Category: Economic Performance

Unemployment Rate up to 11.8% in May

Today’s release shows that the standardised unemployment rate, which is based on the Live Register, rose to 11.8% in May from 11.4% in April and 11.0% in March.

As I wrote last month, it’s tempting to be relieved at seeing increases that are less than the huge jumps recorded at the start of the year.  But a four-tenths increase in the unemployment rate implies an annual rate of increase of almost five percentage points and this is huge. Certainly, the economy appears to be still contracting, if not at quite the shocking pace of late last year and early this year. In the seventeen months since December 2007, the unemployment rate has increased by 7.2 percentage points or four-tenths per month.  Today’s release is exactly in line with that pace of increase.

On a more mundane note, expect to hear plenty over the next few days about how we have “400,000 unemployed” (the total listed on the Live Register).  This is despite page one of the release stating:

The Live Register is not designed to measure unemployment. It includes part-time workers (those who work up to three days a week), seasonal and casual workers entitled to Jobseekers Benefit or Allowance.

The structure of Irish economic activity during the boom

The CSO has just released a detailed description of sectoral gross output and value added for the years 2002-2006: you can download it here.

By the way, the CSO is celebrating its 60th anniversary with a conference today: the programme is here.

Thank goodness for independent central banks

Angela Merkel has just given us a compelling reason to be grateful for central bank independence.

Update: Wolfgang Münchau is pessimistic about future ECB independence here.

The knowledge economy

The news today that the proportion of Leaving Cert students taking honours maths and physics has declined confirms what third level teachers already know: mathematical literacy is poor in Ireland. There are obvious implications for the credibility of the government’s knowledge economy ‘strategy’, but since the government has little credibility anyway that is not of any great importance. The problem of low mathematical standards is, however, an important one for the economy. It is a problem for which there are no quick fixes, but which could be solved given time, willingness to change, and attention to detail. Which makes it a nice metaphor for the Irish economy more generally.

Banking Reform

Once we have banks that have been re-capitalised and apparently stable once more, where does our financial system go? In negative terms, how can we be assured that the financial system will not generate crises on the kind of scale that we are currently living through? In positive terms, how can we increase the chances that finance flows toward productive rather than speculative uses?

These critical questions are largely sidelined in the current debates on nationalization, which have focused largely on the (urgent and very important) questions of how to restore the stability of the banking system and who will end up stuck with the bill. But, even if this is achieved at the least possible cost to the taxpayer (and therefore with the least possible constraint on public investment into the future), this still leaves the questions of stability and productive investment. There is little reason to suppose that an unreconstructed banking system will deliver this on its own – the banking system provided neither stability nor productive investment before this crisis. Reform of banks themselves will be essential, although this has largely disappeared off the agenda in recent months.

There are five areas through which we can influence how banking practices are shaped by the wider system of financial governance (some of these are usefully reviewed in Stiglitz and Uy’s account of the ‘East Asian Miracle’). In each area, the system has left a great deal to be desired and requires reform.

Continue reading “Banking Reform”