Unemployment - will it fall , can it fall ?

Delancey

The latest CSO unemployment figure now stands at 14.7% , this rate is uncomfortably close to the ' worst case scenario ' rate of 14.9% that was used for the last round of bank stress tests.
The general consensus from a stready stream of forecasts from various respected sources seems to be that we can expect perhaps a very small decrease over the next year or so , however to my knowledge nobody has forecast a significant increase.

Are these forecasts optimistic ? My own view is that with further cuts in public spending and tax increases we will see further significant job losses. Just looking around I see only evidence that unemployment will worsen ( for example a neighbour has just lost her third job in 4 months due to staff reduction / business failing ).
Much is made of our export driven Multinationals but given they employ circa 100,000 it is difficult to see how they can take up the slack of the domestic or 'real' economy.

Even with emigration I would not be surprised to see a rate of close to 16% in a years time.

What do others think ?

RichardAnd

My own oinion is that unemployment is going to be an issue for some years to come. I wouldn't say it will get much higher nor do I think it will fall by any real amount either. What seems to be happening here is that we're over the crash and are now entering a peroid of stagnation.

To take an example from the past, the unemployment levels reached in the 80s didn't fall over night. I don't know when things started to improve but I do know that unemployment was in double didgits into the 90s.

Another rather harrowing bit of information is that a good chunk of the unemployed were employed in jobs that only existed because of the boom. By right, the boom never should have happened and likewise, those jobs never should have existed so if our current unemployment levels are the result of falling from boom time levels then we can deduce that only another boom will see them rise to the same levels once again. Personally, I don't see that happening for many years to come, if at all.

Diarmuid

Okun's Law
A rule of thumb is for unemployment to fall 1%, GDP must grow by 2%. IMF projections for GDP growth in Ireland for the next 3 years is –1.0,0.5,1.9. So from that rule of thumb unemployment to rise 0.5% in 2010, fall 0.25% in 2011, fall 1% in 2012. So you can imagine how long it's going to take us to get back to 4% or 5%

pjd435

Diarmuid wrote: »

Okun's Law
A rule of thumb is for unemployment to fall 1%, GDP must grow by 2%. IMF projections for GDP growth in Ireland for the next 3 years is –1.0,0.5,1.9. So from that rule of thumb unemployment to rise 0.5% in 2010, fall 0.25% in 2011, fall 1% in 2012. So you can imagine how long it's going to take us to get back to 4% or 5%

We have 14.7% of people on the live register, this is not a real reflection of how may people that are unemployed in ireland. There are at least 600,000 people out of work in this country but they government just have ways to make the figures look better than they really are.
There are 60,000 people on C.E schemes (me being one) were are working for are dole but we are not considered unemployed.
There are 120,000 people doing fás courses, anyone who is on a full time course (say 60,000) have to sign off because they get paid by fás instead, but they are still unemployed, but are not on the live register.
People whos stamps run out and self employed people who loose there jobs and are not entitiled to the dole are not on the live register.
So if there are 2.2 million people of working age in this country and there are at least 600,000 people out of work we have and unemloyment rate of 25%.
The government wouldn't want people reading that in the paper.
We have they highest unemployment rate in europe but the government just fudge the figures to make it look better than it really is. For the country to get back to full emploment we have to create 450,000 jobs. No competent government could create that amount of jobs never mind our usless shower. We are in a downward spiral which we are incapable of getting out of.

Mister men

The real figure would be around 22%-24% imo.

later12

Diarmuid wrote: »

Okun's Law
A rule of thumb is for unemployment to fall 1%, GDP must grow by 2%. IMF projections for GDP growth in Ireland for the next 3 years is –1.0,0.5,1.9. So from that rule of thumb unemployment to rise 0.5% in 2010, fall 0.25% in 2011, fall 1% in 2012. So you can imagine how long it's going to take us to get back to 4% or 5%

Okun's rule has broken down somewhat during the recession, and again in the most recent few months has become questionable. The case is illustrated by the US below.

