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News : Irish Last Updated: Jun 16, 2010 - 12:12:25 PM


Irish full-time employment fell by 115,700 in 12 months to Jan/Mar 2010; 112,600 unemployed for longer than 1 year
By Finfacts Team
Jun 15, 2010 - 3:05:15 PM

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Source: CSO

Irish full-time employment fell by 115,700 on an annual basis with declines in both male (-91,800) and female (-23,900) full-time employment in 12 months to Jan/Mar 2010.  The number of people unemployed for at least a year (long-term ) rose to 112,600.

In its Quarterly Household Survey, the Central Statistics office (CSO) said today that the largest decreases in full-time employment occurred in the Construction (-53,600) and Industry (-19,500) sectors. In the first quarter of 2010, the Construction sector accounted for 11.9% of all male full-time employment compared with 16.1% for the first quarter of 2009.

There were 1,857,600 persons in employment in the first quarter of 2010, an annual decrease of 108,000 or 5.5%. This compares with an annual decrease in employment of 8.1% in the previous quarter and a decline of 7.5% in the year to the first quarter of 2009. There was an annual decrease of 80,400 or 7.5% in the number of men in employment, while the number of women in employment decreased by 27,500 or 3.1%.

Number of unemployed increases to more than 275,000

There were 194,900 males and 80,200 females unemployed in the first quarter of 2010, bringing the total number of unemployed up to 275,000, an increase of 52,200 (+23.4%) in the year. The number of unemployed males increased by 36,500 (+23.0%), with female unemployment increasing by 15,700 (+24.3%).

On a seasonally adjusted basis the number of persons unemployed decreased by 7,300 between Q4 2009 and Q1 2010.

Long-term unemployment rate increases to 5.3%

In the year to Q1 2010, the number of long-term unemployed persons increased by 63,500, bringing total long-term unemployment to 112,600. The long-term unemployment rate now stands at 5.3% compared with 2.2% in the first quarter of 2009. As of Q1 2010, long-term unemployment accounted for 40.9% of total unemployment compared with 22.0% a year earlier.

Main Results Q1 2010
Persons
Change in Quarter
Change in Year
Employment
1,857,600
-30,100
-108,000
Unemployment
   275,000
+7,600
+52,200
Labour Force
2,132,700
-22,500
-55,700

Commenting on the latest snapshot of the labour market provided by the CSO's Quarterly National Household Survey, IBEC Senior Economist Fergal O'Brien said: "It is now clear that the worst of the job losses are behind us. Employment in the majority of sectors has stabilised over the past couple of quarters, and some of the high-tech sectors have actually recorded a little job growth over the past year. However, job losses are continuing in the construction sector and there is no evidence yet that this sector has bottomed out.

"The unemployment rate now looks fairly close to its peak but unfortunately this is largely occurring as a result of falling participation rates and outward migration. The participation rate has dropped by nearly 3% over the past two years as many people have stopped seeking work. Emigration continues to moderate the unemployment rate and it is estimated that about 60,000 non-nationals have left Ireland over the past year. This represents a further difficulty for many businesses involved in the domestic economy.

"Government's response to the unemployment problem must now move from crisis management to more strategic measures needed to address the rapidly growing long-term unemployment problem. Reform of labour market policies and continued investment in training and upskilling measures are essential if crippling structural unemployment problems are to be avoided."

Goodbody chief economist, Dermot O'Leary, commented:

There has been a more positive tone to Irish data releases of late. On the employment front, an easing rate of decline is in train, but a return to jobs growth will be a slow process.

Easing rate of job losses - Employment in Ireland is still falling, but at a slower pace. In Q1, employment declined by 0.9% quarter on quarter (seasonally-adjusted), relative to -1.1%, -1.9%, and -1.6% in the previous three quarters, respectively. The peak-to-trough decline is an enormous 12%, but as the drag from the collapse in the construction sector wanes, it is likely that employment declines will continue to ease.

Unemployment rate down, but reasons matter - The unemployment rate actually declined from 13.3% to 12.9% in the first quarter (seasonally-adjusted), but this is due to a falling labour force. While some of this decline (30%) is due to what the CSO call “demographic” effects (i.e. increased emigration), the other 70% is due to falling participation in the labour force. Labour force participation fell to 60.7% in Q1, its lowest level since 2004. This, in turn, can be explained by: (1) early retirement and; (2) chronically high unemployment in the younger age cohorts (24.9% for 20-24 year olds for example), causing some to leave the labour force completely.

Majority of construction losses have already occurred - Almost half of the job losses so far have stemmed directly from the construction sector. Peaking in Q2 2007 at 274,000 workers (12.9% of total), this sector employed 131,000 in Q1 2010 (7.0% of total).

Some sectors showing jobs growth - Some sectors are creating jobs. Although we questioned the sustainability of the job gains in the hotels and restaurant category in Q4 2009, we are encouraged by the fact that more jobs were added in Q1 2010. On annual basis, employment is up 4.7% in this sector. The ICT sector also added jobs (1.9% yoy). This is an area that will continue to benefit from an upturn in global demand and the improvement in competitiveness domestically.

Labour market turnaround is a slow process - We recently upgraded forecasts on the basis of a range of different indicators suggesting that the economy has stabilised. These data do not change that view but they do indicate that the onset of employment growth will be a slow process. With public sector jobs only little changed thus far and the restructuring of the domestic banks likely to lead to job losses in that sector, easing rates of decline will feature, but we will have to wait until 2011 for net jobs growth.

