Uncategorized – Page 131 – The Irish Economy

My recent post on the results of the latest Quarterly National Household Survey (QNHS) provoked some discussion of the Irish unemployment data. I thought it would be helpful to follow up by comparing the evidence available from three measures of unemployment, namely, the Live Register (LR) and two series derived from the QNHS.

The LR data are based on administrative records of those ‘signing on’ for various entitlements, principally Jobseeker’s assistance and benefit. It also includes some people who are working short-time, as well as some seasonal and casual workers who are not fully unemployed, and some people gaining credited social welfare contributions who may not be actively seeking work. In fact Central Statistics Office in its monthly release of the LR figures warns that they are not designed to measure unemployment.

The QNHS is designed specifically to measure employment and unemployment. Similar surveys are conducted across the EU with the aim of providing internationally-comparably measures of labour market performance. The widely-quoted measures of employment and unemployment from the QNHS are based on International Labour Office (ILO) definitions. To be ‘ILO unemployed’ a person must in the week before the survey be without work but available for work and have recently taken specific job-search steps.

A separate measure of unemployment is also published in the QNHS, based on the concept of ‘Principal Economic Status’ – that is, what the respondent considers his or her ‘usual situation with regard to employment’ .

The following Figure shows how these three measures of unemployment have behaved since 2007.

(The LR figures are published monthly. Quarterly averages have been calculated for comparability with the QNHS data. The figures have not been seasonally adjusted.)

The most important showing is the broad consistency of the three measures, especially with regard to changes in the level of unemployment. There is no evidence of a trend in the divergences between the series.

As is to be expected the LR is consistently higher than the ILO measure of unemployment. The excess has varied from a high of 68 per cent in 2007 Q1 to a low of 36 per cent in 2012 Q2. There was a marked downward trend in the ratio between 2008 and 2012 – in times of rising unemployment the gap between the two measures narrows, but as the labour market improved from mid-2012 onwards the ratio has risen. ILO unemployment has fallen by 71,000 since mid-2012, the LR by only 54,000.

The PES measure falls consistently between the two other series, but closely tracks their movements.

In recent years both here and in the US increased attention has been devoted to ‘discouraged workers’ – people who are no longer seeking employment because they believe there are no jobs available. In response to the desire to improve the measurement of unemployment during the recession, a new series on the ‘Potential Additional Labour Force’ (PALF) has been presented in the QNHS. This includes ‘persons seeking work but not immediately available’ and ‘persons available for but not seeking work’.

Since it was launched, the PALF series has followed the same broad pattern as the three measures of unemployment shown in the Figure. Over the course of 2013 the numbers include in the PALF have fallen from 60,000 to 49,300.

Much further analysis could be performed on the these data. It would be interesting to look at the series by age and sex, for example. But suffice for the moment that all the available evidence paints a consistent picture of recent developments in the Irish labour market.