Whereas, looking at final sales may be a better empirical relationship to unemployment, especially for a place like Ireland which is going to rely on SME's for employment (the coffee houses, the country stores, the independent retailer who will only pop up when demand arises)

Taxi Drivers

Here is the breakdown of all people aged 15 and over as estimated by the CSO using the Q4 2010 QNHS. This is based on a question where people are asked to self classify themselves.

At work 1,764.5
Unemployed 354.9
Student 373.8
Home duties 535.8
Retired 340.0
Others 143.3

Total persons 3,512.2

This differs from the technical definition used by the CSO to calculate the official employment rate. This tables shows that out of an available workforce of 2,119,400 that 354,900 consider themselves to be unemployed. This gives an unemployment rate of 16.75% which is well short of some of the figures given above.

For the official rate anyone who worked even one hour in the previous fortnight is classified as "employed". The above question gives the person's own view of their labour status. There are not 600,000 people who consider themselves unemployed.

murphaph

RichardAnd wrote: »

By right, the boom never should have happened and likewise, those jobs never should have existed so if our current unemployment levels are the result of falling from boom time levels then we can deduce that only another boom will see them rise to the same levels once again. Personally, I don't see that happening for many years to come, if at all.

I disagree with this. There was a real export led boom from ca. 1990-2000 which should not be confused with the fake construction driven one from ca.2000-crash. The real boom created massive numbers of jobs. I was involved in hi tech manufacturing during the real boom and saw it dwindle as labour costs rose and companies closed up their operations in Ireland and moved elsewhere (Seagate, Gateway, Fujitsu, Motorola, NEC early on, later Dell and 2 divisions of IBM etc...). I saw colleagues who had trades qualifications but had never worked in construction being drawn out of manufacturing to building and this was seen at all levels from engineers down to labourers.

This transition of labour masked the loss of jobs in the real economy as they were employed in the fake building boom. This is when action should have been taken, both by the government and the electorate. People should have demanded a halt to inflation and if they had the government would have had to call a halt to its pro-cyclical policies and kept costs and with it wages competitive.

If we as a nation had bothered to, we could have avoided the stupid fake boom altogether and we'd have suffered a bit with the global recession (that's now over everywhere else) and we'd be back in business now. What would have been the downside? Not so many plasma TVs and new cars and holidays etc. A small price to pay.

Delancey

Sorry , I'm getting a tad confused here with how the headline rate of 14.7% is reached.
The live register numbers are of little or no value given that people working part / short time are signing on , people who are unemployed are not signing on for various reasons , etc.
The CSO QNHS is regarded as the more accurate test , perhaps a couple of examples will illustrate my question - John is on a FAS course having been unemployed since 2008 , he considers himself to be unemployed and is still actively seeking work - would he be counted as unemployed by the CSO ?

Another example ( and this is a true case btw ) , the wife of a friend of mine lost her job and received Job Seekers Benefit which ran out after a year or thereabouts whereupon she was invited to apply for the means-tested Job Seekers Allowance. This couple have no children and the husband is on a high salary of circa 80,000 Euro , the wife felt that applying for means tested benefit was an exercise in futility and that upon seeing her husbands P60 the Dept of Social Welfare would laugh at her and tell her to go away. The result is that she is not signing on and is still actively seeking work - is she being counted in the unemployment statistics ?

later12

Delancey wrote: »

The live register numbers are of little or no value given that people working part / short time are signing on , people who are unemployed are not signing on for various reasons , etc.

True

John is on a FAS course having been unemployed since 2008 , he considers himself to be unemployed and is still actively seeking work - would he be counted as unemployed by the CSO ?

The QNHS would not consider this individual to be unemployed. It is decided that this individual is undergoing training and unavailable for employment. As far as I am aware (although open to correction) the situation is the same for those on Back To Education Allowances - not signing on, and not eligible to be counted as unemployed for the purposes of the QNHS. Again, these people are assumed to be unavailable for work; they are being paid to engage in other endeavours, typically training.

