Tag: Unemployment

Job Subsidies and Stimulus

One point I had meant to make in yesterday’s post about job subsidies but forgot to was the following.  Beyond the fact that these programs are expensive and known to be ineffective at reducing unemployment, it remains the case that, whatever agreement the government comes to with the unions, the fiscal situation remains the same (I am discounting arguments here that these schemes pay for themselves because we know they don’t.) I doubt if the government will change its plans for the budget deficit by one cent if it adopts this plan.

So if we spend €250 million (or a €1 billion) on these schemes we will undoubtedly have to find a corresponding €250 million in tax increases or, more likely, spending cuts to offset them.  These measures will themselves have a negative effect on aggregate demand and thus unemployment.

This comes back to the point I made in my post on stimulus. In the current environment, spending measures like this need to be evaluated according to balanced-budget multipliers (i.e. factoring in the negative effects of the taxes that need to be raised or other spending that needs to be cut to pay for them.)  With so many difficult cuts in public spending ahead of us, why put ourselves deeper in the hole by adding an extra €250 million (€60 for every man, woman and child in the country) just to pay for a program that doesn’t help much.

Job Subsidy Plan “Announced”

The long-mooted job subsidy plan appears to be about to happen, though as is often the case in Ireland, the public can only learn about this through leaked details from social partnership talks, rather than through the publication for discussion of detailed government proposals.

Continue reading “Job Subsidy Plan “Announced””

IT Article on Job Subsidies

Following on from my post last week on job subsidies, here‘s an article I wrote on the subject for today’s Irish Times.

Perspective on the Labour Market

As readers will be well aware, the Irish unemployment has soared since the end of 2007. Most of the short-run commentary focuses on the monthly Live Register (LR) figures, which we know contain many landmines of interpretation.  The Quarterly National Household Survey (QNHS) data are based on more economically meaningful (ILO) definitions, but these too need to be handled with care. (For example, anyone working for pay or profit for one hour a week or more is classified as employed.)

The survey data allow us to look at the employment rate  – that is, the proportion of the adult population in employment – and this is probably more meaningful as a current economic indicator than the unemployment rate.  (The employment rate is the product of the labour force participation rate and (one minus) the unemployment rate.)

A look back at the employment rate over the past twelve years is interesting.  The male employment rate has fallen by five percentage points – from 70.5% to 65.5% – since the third quarter of 2007.   (N.B. These figures are not seasonally adjusted, but I do show the four-quarter moving average.) 

This brings it back to where it was in the late 1990s.  The female employment rate dropped by only two percentage points – from 52.7% to 50.7% – over the same period.  This leaves it where it was in 2006. The overall rate fell by three and a half percentage points, from 61.5% to 58.0%, so it is back to here it was in 2004. Female participation held up well in 2008, but male unemployment has risen, and participation fallen, faster. 

The continuing relatively high participation rates is one hopeful sign in an otherwise gloomy landscape. The forthcoming QNHS for the first quarter of 2009 will probably show further rises in unemployment and falls in participation, but perhaps later this year there will be signs of stabilisation.

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.