Irish Economy
Ireland: Government explains how it understates recession job losses
By Michael Hennigan, Finfacts founder and editor
Jan 21, 2015 - 6:40 AM

Ireland: Last week when a so-called "Jobs Cabinet" sanctioned cutting the target date for full-employment by two years to 2018 and Enda Kenny, taoiseach, said: "Our goal is that all of the 250,000 jobs that were lost during the recession will be able to be restored," we wondered where the job loss data came from. We can now report how the Government understates recession job losses compared with official data.

Last week's statement from the Government and a press conference as reported, were devoid of detail on the 250,000 lost jobs coupled with the unemployment rate that would suggest full employment and the labour participation rate that fell from 63.8% at the end of 2007 to 60.4% in the third quarter of 2014.

Finfacts appears to have been the only media outlet to query the 250,000 total as ten months before in Washington DC, the taoiseach said in a speech that the economic strategy, which was published in December 2013 aimed "to replace all 330,000 jobs lost during the recession with new jobs by 2020."

The 'Medium Term Economic Strategy 2014-2020' [pdf] states on Page 43: "At its peak, employment in Ireland reached 2.16m people, before 330,000 jobs were lost between 2008 and 2012; the majority during the initial stages of the recession" - note the total of "2.16m people" compared with a 2018 employment target of 2.10m.

The strategy document also suggested full employment could imply an official  rate of unemployment up to 6% compared with 4.1% at the end of 2006 and 4.6% at the end of 2007.

On Tuesday, the Department of the Taoiseach said in a message to Finfacts:

The figures are related to different data sets and different time frames.

The 250,000 is a rounded figure from live register and earnings survey data and is specifically from March 2008 to March 2011.

The Quarterly National Household Survey, which is published later than the live register data, shows the drop in employment exceeding 300,000 from Q1 2008 and Q1 2011."

The current government entered office in March 2011 and the Department of the Taoiseach directly acknowledges that official data show job losses up to March 2011 exceeded 300,000.

The dataset is for a period that ended almost four years ago and it's not relevant that the household survey data came later than data that was used to produce the 250,000 claim in recent weeks.

As detailed in the chart above:

• The Earnings, Hours and Employment Costs Survey covers only employees with the exception of employees in  'Agriculture, forestry and fishing.' The self employed are excluded;
• The Live Register is neither a measure of employment changes nor official unemployment.

Why the fiddle?

We can assume that the Economic Management Council, the Cabinet sub-committe that comprises Enda Kenny, taoiseach, Joan Burton, tánaiste, Michael Noonan, finance minister, and Brendan Howlin, spending minister, which meets with senior civil servants and economic advisers in attendance, had discussed and agreed to bringing forward the full employment target from 2020 to 2018, based on alternative choices of data.

This is a political target that currently has no economic credibility - latest data up to September 2014, show underemployment at 124,000 where part-time workers are seeking full-time work with the ratio of part-time workers rising from 19% before the recession to almost 24%. Separately, about 80,000 are in publicly-funded activation schemes.

Official data show that less than half of the number of jobs added since March 2011 are full-time employee positions.

The selection of 250,000 means that 170,000 jobs need to be added from October 2014 to December 2018 - about 40,000 per year, which meets an official employment target of 2.10m. The 12 month level of jobs added to September 2014 was at 27,700 while using the official number of 305,000 job losses up to March 2011 would require job creation of more than 50,000 annually.

In a world of common sense, the misuse of data is a fiddle.

We could use euphemisms like "misleading," "economical with the truth" or "falsehood" - The New York Times' term for a political lie, but after the second massive economic bust in a generation, why be complicit in the erosion of public trust?

We said on Monday that the enduring addiction to spin in Irish politics, reflects a lack of confidence and self-belief and is damaging to the economy.

Ireland: Government's spin and lies damage the economy