Month: November 2009

Work Experience Programme Being Reviewed

David Blanchflower’s ideas on stimulus have received a lot of attention but the core of his paper, namely the imperative to act on the youth labour market side did not receive much debate. It is good though to see that the most downloaded article for the last day on the Irish Times website deals with this part of his talk and hopefully he has succeeded in pressing home the urgency of this problem.

However, those who argue that active intervention in the Irish labour market is counter-productive will be given further credence by the reports on the FAS Work Experience Programme. If the Times is correct, it is very likely that this has flopped and is currently under review.

However, if something is designed in such a way that it has no chance of success then its unclear how much we have learned from its failure. In terms of graduates, FAS simply does not have a recognition among graduates as a place to go to look for work (though even with this caveat it seems to have attracted greater interest from graduates than nongraduates). The process required companies to actively apply to FAS and also made the stipulation that the applicants themselves be unemployed for six months or more before applying. Even with this, it still got nearly 2,000 applicants.

It is important that they get this right, and start by taking it out of FAS and placing it between departments packaged in a way that will attract both the companies and the graduates. The 6 month proviso is also pointless in the current market and this should be relaxed. We cannot say that active interventions do not work until we actually begin to experiment properly with their design and approach them with more vigour than these efforts.

Is Ireland That Different?

Table 2.1 of the OECD’s recent survey of the Irish economy provides a sobering statistic: when the anticipated adjustment in the December budget is included, the total discretionary fiscal adjustment for 2010 implemented this year will add up to 6.4 percent of GDP.    This is an extremely pro-cyclical fiscal policy by any standard.   It is also occurring while other industrialised economies are applying discretionary fiscal stimulus.  Unnerved as we all are by the escalation in debt and the rise in the risk premium, there seems to be broad agreement among academic and financial-sector economists that Ireland is different and has really no choice but to pursue this fiscal course.   Maybe it is my unhealthy suspicion of too much consensus, but I think it is worth asking if the Irish case is really that different.

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Limited Gains from Taxing the Rich

A prominent part of ICTU’s ten-point plan campaign has been the proposal to introduce a new third rate of tax on rich people. As far as I know, the proposals have not precisely defined who qualifies as rich. However, it is certainly understandable that the average person may find some appeal in this proposal, particularly as most people don’t consider themselves to be rich.

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The benefits of constitutional change do not seem to have been considered at all

Today’s Irish Times contains a column by Dan O’Brien, based on his new book, which makes some interesting claims about possible links between the Irish constitutional order and what Dan O’Brien characterises at a uniquely Irish pattern of economic performance: slump-slump-boom-slump.

It seems like a topic worth adding to the mix in this forum.

Update on Irish Labour Market

FAS produces a useful quarterly commentary on the Irish labour market, which provides a detailed analysis of what has been happening in recent months: you can read a summary (and download the full report) here.