Thursday, August 5, 2010

Economics 5/8/10: Live Register - up & up, again

Live register is out today with some poor news: the seasonally adjusted LR rose from 444,000 in June to 452,500 in July (+8,500 mom).This year to July 2010 LR rose by the cumulative total of 34,403 (+8%).

The latest increase in LR is marked by women signees leading males signees by 4,600 to 3,900. This suggests that (a) services sectors are more likely to show accelerating contraction in employment, and (b) the trend for jobs destruction in higher value added activities is still running strong.

This is confirmed by LR new data on occupation breakdown of lost jobs. Per CSO: "All occupational groups showed monthly Live Register increases in July. The largest percentage increase was in the Professional group (+12.3%), while the smallest percentage increase was in the Craft and related group (+0.1%). In the six months to July 2010 all occupational groups showed Live Register increases with the largest percentage increase in Professional (+22.8%), while the next largest increases were in Clerical and secretarial (+15.6%) and Sales (+13.0%). The smallest percentage increase was in the Craft and related group (+0.1%)."

So for the headline impact of the news - take an average weekly earnings (Q4 2009) at €716.09 (€37,237pa), take the average professional grade weekly earnings at €793.35 (€41,254pa), apply tax rates consistent with these earnings at €3,963-5,610 net tax liability, plus €1,225-1,386 PRSI, plus €1,489-1,650 Health Levy and €745-825 Income levy. Net loss to the Exchequer of tax revenue alone is €7,422-9,471. Employer-side taxes lost are ca €1,250-1,400. Now, add to this the cost of unemployment benefits, loss of Vat on private health insurance, provision of public benefits, such as health etc - you have total cost to the Exchequer of €28,040-30,240 per each new signee.

So July figures are signaling a hit on the Exchequer balance of ca €257mln over the year - just like that, one month worth of newly unemployed.

The average net weekly increase in the seasonally adjusted LR was 1,700 in July or virtually identical to June figure of 1,725.
Monthly rate of change accelerated in July to 8,500 up from 4,900 in June and marking the fastest rate of monthly increase in a year to date, and the highest rate of increase since July 2009:
The standardised unemployment rate in July is now at 13.7% up from 13.4% in June. This compares with 12.9% in the first quarter of 2010, the latest seasonally adjusted unemployment rate from QNHS.
Some final comparatives:
  • Weekly net increases average from January 2008 through July 2010 were 2,102 - above the July average weekly net rate of increase of 1,700. However, over the last 12 months, average net weekly increases were 386 - well below the figure for July;
  • Monthly average rate of increase in LR was: January 2008-July 2010 = 9,100, 12 months to July 2010=2,783. July 2010 monthly increase was 8,500.


patrick1978 said...

FF/GP may argue that we're Turned the Corner but, in reality, they've lead us to a dead-end street.

Chris Connolly said...

Ok, so we say there's 500,000 unemployed, of which only 350,000 are willing to work. If I gave them each had a job they'd pay 10,000 tax a year, and save the state 10,000 dole a year.
The state gets €3.5 billion tax, and saves €3.5 billion social welfare, leaving us €7 billion better off, but still in deficit.

Shoe said...

Interesting points. Consider also that the net figure before massaging by "seasonal adjustments" was closer to 14,000 (of which nearly half are regarded as "seasonal" whatever that is), this means you can probably double your figures for the net cost.

The government also spuriously claims that many of the "seasonal" claimants will go back to other benefits in September (assuming they resume receiving BTEA or whatever similar allowance they get while studying). In fact this will be offset by the fact that many students now have to wait 3 months before they can claim. We might see a small decrease in September therefore, followed by another hike in October.

The figures for taxes foregone are particularly interesting, and a good start for a truly systemic piece of research into Ireland Inc's woes - the knock on impacts feed into so many potential areas its incredible that so much emphasis was placed on paying the banks bad debts while ignoring the problem at individual level.