Friday, March 5, 2010

Economics 05/03/2010: Losing capital in a recession

Live Register additional tables are signaling that the latest 'improvement' (or as I would call it - a bounce) in LR figures for February was driven by exits of the unemployed not into gainful employment, but into emigration.

In February 2010 there were 355,690 Irish nationals and 81,266 non-Irish nationals
on the LR:
  • a monthly increase of 149 (0.0%) in Irish nationals and
  • a decrease of 129 (-0.2%) in non-Irish nationals.
In the year to February 2010 the number of Irish nationals on the Live Register increased by 74,549 (+26.5%), while the corresponding annual increase for non-Irish nationals was 9,954 (+14.0%). This clearly shows that most non-national unemployment did come from the earliest-hit construction sector.

Among non-Irish nationals the largest number on the Live Register, were nationals from the EU15 to EU27 States (45,649) - aka the Accession States or EU10 states - while the smallest number were from the EU15 States outside of Ireland and the UK (4,139). This is, of course, reflecting levels, not proportionate terms.

Non-Irish nationals represented 18.6% of all persons on the Live Register in February 2010 against their share of the labour force being around 14.7%.

I said earlier (here) that the Live Register improvements are driven by three factors:
  1. emigration;
  2. exits to Fas-led 'training' and exits from the labour force (the two are equivalent in my mind, as I see no real hope for Fas to actually provide employable skills); and
  3. exits to education (a better alternative to Fas, but still not a guarantee of education).
Several community leaders recently have pointed out to me that their organizations, dealing primarily with foreign residents in Ireland, are seeing a rising tide of residents who fall out of unemployment benefits and having trouble signing for welfare benefits. It seems that the better quality workers who can emigrate are now doing exactly that - inducing a loss of human capital for Ireland.

Hence, we are now in a really tough position, whereby the recession is causing:
  • fire sales and exports of capital (with banks taking posessions of machinery, equipment, stocks of goods and selling these through distressed sales - including to foreign buyers); and
  • exits of human capital.
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