate terms some of this is already being factored into the Standarised Unemployment Rate published with the LR which applies an LR based trend to the QNHS Base. This was at 9.2% for January and presumably will be up again tomorrow.

Brendan,

as all have stated before me, thank you for this insight.
i am a part time studen tat present and fortunately in full time employment. It was a pre requisite of our course (Construction
Management) that all 32 students accepted into the course should be in full time employment within the construction industry, at present 75% of the course are now unemployed. Of the the satted 75% athird of these students are not claiming/signing on, instead all are eating into what they have saved.

This semester we have been fortunate enough to study economics in construction, i beleive that this has been a real eye opener for alot of the students. it has been a real exciting (not in a happy sense) period as we see daily the effects of fiscal policy and some of the inept decisions that have been made and the squandering of what could have been the potential of a substantial surplus.
As some have previously pointed many youngsters are now looking to leave these shores and with them they will take their newly aquired knowledge, skills and their savings.
From what i have gathered of those that have already left few have found work else where and are still spending what ever they have taken from this economy and are pumping it into their new countries of residence. surely the big problem will be when the funds run out and they return, they will have nothing and will then have no option but to sign on. The economy will lose at both ends will it not?
Alot of people in this new generation who have not seen bad times before seem slightly unaware of their actions. Infact many are naieve as to the effect of their actions with regards to consumption, and the fact that the whole nation has a responsibility to work our way out of this defecit, be it through taxation on different levels or the reduction in benefits. All seem very quick to shout at politicians and decisions made but few have a real concept of what is really going on. Shouldn’t there be more awareness on all levels of society,and perhaps more understanding of what the government hopes to acheive, possibly through a leaders honesty making all decisions more transparent.
Apologies if i have not made myself clear here but as i pointed out I am a student merely trying to grasp what is happening here!
Thanks.

Brendan,

as all have stated before me, thank you for this insight.
I am a part time student at present and fortunately in full time employment. It was a pre requisite of our course (Construction
Management) that all 32 students accepted into the course should be in full time employment within the construction industry, at present 75% of the course are now unemployed. Of the the stated 75% a third of these students are not claiming/signing on, instead all are eating into what they have saved.

This semester we have been fortunate enough to study economics in construction, i beleive that this has been a real eye opener for alot of the students. it has been a real exciting (not in a happy sense) period as we see daily the effects of fiscal policy and some of the inept decisions that have been made and the squandering of what could have been the potential of a substantial surplus.
As some have previously pointed many youngsters are now looking to leave these shores and with them they will take their newly aquired knowledge, skills and their savings.
From what i have gathered of those that have already left few have found work else where and are still spending what ever they have taken from this economy and are pumping it into their new countries of residence. surely the big problem will be when the funds run out and they return, they will have nothing and will then have no option but to sign on. The economy will lose at both ends will it not?
Alot of people in this new generation who have not seen bad times before seem slightly unaware of their actions. Infact many are naieve as to the effect of their actions with regards to consumption, and the fact that the whole nation has a responsibility to work our way out of this defecit, be it through taxation on different levels or the reduction in benefits. All seem very quick to shout at politicians and decisions made but few have a real concept of what is really going on. Shouldn’t there be more awareness on all levels of society,and perhaps more understanding of what the government hopes to acheive, possibly through a leaders honesty making all decisions more transparent.
Apologies if i have not made myself clear here but as i pointed out I am a student merely trying to grasp what is happening here!
Thanks.

Comments are closed.