This situation is not totally ideal, there is an opaque effect. But then again, should we count students receiving maintenance grants as well, as unemployed? Where do we draw the line?

Another example ( and this is a true case btw ) , the wife of a friend of mine lost her job and received Job Seekers Benefit which ran out after a year or thereabouts whereupon she was invited to apply for the means-tested Job Seekers Allowance. This couple have no children and the husband is on a high salary of circa 80,000 Euro , the wife felt that applying for means tested benefit was an exercise in futility and that upon seeing her husbands P60 the Dept of Social Welfare would laugh at her and tell her to go away. The result is that she is not signing on and is still actively seeking work - is she being counted in the unemployment statistics ?

Yes, this lady is eligible to be counted as unemployed as part of the survey because she has recently been without work, and available for work, and has taken specific steps, in the previous four weeks to find work.

murphaph

murphaph wrote: »

I disagree with this. There was a real export led boom from ca. 1990-2000 which should not be confused with the fake construction driven one from ca.2000-crash. The real boom created massive numbers of jobs. I was involved in hi tech manufacturing during the real boom and saw it dwindle as labour costs rose and companies closed up their operations in Ireland and moved elsewhere (Seagate, Gateway, Fujitsu, Motorola, NEC early on, later Dell and 2 divisions of IBM etc...). I saw colleagues who had trades qualifications but had never worked in construction being drawn out of manufacturing to building and this was seen at all levels from engineers down to labourers.

This transition of labour masked the loss of jobs in the real economy as they were employed in the fake building boom. This is when action should have been taken, both by the government and the electorate. People should have demanded a halt to inflation and if they had the government would have had to call a halt to its pro-cyclical policies and kept costs and with it wages competitive.

If we as a nation had bothered to, we could have avoided the stupid fake boom altogether and we'd have suffered a bit with the global recession (that's now over everywhere else) and we'd be back in business now. What would have been the downside? Not so many plasma TVs and new cars and holidays etc. A small price to pay.

Those companies were 'boom' jobs too.

But rather than feed off credit, these jobs were fed off cheap Irish labour, and were not sustainable either.

Cost of living (and labour) would have inevitably rose in any case.

Should we reduce our working conditions to that of China and India to try attract (and keep) manufacturing jobs in Ireland?

Even a reduction in costs to bring us into line with Northern Ireland would require a significant adjustment.

later12

salonfire wrote: »

Those companies were 'boom' jobs too.

But rather than feed off credit, these jobs were fed off cheap Irish labour, and were not sustainable either.

Cost of living (and labour) would have inevitably rose in any case.

That is not exactly the case.

If the government had practiced wage restraint and shown some ability to keep down public spending, if they had not fanned the flames heating up the economy led by construction income and stamp duty revenues, there is no reason why wages should have had to rise outside the European norm, no reason why inflation would have had to take off in Ireland, no reason for the 'boom' to be anything but sustainable on a slow, steady basis.

I understand that this is not where we are, and there is little point going on about it, but it was never an inevitability that wages would get out of hand. A small number of jurisdictions, including Germany, are exemplary in avoiding wage inflation.

murphaph

salonfire wrote: »

Those companies were 'boom' jobs too.

But rather than feed off credit, these jobs were fed off cheap Irish labour, and were not sustainable either.

Cost of living (and labour) would have inevitably rose in any case.

Should we reduce our working conditions to that of China and India to try attract (and keep) manufacturing jobs in Ireland?

Even a reduction in costs to bring us into line with Northern Ireland would require a significant adjustment.

What a nonsense post.

You think having a bit of wage restraint would have put us in the same league as China?

Yes our labour was cheaper than that of the likes of Germany in 1990. The problem is not so much that our labour costs rose to those of Germany, the real problem is they overtook the likes of Germany based on absolutely NOTHING.

Why did Irish labour become more expensive than German labour? Germany has seen incredible wage restraint over the past 10 years, Ireland lost its head and now we're paying the price.