Irish Economy
Irish Economy: Employment fell by 13,700 in the second quarter of 2012 - - down 33,400 in year
By Finfacts Team
Sep 19, 2012 - 11:22 AM

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Irish Economy: The Quarterly National Household Survey (QNHS) published today shows that employment fell 1.8% or 33,400 in the year to the second quarter of 2012, bringing total employment to 1,787,900. This compares with an annual decrease in employment of 1.0% in the previous quarter and a drop of 2.0% in the year to Q2 2011.

The Central Statistics Office data shows that the long-term unemployment rate (jobless for 12 or more months) increased from 7.7% to 8.8% over the year to Q2 2012. Long-term unemployment accounted for 59.9% of total unemployment in Q2 2012 compared with 53.9% a year earlier and 43.3% in the second quarter of 2010.

The QNHS shows that employment fell in ten of the fourteen economic sectors over the year. The greatest rates of decline were recorded in the Administrative and support service activities (-8.8% or 5,800), Financial, insurance and real estate activities (-7.0% or -7,300) and Construction (-6.5% or -6,900) sectors. The greatest actual decline in the number of persons in employment in a sector was recorded in the Wholesale and retail trade; repair of motor vehicles and motorcycles sector where employment was down year on year by 7,500 or 2.8%.

The largest increase was recorded in the Accommodation and food service activities sector where employment increased by 6,300 (+5.9%).

The report shows that full-time employment fell by 31,700 over the year from 1,395,900 to 1,364,200 while part-time employment also decreased by 1,800 (-0.4%) on an annual basis from 425,400 to 423,600. Full-time employment has been falling almost continuously since peaking in Q3 2007 with a total decrease of 399,800 or 22.7% being recorded by Q2 2012. Part-time employment had been increasing up to 2011 before stabilising at levels around 420,000 in the last year.

QNHS report [pdf]

Number of Persons in Employment 

  • There was an annual decrease in employment of 1.8% or 33,400 in the year to the second quarter of 2012, bringing total employment to 1,787,900.
  • On a seasonally adjusted basis, employment fell by 13,700 (-0.8%) in the quarter. This follows on from a seasonally adjusted decrease in employment of 10,300 (-0.6%) in Q1 2012.

Number of Persons Unemployed 

  • Unemployment increased by 4,000 (+1.3%) in the year to Q2 2012. This brings the total number of persons unemployed to 308,500.
  • The long-term unemployment rate increased from 7.7% to 8.8% over the year to Q2 2012. Long-term unemployment accounted for 59.9% of total unemployment in Q2 2012 compared with 53.9% a year earlier and 43.3% in the second quarter of 2010.
  • The seasonally adjusted unemployment rate was unchanged over the quarter at 14.8%.

Labour Force 

  •  The total number of persons in the labour force in the second quarter of 2012 was 2,096,400, representing a decrease of 29,500 (-1.4%) over the year.

Summary of headline results – Q2 2012

Main Results Q2 2012
April-June 2012  
Annual Change
Employed
1,787,900
-33,400
Unemployed
   308,500
+4,000
In labour force
2,096,400
   -29,500
Not in labour force
1,389,800
  +12,900

 

Conall Mac Coille of Davy comments:

Public sector job cuts drive employment contraction

Employment falls again in Q2

  • Irish employment fell 13,700, or 0.8%, quarter-on-quarter in Q2 2012 following a 0.6% decline in Q1;
  • Employment fell 1.8% on the year to Q2, a sharper pace of contraction than the -1.0% recorded in Q1;
  • Unemployment was unchanged at 14.8%, reflecting a 14,200 fall in the labour force.

Public sector job cuts push down on employment

  • Private sector employment fell by 0.3% on the year, but public sector jobs declined by 6.3%;
  • Private sector employment has stabilised close to 1.1m, but there was a 25,800 fall in public sector jobs on the year, reflecting retirements in H1 2012.

Long-term and youth unemployment a growing problem

  • Long-term unemployment, up from 7.7% to 8.8%, now accounts for 59.9% of total unemployment;
  • The unemployment rate for 20-24 year olds rose to 29% in Q2, up from 27.7% in Q1 2012;
  • The 29,500 fall in the labour force in the year to Q2 indicates that emigration could be running close to 40,000 per annum given the expected natural increase.

Poor labour market out-turn questions government's fiscal consolidation strategy

  • Clearly, the pace of private sector job creation has not been sufficient to offset cuts in the public sector;
  • The poor performance of the labour market questions the government's strategy of prioritising reductions in public sector employment to protect pay rates.

Dermot O'Leary of Goodbody comments:

Export-led growth has not yet contributed to an increase in employment levels overall. Q2 data show a further deterioration.  

A poor Q2 for the Irish labour market... - 
Irish employment levels continued to fall to new lows in this cycle in the second quarter of 2012. Employment fell by 0.8% quarter on quarter on a seasonally-adjusted basis. This followed a 0.6% quarterly decline in Q1 and a 0.5% increase in Q4 2011. The unemployment rate also remained high at 14.8% (same as Q1). Overall, the Q2 performance is disappointing given the resilient performance of GDP and more timely PMI surveys in the first half of the year. 

...with ten sectors down on an annual basis - 
Seven of the fourteen sectors analysed by the CSO witnessed a quarterly fall in employment levels, while on an annual basis, employment fell in ten sectors. The worst performing sector in Q2 is Admistrative and support services (-9% yoy), followed by Financial, insurance and real estate activities, are the worst performers. Significant job losses are likely to continue in the latter category due to the restructuring of the domestic banking system up to the end of 2013. 

Tourism & ICT contributing positively to employment - 
Of the four sectors seeing annual increases in employment, the Accomodation and food services is the biggest contributor. This is followed by Information and Communications Technology (ICT), where employment grew by 4% yoy in Q2. 

Unsurprisingly, public sector employment is down sharply - 
The public sector continues to be a major drag on employment levels. Using separate data (from the EHECS survey), the CSO state that private sector employment fell by just 0.3% yoy in Q2 while public sector employment (excluding the temporary effect of the Census staff in 2011) fell by 5.1%. This brings the total reduction in public sector employees to 8.8% over the past three years. 

A disappointing report overall – 
Given the slew of job announcements from the multi-national sector it is disappointing that employment trends have actually deteriorated further in the first half of the year. Clearly, falling domestic demand, fiscal consolidation and banking sector restructuring is taking its toll and will continue to do so. It will be a long haul back to full employment and policy efforts must focus on reducing the longer-term risks to the economy associated with the large increase in long-term unemployment which now stands at 8.8%.

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