Three labour market trends Ireland can’t ignore

Last week, the official unemployment rate was revised down by essentially one percentage point, from 15% to 14%. While below the highs of the 1980s, this is still about three times as high as the rate of unemployment that the economy had got used to during the Celtic Tiger years.

In a normal market, about 3-4% of workers are “in transition”, a normal and relatively healthy feature of a jobs market that’s trying to match individual people and individual jobs. But even subtracting those, that still leaves one in ten people in Ireland who want to work but who have no job. That’s 200,000 individual tales of wasted talent, broken dreams, anguish and distress.

For those designing policy, it is easy to become dazzled by the immediacy of the problem. We need those in charge to look past the headlines, though. If they can do that, they will be able to form a picture of the kind of labour market Ireland will have once it emerges from crisis. My final doctoral exams have me a little distracted this week, so having done a lot of talking over the last few weeks, I’ll let the pictures do the bulk of the talking today. Below are three pictures, which reveal some of the facets of the Irish labour market that have been emerging over the past 5 (and in some cases 15) years.

The Man-cession

For most of the past fifteen years, the gap between men and women in work was a pretty steady 300,000. In the space of a short couple of years, it has collapsed to 120,000. Equality, but not the way we wanted it. Ensuring there is work to match the skill-sets of unemployed Irish males will present huge challenges for policy-makers.

The Hollowing out of Dublin

As you can see above, since the 1990s, people’s homes have been drifting out of Dublin. Perhaps surprisingly, that has continued in the recession. The hollowing out of Dublin continues, as some of the young who rent move elsewhere (e.g. London) and most of the young who own already live elsewhere (e.g. Meath). Over coming years, the cities will still prove the engines of jobs growth… but not necessarily homes growth, as Ireland’s property overhang lies outside the major cities. People stuck with negative equity in one county but with the jobs somewhere will be another major complication in lowering unemployment.

The Importance of the Domestic Economy

I’m a big advocate of Ireland’s competitiveness – both actual and desired. It is easy to forget, though, with the focus given to the much needed jobs created by Ericsson, Dell, Symantec and others, that as of the first quarter of this year, Ireland’s ICT, professional and finance sectors employ about one in six workers.

While there is lots of talk of export-led growth as driving recovery, we should not forget that half the Irish labour force is in education, health, retail and manufacturing. That is why the jobs lost in construction, retail, manufacturing and tourism have been so detrimental to the wider economy. Without turning around employment in domestic sectors, it will feel like a very hollow recovery. What is worth remembering is that if each small and medium enterprise in Ireland could create one more job, unemployment would be below 5% overnight.

Over coming months, I hope to have an in-depth look at a few different sectors and activities each of which could create somewhere in the region of 10,000 jobs – much as I did with education as an export last year. Real domestic recovery will come when a number of these types of plans are put into action at the same time.