By Sinead Pentony
‘Employment in construction is now just 37.5% of its June 2007 level but increased by 51,300 over the last six years in the areas of health and social work, information and communication, and education’.
‘The main policy measures aimed at increasing employment include the Action Plan for Jobs which aims to have 100,000 more people in work; the Ireland Strategic Investment Fund which is to be funded with €6.4 billion from the National Pension Reserve Fund; and JobsPlus’.
As we prepare to exit the bailout and wave goodbye to the Troika in mid-December, they have highlighted three big issues that have yet to be resolved – elevated levels of unemployment, high public debt, and banks’ growing non-performing loans. I will take a closer look at the first two issues over the next two editions of Village.
The Troika may be leaving Ireland but the unemployment crisis is on-going. Unfortunately, unemployment crises are nothing new to Ireland. The unemployment rate currently stands at 13.9% (200,700 people). Over the last 30 years (1982-2013) unemployment has averaged over 11%, which represents a huge loss to the economy, lost opportunities for thousands of people and enormous social costs for society. Ireland experienced one of the biggest increases in unemployment of the 34 OECD countries between 2007 and 2012, as shown in Figure One. Long-term unemployment (unemployed for over 1 year) is currently 8.1% (175,000 people), which means the long-term unemployed make up almost 60% of the total number of people who are unemployed.
There are signs of improvement. The number of job losses appears to have levelled off and there has been a modest increase of 33,700 people in work over the last 12 months (June 2012 – June 2013). While this is positive, it still represents a decline of 277,400 jobs from June 2008. Ireland experienced the third largest fall in employment levels over this period, after Greece and Spain, as shown in Figure Two.
The sectors most affected by the crisis are construction, industry, and administrative and support services. Employment in construction is now just 37.5% of its June 2007 level. Industry and administrative and support services have fared better, with employment levels of 79% and 73%, respectively, for the same period. In contrast, employment increased by 51,300 over the last six years in the areas of health and social work, information and communication, and education.
While any improvement in the employment figures is to be welcomed, this is not at a level that is going to solve the unemployment crisis in the short term. The employment rate in Ireland currently stands at 60%, which falls far short of the EU Commission’s Europe 2020 Strategy employment target of 75%. The biggest issue is that there are not enough jobs available.
Ireland adopted a mid-range 2014 employment rate target of 69-71%. This was combined with a commitment to focus policy on addressing weak labour demand; putting in place incentives and stimuli to increase employment within enterprises; addressing long-term unemployment; and improving the levels of skills and education in the working-age population.
The main policy measures aimed at increasing employment include the Action Plan for Jobs which aims to have 100,000 more people in work over the life-time of the plan; the recently announced Ireland Strategic Investment Fund (ISIF) which is to be funded with €6.4 billion from the National Pension Reserve Fund; and a range of initiatives aimed at incentivising employers to take on unemployed people e.g. JobsPlus.
These are important measures to boost economic growth and job creation, but many of the initiatives are relatively new, which means it will take time for the effects to be seen in the employment figures. The policies aimed at increasing growth and jobs are also not sufficient to deal with the scale of the unemployment crisis, nor are they sufficient to off-set the damage that has been done by a budgetary strategy that has taken €28 billion out of the Irish economy since 2008.
Policies aimed at increasing employment are complemented by policies that support unemployed people back into work and ensuring the workforce is equipped with the skills and training required in an advanced economy. These policies, commonly referred to Active Labour Market Programmes (ALMPs), are crucial to reducing structural unemployment (an over-supply of skills in the construction sector and an undersupply in the ICT sector) and achieving a high rate of employment.
Pathways to Work sets out the programme of reform. The central element of these reforms has been the establishment of Intreo. This merges employment services and benefit administration into one-stop-shops, providing a single point of contact for all employment and income supports. A key aspect of the Intreo service is its case management approach and the development of a personal progression plan, which is in line with international best practice. Unfortunately, the new Intreo service only covers new jobseekers, which means that the vast majority of unemployed people have no access to Intreo supports.
While the number of caseworkers is increasing, the average caseload currently is approximately 800 jobseekers, which is very high by international standards. This raises serious questions about the quality of service that can be delivered. A person-centred approach to labour market activation also requires highly skilled case workers. There are challenges relating to the skills and training of case workers who need extensive knowledge of the social welfare system, employment opportunities, education and training, work programmes and how to provide guidance to people with a varied range of skills and qualifications.
An active labour-market service that supports a move towards a high level of employment also needs to develop tailored supports for people who often find themselves at the back of the jobs queue because employers perceive them to be less productive, or because they cannot easily combine work with their other responsibilities. This includes people from ethnic minority backgrounds, those with long-term health conditions, people with disabilities, younger and older people, mothers, and people with few or no formal qualifications.
The EU framework ‘Active Inclusion for All’ is a holistic strategy that is based on the integration of three key and equally important social policy pillars: adequate income support, inclusive labour markets, and access to quality services. This framework should be used as a roadmap for developing ALMPs in Ireland to reduce many of the unequal outcomes in the current labour market, especially in reducing the differences between the employment rates of various groups.
If the unemployment crisis is to be seriously addressed in the short and medium term, policies aimed at developing inclusive and effective ALMP and supporting investment and jobs need to be scaled up; the policy of austerity needs to end; and targets for reducing unemployment and increasing employment rates need to replace deficit reduction targets as the central goals of economic and social policy.
Figure One: Harmonised unemployment rates across OECD countries, 2007 and 2012 (%)
Figure Two: Working-age employment rates across OECD countries, 2007 and 2012 (%)