Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Where in Ireland has seen the biggest increase in unemployment?

My recent attempt to put some figures on the scale of negative equity in Ireland – which concluded that about 40% of Irish homes are worth less than when they were bought and that as many as 20% of homes may be in negative equity – sparked some discussion here, on thepropertypin and most thoroughly on irisheconomy.ie.

The original post was designed just to put some numbers on the potential problem of negative equity, leaving aside for the time being the implications. Two important strands of discussion have arisen about the implications. The first relates to financial consequences, as mentioned by Karl Whelan, particularly in relation to the proposed NAMA and the fate of the banks. The second broad strand of discussion, being led by Liam Delaney, relates to how negative equity has labour market implications, particular when unemployment is on the rise. (Unemployment and negative equity are mirror images of the home ownership/labour mobility discussion being led in the US by Richard Florida.)

I’m currently working on estimates of how many households are affected by the dual problem of unemployment and negative equity. Combined with the likelihood of falling rents over the coming two/three years, rents being the alternative income a homeowner could get from their house, this is a cocktail for widespread misery currently partially staved off by all-time low interest rates and therefore mortgage repayments.

A next step in working out where both negative equity and unemployment will strike is looking in more detail at the problem of unemployment. The CSO provides very detailed statistics on unemployment by county/town and more occasional detail on the age profile and duration of unemployment. The map below gives an idea of ‘unexpected’ unemployment (original visualization here). It show the increase in those signing on by county in April 2009, compared to the average of 2005 and 2006, meant to indicate a natural level of unemployment (whether long-term or just switching jobs).

Unemployment in Ireland by county, April 2009 compared to 2005/2006
Unemployment in Ireland by county, April 2009 compared to 2005/2006

Those looking with relief at counties in a light brown – such as Waterford, Louth, Donegal and Mayo – should be aware that in all counties, the April 2009 was at least twice the 2005/2006 average. What’s more worrying, though, is that there are a number of counties where unemployment is three times what it was three years ago. In Meath and Kildare -stalwarts of Dublin’s commuter belt – unemployment has more than trebled. Likewise in Cavan and Laois.

The next part of the puzzle is to revisit county-level estimates of negative equity based on comments on the last set of figures and then try to put some numbers on how many households finds themselves faced with both unemployment and with a house worth less than their debt to the bank.

  • Con ,

    Ronan, part of the reason for Kildare and Meath looking so bad may be that they started off with a lower than average unemployment rate, so an increase in unemployment that would have come out as doubling in some other counties, might have come out as trebling there. QNHS data shows the average unemployment rate in the Mid-East region in 2005-6 was the lowest in the country at 3.3%. Three times this is about 10%, which is less than twice the 2005-06 unemployment rate for the Border and South-East regions, and is not much more than twice the 2005-06 unemployment rates for Dublin and the Mid-West.

    • ronanlyons ,

      Hi Con,

      Thanks again for the comment. You’re right – that may indeed be the case. Next step is unemployment rates (rather than increases) – what I wanted to show here is which counties have been most ‘caught off guard’. For example, if 6% unemployment was par for the course in some counties, going to 12% is a shock but less of a shock a county where 4% is normal (particular if the first 3% is typically described as people switching jobs).

      As Stephen Kinsella put it, “The visualisation is brilliant, as it gets the point across well-the lower middle classes have gotten shafted in this.”

      • Con ,

        Sitting here, looking at stats, what’s clear to me is that most of us have been shafted, but the group in biggest trouble is the construction trades workers who have taken the worst of the career hits as well as possibly the worst of the negative equity hits. Thousands of them chose to become apprentices rather than going to college. Half of them now have no future in construction in Ireland, and that’s an optimistic view. Given the pattern of past growth in the industry, it is likely that an exceptionally large proportion of them bought their first home in the last few years, and are either in negative equity now, or are threatened by it.

        So if you’re including construction tradespeople among the lower middle classes, I’ll happily agree with you.

        • How many mortgage-holders are faced with unemployment? « Ronan Lyons | Blog ,

          […] Where in Ireland has seen the biggest increase in unemployment? […]

          • John Devereaux ,

            I am curious to know how many of the unemployed in Ireland are non nationals ????.

            I read recently that one in four of those unemployed are non nationals.

            This makes me wonder that if the level of unemployment in the country now stands at almost 12% and say 400,000 are those, then, 100,000 non nationals are a percentage of those figures. Am I right.

            If so and if the government plan to cut social welfare payments by 10% which will effect nationals in particular. What steps are the government going to take to protect the nationals from entering the extremities of say the “lower socio-economic group members” whilst dealing with the increasing numbers of now unemployed non nationals ????.

            Will the non nationals opt to return to their own countries and save Old Ireland a few bob to throw to the outstretched hands of the native Irish ???.

            Will the Irish government opt to struggle in this climate to support the non nationals with social welfare payments etc or will their own countries opt to subsidise the social payment to those ex patrots ???.

            Why so many non nationals on the Irish dole que ???

            • AJ Bowe ,

              Ronan,

              Have you analysed the ESRI data on negative equity? Do you think it is a fair analysis?

              • Ronan Lyons ,

                Hi AJ,
                Thanks for the comment. I’ve seen the ESRI analysis and they’re using largely the same method and sources, which are the best ones we have. The difference here is that I’m trying something a little more ambitious (a county-by-county breakdown hence use of daft.ie data, as opposed to ESRI data). This is likely to mean that there’s probably greater room for error here with 26 estimates than with one headline estimate, although you’ll notice the national totals are similar enough.
                R

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