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News : Irish Economy Last Updated: Aug 30, 2014 - 2:57 PM


Ireland: Recovery on track but fantasy economics endure
By Michael Hennigan, Finfacts founder and editor
Aug 27, 2014 - 7:19 AM

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German living standard highest in Europe; Irish, Italians, Spanish among Eurozone's poorest : Actual Individual Consumption (AIC) per capita is a more realistic measure of Ireland's standard of living than GDP per capita.

Belgium (BE) Greece (EL) Lithuania (LT) Portugal (PT) Bulgaria (BG) Spain (ES) Luxembourg (LU) Romania (RO) Czech Republic (CZ) France (FR) Hungary (HU) Slovenia (SI) Denmark (DK) Croatia (HR) Malta (MT) Slovakia (SK) Germany (DE) Italy (IT) Netherlands (NL) Finland (FI) Estonia (EE) Cyprus (CY) Austria (AT) Sweden (SE) Ireland (IE) Latvia (LV) Poland (PL) United Kingdom (UK)

Ireland: The recovery is on track but almost six years after the economic bust, fantasy economics endure.

Ronald Ziegler, White House press secretary, declared in April 1973 that all of President Nixon's previous statements on the Watergate scandal that would doom his presidency, were "inoperative." Not incorrect, not misinformed, not untrue - - simply inoperative, like batteries gone dead, in the words of a contemporary Time magazine report.

In Dublin on Tuesday, while the ministerial mantra of the early months of 2014: "we are creating some 5,000 jobs a month" was already made inoperative by a flat jobs market in Q1 2004, ministers welcomed a half-measure of job creation in the 12 months to June but of course they didn't embrace a revised mantra: "we are creating some 2,500 jobs a month."

Finfacts on the CSO's Quarterly National Household Survey for the second quarter of 2014 and migration estimates:

Q1 2011-Q2 2014: Irish employee jobs up 21,000; 130,000 part-timers seeking full-time work

Irish Economy: Job numbers & workforce fell in H1 2014; Finfacts proved right

Net emigration by Irish nationals at 124,000 in 2009-2014

Irish Media Post-Economic Crash: "Don't interrupt the minister" - - "In an April 2014 press conference, Richard Bruton, jobs minister, categorically rejected my question on the reliability of the report that 61,000 jobs were added in 2013. Bruton was categorically wrong," -- Michael Hennigan

Bruton and politics of jobs numbers; CSO says 47,000 jobs added in 18 months to end March 2014; Dept of Enterprise & Jobs claims CSO data says 70,000????

Apart from 31,000 jobs added in the 12 months to June, the seasonally adjusted unemployment rate fell from 12.0% to 11.5% over the quarter while unemployment decreased by 46,200 (-15.4%) in the year to Q2 2014 bringing the total number of persons unemployed to 254,500.

In addition to net migration of 124,000 by Irish nationals since 2009, the numbers in publicly-funded activation programmes outside the summer months, is typically about 85,000 - -  with about 55,000 who are not attending 'back to education' courses, treated as employed.

In the period May 2013-April 2014, during 12 months of mainly jobs growth, 41,000 emigrated and 12,000 returned giving a net loss of 29,000.

Some 130,000 of part-time workers are seeking fulltime jobs and while the Live Register includes some casual and part-time workers, the total including activation scheme participants was at 469,000 in July -- 22% of the workforce.

The number in self employment with no employees (one-person operations) is back to boom times and on Tuesday, Richard Bruton, jobs minister, saw a silver lining in the numbers in full-time employment but in the real world, how many of the newly-self employed are earning a living wage?


Earlier this month on August 08, we said that the economic recovery is real but it may not be as strong as some headlines suggest:

Finfacts: Irish Economy 2014: How strong is the economic recovery?

A day later, Prof Alan Ahearne of NUI Galway, wrote in an op-ed in The Irish Times:

Gains in employment averaged about 4,000 per month over the past year, corresponding to one of the fastest rates of job creation in Europe. It is worth recalling that the economy lost nearly 8,000 full-time jobs per week in early 2009, as the construction and other property-related sectors collapsed. At the current pace of growth, employment is expected to approach the 2m mark by the end of next year. The unemployment rate, though still at elevated levels, has fallen more than 1½ percentage points over the past year to 11.6 per cent in June and is down about 3 percentage points from its peak in 2012.[ ] The export sector continues to expand and is expected to remain the engine of growth for the Irish economy of the next few years."

Distortions caused by the foreign-owned exporting sector including massive tax avoidance renders many national accounts indicators and soft indicators such as PMI (purchasing managers' index) surveys unreliable - - with the result that much of the economic analyses in Ireland is superficial, including at times from the Economic and Social Research Institute and Central Bank.

In a system addicted to spin and coupled with the mainstream media with few staff to forensically mine for the facts behind the spoof, this scenario is a big gift for ministers.

Alan Ahearne focuses on the headline unemployment rate but a broader rate would add 2.6% to the rate in respect of activation scheme members who are counted as employed; the 130,000 who are underemployed would add 6%. Then there are the 227,000 in one-person operations: entrepreneurs by choice?

We estimate that 21,000 of the 60,000 jobs added since the current governing coalition took power are paid employees either full or part-time.

How many of these 60,000 jobs would give a likelihood of a mortgage?

Alan Ahearne's point about exports being a jobs engine is an aspiration as despite a surge in exports in 2000-2013, there was no net direct jobs growth in exporting firms.  

On tax receipts, the fiscal consolidation in last Oct's budget included a rise of €900m in taxes including from prior measures.

In the 7 months to July, income tax was up 0.6% compared with target (made on the basis of June 2013 data when annual jobs growth was 34,000).   

The overall tax take was up €548m or 2.5% mainly comprising VAT & Excise.

The rise in house prices and the FDI (foreign direct investment) economy doing fine, has boosted spending but with no growth in wages, many of the 24,000 additional self-employed having a precarious earnings base and half the rise in tourism jobs going to migrant workers on the minimum wage, there is still a need for a jobs engine.

Despite lots of public funds and incentives, the ICT and Professional, scientific and technical activities sectors have not produced significant jobs numbers.

Total employment is down 245,000 since Q2 2008 but absent a strategy (an aspirational brochure was published last December), the Government will mainly have to keep fingers crossed that good news will keep coming.

Last month a document on FDI policy published by the Government says that net FDI job creation target is 7,000 annually, in the next five years.

That could hardly be called a jobs engine.

Finfacts July 2014: Irish Economy: Bruton publishes new FDI policy; Avoids inconvenient facts

Finfacts July 2014: IDA Ireland: Jobs in Irish FDI exporting sector remain below 2000 level

Finfacts Dec 2013: Irish Medium-Term Economic Strategy 2014-2020: Where will 300,000 net new jobs come from? - - Part 8

Finfacts:

Irish corporate tax policy like property bubble driven by short-term interests

Irish Economy: Bruton and politics of jobs numbers; CSO says 47,000 jobs added in 18 months; Dept of Enterprise & Jobs claims CSO data says 70,000????

Submission to the Department of Finance consultation [pdf] - -  on tax policy and outline on the need for a credible enterprise strategy.   

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