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.

Setting the Record Straight

Some time back I was guilty of mentioning the rumour that the public might be hoarding “German” euronotes (X-rated!) and getting rid of those issued by the PIGS.  My attention has been drawn to a trenchant piece by Willem Buiter that shows there is no logic behind this mischievous piece of British Euroscepticism.

See http://blogs.ft.com/maverecon/2008/11/eurosceptics-remedial-education-class-1/.

Gresham’s Law

A rumour is circulating that people are hoarding euro notes whose serial number begins with X and using those whose numbers begin with T, M, Y, and V.

No prize for matching the letters to the issuing countries!

Wages and Employment

The idea that wage cuts would be deflationary and employment-reducing is being used in some quarters to argue against public sector wage reductions.  Herbert Grubel has a relevant short paper on the use of the Marxist “under consumptionist” argument to obtain wage increases in the US during the Great Depression.

See:

http://www.sfu.ca/~grubel/marx_,_unions_and_current_crisis.htm

Holiday Reading

Many of you may not read Vanity Fair or be aware that Joseph Stiglitz is a regular contributor.  In the current issue he gives his trenchant version of who is to blame for the mess the US economy is in at the start of 2009.  See http://www.vanityfair.com/magazine/2009/01/stiglitz200901.

Anyone prepared to do an Irish edition?