Showing posts with label Ireland long term unemployment. Show all posts
Showing posts with label Ireland long term unemployment. Show all posts

Friday, September 16, 2011

16/09/2011: QNHS 2Q 2011 - things are getting frighteningly worse less rapidly

This is the first of two posts on QNHS 2Q 2011 data released yesterday.

Yesterday's QNHS results for 2Q 2011 confirmed the continuation in the trend weaknesses in Irish labour markets, with some moderation in the rate of deterioration qoq.

Per CSO: "There was an annual decrease in employment of 2.0% or 37,800 in the year to the second quarter of 2011, bringing total employment to 1,821,300. This compares with an annual decrease in employment of 2.9% in the previous quarter and a decrease of 4.1% in the year to the second quarter of 2010."

Other core stats and changes are:
  • The annual decrease in employment of 2.0% is the lowest annual decline since 3Q 2008.
  • On a seasonally adjusted basis, employment fell by 3,200 (-0.2%) in the quarter. This follows on from a seasonally adjusted fall in employment of 7,200 (-0.4%) in Q1 2011. The 2Q 2011 fall in employment is the lowest quarterly decrease recorded in the seasonally adjusted series since 1Q 2008.
  • The largest decrease in employment over the year was recorded for the 25-34 year age group (-27,500 or -5.0%). A reduction of 21,100 was also recorded for the 20-24 age group (-15.0%). Numbers in employment are now down 324,900 on the peak attained in 4Q 2007.
The total number of persons in the labour force in 2Q 2011 was 2,125,900, representing a decrease of 26,800 (-1.2%) over the year. This compares with an annual labour force decrease of 50,400 (-2.3%) in Q2 2010. This marks a decrease of 128,500 on the peak reached back in 1Q 2008.

Unemployment rose 10,900 (+3.7%) in the year to 2Q 2011 with 304,500 now unemployed (male unemployment increasing by 5,600 (+2.8%) to 205,700 and female unemployment increasing by 5,200 (+5.6%) to 98,800). The unemployment rate increased from 13.6% to 14.3% yoy in 2Q 2011.

The long-term unemployment rate increased from 5.9% to 7.7% over the year to Q2 2011. Long-term unemployment accounted for 53.9% of total unemployment in Q2 2011 compared with 43.3% a year earlier and 21.7% in the second quarter of 2009.

The seasonally adjusted unemployment rate increased from 13.9% to 14.2% over the quarter.
Full-time employment fell by 53,000 (-3.7%) yoy with declines in both male (-33,700) and female (-19,300) full-time employment. Per CSO: "This decline in full-time employment was partially offset by an increase in the number of part-time workers where the numbers increased by 15,200 (+3.7%) over the year. Part-time employment now accounts for 23.4% of total employment. This had been as low as 16.7% in Q3 2006." Full-time employment is now down 367,600 on peak (4Q 2007) and part-time employment is now at its new peak at 426,800 - up 40,800 on 4Q 2007.


Part-time underemployment (a form of unemployment, really) increased by 23,000 (+20.9%) from 110,100 to 133,100 over the year. Part-time underemployment now represents just under one-third (31.3%) of total part-time employment, up from 26.8% a year earlier. Among males, part-time underemployment is close to half of total part-time employment (46.7%), up from approximately 42% a year earlier. For females the comparative proportion is one quarter (25.0%), but as with males this proportion has been increasing over time.

Now to the frightening number: combined unemployed and underemployed part-timers now stand at a frightening 434,700 or 20.5% of the labor force. This number is up from 400,300 a year ago (+8.6%).

So, on the net we have:
  • flattening out of the unemployment increases curve, but continued increases, nonetheless
  • flattening out of labor force decreases rate, but continued declines in labor force
  • increasing share of employment taken up by part-time employed
  • increasing share of long-term unemployed and underemployed in the labor force.

And LR confirms this diagnosis:
It's not exactly 'turning the corner' moment, is it?

