Irish Economy 2015: While data published on Thursday which showed that 41,300 jobs were added in the 12 months to March 2015, is impressive, the Government has a target of an additional 200,000 net jobs to be added by the end of 2018, which raises a question on which sectors of the economy will continue to be jobs engines. Thursday's data also show that while the official unemployment rate fell to 9.9% in March, the broad jobless rate was at 19%.
The CSO reported that Construction accounted for 19,600 of the 41,300 jobs and if we assume an additional 40,000 construction jobs by end 2018 the total of 162,000 jobs would be at the level of Q2 2000 — a year when there were 50,000 housing completions. “Of the 90,000 additional housing units required between 2011 and 2021, over 60% (54,000 units) are needed in Dublin and a further 26% are needed in counties Louth, Meath, Kildare and Wicklow," the Economic and Social Research Institute said in August 2014.
We do not expect 50,000 completions in 2018 up from about 10,000 in 2015 following 8,800 completions in 2014 — there are of course the commercial and civil engineering (infrastructure) sub-sectors and in the Dublin area in particular, the former will remain strong while a big ramp-up in civil engineering projects is not expected in the medium term.
A curious aspect of the Construction jobs data since the bust in 2008, is that at each year end the number of jobs never fell below 100,000 even though by 2013 housing completions had fallen to 8,300 and the other sub-sectors were also just ticking over.
Direct construction employment peaked at 282,000 in late 2006 and DKM Economic Consultants estimated that 416,000 were employed in property-related activities in Q2 2007 — 19% of the workforce.
In 1994, 1995, 1996 and 1997, a period when FDI (foreign direct investment) inflows were strong, resulting in demand for commercial property, while public funded civil engineering projects were relatively stable compared with rising GNP, new house completions rose from 27,000 in 1994 to 39,000 in 1997. House completions peaked at 93,000 in 2006.
In 1994, 1995, 1996, 1997, direct employment in construction was at 91,500, 96,600, 100,800, and 110,400.
For our purposes here, we say 40,000 jobs will be added by 2018 leaving 160,000 to be provided in other sectors.
In the chart below the international tradeable goods and services sectors are included in Industry, Information and communications, Agriculture, forestry and fishing, Financial etc and Transport — these sectors also include domestic sales — and inward tourism is included in Accommodation and food service activities.
Industry is down 38,000 jobs compared with 2008 despite a recent recovery; Information and communications (ICT) which includes big employers such as Apple, Google, and Microsoft has been flat in recent times and is up 10,000 on 2008 while Accommodation and food service activities has recovered from a dip to 120,000 at end 2010 to the 2008 level.
Transport, Financial etc and Agriculture etc are at similar levels to 2008.
IDA Ireland, the Irish inward investment promotion agency, has forecast that its client companies will add 7,000 net jobs annually in the period 2015-2019. Enterprise Ireland, which supports indigenous exporting firms, has forecast 40,000 gross jobs in client firms in 2015 and 2016. In 2014 19,700 gross jobs at client firms resulted in 8,500 jobs in the year.
Here we have about 60,000 jobs forecast for the international tradeable goods and services sectors by 2018
Retail and public sector
Employment in the mainly retail sector is down 50,000 from 2008 while employment in the mainly public sector dominant Education and Health sectors is up 40,000.
Real per capita disposable income in 2018 is likely to be below the 2008 level and a reprise of the retail bonanza is unlikely. Increases in public sector employment are also likely to be muted.
Construction and the main exporting sectors can produce 100,000 additional jobs but short of an unexpected international boom, adding 50,000 jobs a year for four years is a tall order.
Besides the correlation between rising headline exports and jobs is weak.
Broad jobless rate
The broad jobless rate has been used in the US since 1994 and is more useful than the International Labour Organisation standard which defines employment as paid work of at least one hour per week.
In the US, the broad rate includes part-timers seeking full-time work and discouraged workers who have given up looking for work. The broad jobless rate in April was at 10.8% compared with the standard rate of 5.4%
In March 2015, the official Irish rate was 9.9% or 213,000, unchanged from December 2014.
115,000 part-time workers were seeking full-time work which is 5.4% of the workforce and 90,000 or 4.2% of the workforce were in public activation schemes in March.
The total was 418,000 or 19.2% of the workforce.
The CSO says its "PLS4 Indicator (Potential Labour Supply) is unemployed persons plus Potential Additional Labour Force plus others who want a job, who are not available and not seeking for reasons other than being in education or training plus part-time underemployed persons as a percentage of the Labour Force plus Potential Additional Labour Force plus others who want a job, who are not available and not seeking for reasons other than being in education or training."
The PLS4 was 18.7% in March 2014.
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