Showing posts with label Irish Labour Markets. Show all posts
Showing posts with label Irish Labour Markets. Show all posts

Wednesday, February 25, 2015

25/2/15: QNHS Q4 2014: Broader Measures of Irish Unemployment


In the previous post (http://trueeconomics.blogspot.ie/2015/02/25215-qnhs-q4-2014-labour-force.html) I covered the QNHS results for Q4 2014 from the point of Labour Force Participation Rate (poor news showing decline in the already historically low participation) and Unemployment Rate (goods news with unemployment - absent seasonal adjustment falling to 9.9% and the rate of decline in unemployment on quarterly basis accelerating).

Here, let's consider actual size of the labour force and the broader measures of unemployment, including numbers on state training programmes (e.g. JobBridge) and factoring in estimates of inward and outward migration.

Few definitions are provided in the note below the post, so feel free to consult these.

Now, onto numbers.

Total size of Irish labour force at Q4 2014 stood at 2,152,500 down from 2,172,400 in Q3 2014 and down 10,600 on Q4 2013. This is not good. Compared to peak, current Labour Force is down 147,600 and compared to crisis period trough it is up 15,000. Over the last 12 months, irish labour force average levels were down 117,100 on pre-crisis average. All indicators point to a decline in labour force, consistent with the weak labour force participation rate reported in the previous post. All of this suggests that some share of improvements in unemployment performance is down to people dropping out of the labour force rather than the unemployed finding jobs.



As chart above highlights, remarkably, there has been basically no change in labour force numbers from H2 2010 through Q4 2014, something that is not consistent with our natural demographics, but is consistent with the story of outward emigration and dropping-out from the labour force by working age adults.

Now onto more pleasant news. All broader measures of unemployment have registered declines in Q4 2014 both y/y and q/q:

PLS1 indicator - basically a measure of unemployment fell 2.0 percentage points y/y in Q4 2014 to 10.5%, marking an acceleration in the rate of decline from 1.9% drop in Q3 2014.

PLS3 indicator, capturing those employed, unemployed, discouraged, plus all those not seeking a job for reasons other than being in Education & Training - has fallen from 15.1% in Q3 2014 to 13.3% - a drop of 2.7 percentage points y/y accelerated from 2.4 percentage points decline back in Q3 2014.

PLS4 - the broadest officially reported measure of unemployment that includes PLS3, and also underemployed - has fallen to 18.5 in Q4 2014, marking the first reading below 20% since Q1 2009. The measure is down 3.8 percentage points y/y and this marks a major acceleration in decline compared to 2.9 percentage points drop in Q3 2014.

Adding State Training Programmes participants to PLS$ to produce PLS4+STP puts the broader unemployment measure to 22.34%. This is the lowest reading since Q4 2009 and also marks acceleration in decline exactly matching that for PLS4.

Accounting (and this is rough estimation, so be warned) for net outward emigration, however, PLS4+STP measure of broad unemployment rises to 29.8% in Q4 2014. This marks a decline of 2.8 percentage points y/y and acceleration of decline from 2.0 percentage points drop in Q3 2014. However, the rates of decline in both Q3 and Q4 were shallower than for other measures, save PLS 1.



To summarise, labour force levels are worrying and static at and around crisis trough. Broader measures of unemployment show significant improvements, but the levels of unemployment, especially adjusted for state training programmes and potential adverse effects of net emigration are still high and more worrying than the headline unemployment measures suggest. While we do not know exactly, indications are - the data is consistent with at least some declines in unemployment officially recorded by the CSO coming not from jobs gains, but from emigration, state training programmes and exits from the labour force.

For example, compered to H1 2011, there were 23,373 more individuals that were participating in state training programmes who are not counted as unemployed. Furthermore, estimated net 94,800 individuals of working are have left Ireland between end of Q1 2011 through end of Q1 2014. They too are no longer counted in the labour force or in employment/unemployment statistics.


Note:


  • PLS1 indicator is unemployed persons plus discouraged workers as a percentage of the Labour Force plus discouraged workers.
  • PLS2 indicator is unemployed persons plus Potential Additional Labour Force as a percentage of the Labour Force plus Potential Additional Labour Force
  • PLS3 indicator is PLS2 plus others who want a job, who are not available and not seeking for reasons other than being in education or training 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.
  • PLS4 indicator is PLS3 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.
  • PLS4+STP is the indicator combining PLS4 above and State Training Programmes Participants but excluding those of working age who emigrated (net of those who immigrated). 
  • PLS4+STP+migration numbers reported below are reflective of PLS4+STP measure and add estimates of net emigration from Ireland based on latest available data extrapolated linearly over the year from May 2014 and adjusted for working age and labour force participation rate in the economy.

25/2/15: QNHS Q4 2014: Labour Force Participation Rate and Unemployment Rate


Some good news today from the QNHS report for Q4 2014 covering labour market conditions in the Irish economy. I will be detailing these throughout the day today, so stay tuned for more posts.

To start with, consider the labour force participation and unemployment rates - two key aggregate metrics for labour markets.

In Q4 2014, Labour Force Participation Rate in Ireland stood at 59.8%, down 0.3 percentage points from 60.1% in Q4 2013. By definition: The labour force participation rate is computed as an expression of the number of persons in the labour force as a percentage of the working age population. The labour force is the sum of the number of persons employed and of persons unemployed, but it excludes people in education and training, unless training is directly associated with employment. Currently, Labour Force Participation Rate is 125 basis points below the Q1 2000- Q4 2007 average of 61.23% and full 490 bps below the historical maximum. Which is not good news.

On seasonally-adjusted basis, Labour Force Participation Rate fell 0.1 percentage point quarter on quarter in Q4 2014 to 59.9%, matching the previous lowest point over the last 8 consecutive quarters.

Meanwhile, the official Unemployment Rate fell to 9.9 percent, the first sub-10 percent reading in 24 quarters. Which is great news. Year on year, unemployment rate is down from 11.7% in Q4 2013. Seasonally-adjusted unemployment rate, however, remained above 10 percent marker at 10.4%, but is down from 11.1% in Q3 2014.


In terms of unemployment rate, quarterly rate of decline registered in Q4 2014 stood at 0.7 percentage points, which is the strongest performance for any quarter since Q3 2013 when it posted a decline of 0.8 percentage points. Year on year decline in unemployment rate was 1.8 percentage points, slightly better than 1.7 percentage points decline in Q3 2014, but lower than 2.1 percentage points drop in Q2 2014.


All in, the news are good on unemployment statistics front, but poor on labour force participation side.

More analysis to follow.