Tuesday, April 6, 2010

Economics 6/04/2010: QNHS - the figures of despair

Time to take a closer look at the latest data from Quarterly National Household Survey - released a week ago. The focus below is on less recognized trends, so endure the charts...

Chart above shows the dramatic declines in our labour force and an even more dramatic decline of those in the labour force who are currently employed. In effect, unemployment has consumed two years worth of gains in jobs, plus another 3.5 years worth of increases in participation. Overall, we are now back in Q2 2004 when it comes to employment figures.

As a result, unemployment soared, but what we tend to forget in looking at the headline figure is that long term unemployment - lagging ordinary unemployment by some 12 months or more - is now precipitously rising...
Chart above shows that contrary to all the talk about 'bottoming out', the latest fall-off in unemployment recorded in Q4 2009 is seasonally consistent with normal patterns, implying that in all likelihood, unemployment figures will remain on the rise from Q1 2010 on.
Looking at employment changes broken down by occupation, it is clear that the crisis has seen most of jobs destruction focused at the bottom of earnings distribution - in areas that are less skills-intensive. There are, most likely, several reasons for this:
  • Professional and Managerial grades are usually occupied by people with longer on-the-job tenure, making them more expensive to lay off, and more likely to be part owners of businesses and professional practices;
  • Sales and Other are more flexible workforce components, linked closely to internal demand;
  • One interesting change is amongst operative workers. This category includes some construction workers, but in general, it does appear to suggest that exporting sectors growth over 2008 was more likely underpinned by transfer pricing by multinational rather than by real expansion of physical production.
Overall, however, it is worth noting that occupations with greater human capital intensity of production are holding up much much better than those where people are closer substitutes for technology and machinery.

Change in working hours also reveals some interesting features of the changing labour force:
We clearly are having a secondary crisis in terms of under-employment, whereby workers might be retaining jobs, but their hours worked are being cut back dramatically. Percentage of full time jobs has clearly declined, while part-time jobs are on the rise.

And unemployment is becoming a long-term condition for an increasing number of workers:
The numbers are pretty self-explanatory, except that one must add to these figures an observation - long-term unemployed are much harder to shift off the welfare than those in shorter term unemployment. Note that 29,400 long-term unemployed back in 2007 were pretty much unchanged since the beginning of the century. Since then, however, we just added 59,700 more of those who are risking to becoming permanently unemployed into the future.
While unemployment increases (chart above) were the feature of 2008 labour market collapse, job seekers (both in education and outside), underemployment rises and full-time employment fall-off were the main features of of 2009. These are likely to remain dominant in 2010 as well as unemployment reaches deeper into skills distribution over time.

This is confirmed in the following chart:
Notice that S3 and S2 (broader) categories of stressed workers are rising faster through out 2009 than the more narrow unemployed category. Should the positive move in Q4 figures be reversed (see above discussion), there is significant likelihood that these broader categories will continue to increase at a faster pace than simple unemployment measure, further increasing surplus capacity in the economy and putting more income uncertainty onto the shoulders of those still in full-time work.

Returning back to the issue of skills: chart above shows that both in 2008 and 2009 workers with greater human capital attainment were in lower risk of unemployment than those with lower educational attainment. Of course, this is a result of several forces:
  1. Workers with higher educational attainment tend to be more productive in same occupations;
  2. Workers with higher educational attainment tend to have better aptitude;
  3. Workers with higher educational attainment are also more likely to engage in continued up-skilling and on-the-job training;
  4. Workers with higher educational attainment tend to possess more flexible sets of skills;
  5. Workers with higher educational attainment tend to be employed in more competitive and exports-oriented sectors and companies, etc.
All of this, however, suggests that human capital matters even in amidst a wholesale collapse of the labour market experienced in Ireland.
And, as chart above shows, workers with higher human capital attainment are also more likely to be fully engaged in the labour force. Which means two things:
  1. Human capital is an important differentiator in a recession; and
  2. Those currently fuelling longer-term unemployment are more likely to be with lower skills, and thus are more likely to exit labour force and remain outside the labour force for a much longer period of time.
In short, we are now at risk of creating a permanent underclass of under-skilled and under-employed.