Bank of Ireland commented:

Q1 Unemployment rate revised down

Employment still falling but at much slower pace…Irish employment on a seasonally adjusted basis started to fall in the second quarter of 2008 and the pace of decline reached a peak in the first quarter of 2009 with a 3.6% fall. The rate of job loss slowed to 1.2% in the final quarter of 2009 and the latest figures from the Quarterly Household Survey reveal a further moderation; employment fell by 0.9% on a seasonally adjusted basis in the first quarter of 2010 or by just 17,000. The annual pace of job loss also slowed appreciably to 5.5% from 8.1% in the fourth quarter of 2009.

 

With job gains in some sectors…The construction sector is still the main culprit in terms of job loss, with another 4,000 seasonally adjusted fall in the first quarter, leaving employment in the sector at 131,000 or 7% of the total in work, compared with a cycle high of 285,000 (13.7% of the total in employment). The first quarter also saw other sectors shedding labour including agriculture (-6,000), administrative and support services (-4,000) and manufacturing (-2,000) but a number of sectors generated employment, albeit largely in the public sector, including health (1,000), education (2,000) and public administration (1,000).

There was also marginal job growth in private sector services including accommodation, information and communication and professional and scientific. The unemployment rate was revised down to 12.9%...The unemployment rate is derived from the Household Survey and on a seasonally adjusted basis emerged at 12.9% in the first quarter, down from 13.3% in the previous quarter.

This is substantially below the published monthly estimates of 13.4% for the first three months of the year, implying the latter will now be revised down. The actual number classified as unemployed actually fell in the quarter on a seasonally adjusted basis to 277,000 from 285,000 although the labour force also declined by some 14,000.

Ulster Bank economists Simon Barry and Lynsey Clemenger commented:

There have been numerous indicators in the past few months suggesting the Irish economy is now in the process of recovering. These include a firmer tone to retail sales, large Q1 increases in industrial production and exports, and signs from the PMIs of a return to growth in the services sector.

Today’s Quarterly National Household Survey (QNHS) provides the most comprehensive information on the state of the labour market and while it certainly does not paint a picture of outright improvement, there are some encouraging aspects nonetheless.

On the employment front, the numbers tell us that the economy is still shedding jobs. In fact, the level of employment in the first quarter stood at a seasonally-adjusted 1.87 million, the lowest level in some six years, following a decline of 55,000, or 5.5%, in the past year. However, looking a year-on-year changes will always obscure the more important point which is what has been happening in the most recent quarter.

Comparing Q1 of this year with Q4 of last, the economy lost 17,300 jobs which is certainly not good news. However, that does represent a clear continuation of the recent trend which is that while employment is declining, it is doing so a much less rapid pace than previously. In fact, that is the smallest quarterly fall in employment in two years and is way less severe than the staggering weakness from the same period last year when employment fell by over 76,000.

At a sectoral level, outside of agriculture (where survey problems are making it difficult to get an accurate read at present) the largest fall in Q1 was a 4,100 decline in construction employment. However, this was the smallest quarterly decline since the final quarter of 2007 – an indication that the intensity of layoffs in the hardest hit sector of the economy is easing off.

Interestingly, a few sectors actually managed some small gains in employment in Q1. These included: accommodation and food service activities, information and communication, professional, scientific and technical activities as well as education and health. In total, these sectors managed to create an additional 4,200 jobs last month which was obviously more than fully offset by weakness elsewhere. Nonetheless, this does reveal some early evidence of stability in the demand side of the labour market, even if it will likely take more time for definitive signs of broad-based improvement to come through.

Somewhat surprisingly, the numbers unemployed fell back by 7,300 between the Q4 of last year and Q1 of this year, the first quarterly decline in unemployment since the modest 1,000 fall in Q3 2007. We also saw a moderation in the unemployment rate from (an upwardly revised) 13.3% in Q4 2009, to 12.9%. While this is certainly an encouraging development, it likely exaggerates the extent of the improvement, with the easing back in the unemployment rate importantly linked to the 13,700 decline in the labour force in the quarter.

In the year to the first quarter of 2010, the workforce declined by 55,300 to 2.15 million. There continues to be two main factors explaining this shrinking labour force. Firstly, there is an ongoing decline in participation rates. That is, a smaller proportion of the population of working age are choosing to participate in the jobs market. The overall participation rate has fallen to 61.5% from 62.5% a year ago, with this factor alone accounting for almost 70% of the fall in the workforce over the period. Secondly, outward migration is also continuing to play a role in the adjustment underway in the Irish labour market. The CSO estimates that 59,600 Non-Irish nationals aged 15 and over left the country in the year to Q1, contributing 53,500 to the decline in the labour force over this period.

It is important to point out that the QNHS measure of the unemployment rate is the official one. However, the more timely Live Register estimate of the unemployment rate is generally a reasonably good guide, and points to further upward pressure on the rate in the second quarter. While we do expect the official unemployment rate has further to rise, increases from here will be relatively minor given the ongoing decline in the workforce we anticipate, in addition to an easing in the rate of decline of labour demand as the economy shows greater signs of recovery. We continue to forecast a peak unemployment rate of between 13.5 and 14% on the QNHS numbers, with these latest figures suggesting the outturn may be at the lower end of this range.

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