And to conclude - two charts on comparisons between Ireland and the rest of EU27:
Participation figures above clearly show that our labour force has experienced a much more dramatic collapse than in any other country in the European Union. At the same time, our unemployment has risen less drmatically:
Which suggests that the gap between us and the worst performing European countries (Spain and the Baltics) masks a much more troubling reality: Irish unemployed are much more likely to drop out of the labour force (and thus out of unemployment counts) than those in other European countries.

This, of course, is a sign of much deeper despair.

Wednesday, November 4, 2009

Economics 04/11/2009: Live Register - don't touch that champagne yet...

While the Live Register figures (out today) have shown some significant moderation trend for some months now, the latest data remains gloomy. There is a misplaced emphasis on reading the headline statistics too much and ignoring the underlying movements of displaced workers.

The conclusion advanced by many analysts is that October figure shows a seasonally adjusted decline in the LR of 3,000 - the largest drop in LR since the 3,900 decline in April 2005 and the first decline since March 2007. Good news.


The headline numbers of people in receipt of unemployment benefits now stands at 422,500 or 62% above the same period a year ago. This calls for a revision of the expect year-end number to below 500,000. Many analysts jumped in with a conclusion that this will mean the exchequer can breath easier now, because each 10,000 fewer people on LR means the savings of Euro100mln to the Exchequer. Hmmmm... I don't think so.


The savings above reflect the assumption that those off LR are moving into jobs. What if they move into the welfare? Ok, 10,000 people off the LR means savings of Euro 100mln from lower unemployment benefits. If you move to supplementary welfare benefits, the cost of these is identical to job seeker allowance (Euro 204.30 per week), but you will also qualify for more assistance. A temporarily unemployed person might be able to pay out of savings for housing and job searching costs and might be staying outside state-financed training and education programmes. A long-term unemployed person will not, implying a massive cost run up for the state. A 10,000 cost basis for an unemployed LR-listed person quickly turns into a 20-40,000 cost tag for a long-term unemployed.


Now, LR data does not give us a breakdown of tenure in unemployment or other characteristics, but what we do know from today's data is that:

  1. Males dominated the reductions in LR numbers with a fall of 2,300 amongst males and just 700 amongst the females. Let me ask you this question - if males increases in LR were driven by construction sector collapse, have any of you seen so many new cranes working in Dublin or elsewhere in the country to warrant 2,300 of these construction workers getting jobs all of a sudden? Neither did I. So most likely, these males are simply exceeding the time limit on unemployment benefits and are now eligible for much more substantial aid available under the general social welfare rates and allowances.
  2. Timing of males unemployment increases suggests that we are now seeing reductions in male unemployment coincident with roughly 9-12 months lag from entry point. What does this tell us? Indirectly, this might mean that those who became now long-term unemployed by official definition are simply opting to sign onto welfare rolls and exit the labour force.
  3. We are in the beginning of a new academic year. Is it possible that a number of those previously unemployed now became full-time students again? It is. While this is great news, as it means that they will stand a chance of enhancing their education, it is not the good news regarding unemployment in this country.
  4. Emigration is another likely factor driving some of the declines in unemployment. Back in September data, details on Irish v Non-Irish nationals on LR showed that the rate of unemployment increases amongst non-nationals was contracting faster than for the Irish nationals. Detailed figures on this matter for October will come out on Friday, so stay tuned.
  5. Lastly, the main bit of information relevant to this analysis. Out of 3,000 fewer LR signees, 2,900 came from under 25-year old group. Only 100 of the reductions came from the over 25 years old group. Incidentally, this suggests that LR reductions due to emigration are most likely impacting primarily Irish nationals leaving the state, rather than Accession states’ nationals going back to their countries of origin.

This speaks loudly in support of my assertion that the following forces (in decreasing magnitude of their contribution to falling unemployment) are at play
:
  • Labour force exits into welfare benefits;
  • Net outward emigration of the young.

In my view, both reasons offer nothing to cheer about.