Wednesday, November 3, 2010

Economics 3/11/10: Live register

Being away from Dublin this week means I am missing both the Exchequer returns and Live Register data. I will, of course, update the charts on both in due time - probably closer to the weekend.

While I am away, here is the best analysis of the LR data I've seen so far (well done, Brian!) issued earlier today by the NCB Economics team:

" On a seasonally adjusted basis there was a monthly decrease of 6,600 in the Live Register (unemployment claims) in October 2010, following a fall of 5,400 in September. This is the largest monthly fall in the numbers on the Live Register in the last ten years

[I seem to think it is in 14 years, but I might be wrong - again, need my trusted database off my trusted Apple to check]

In terms of flows in/out, which are not seasonally adjusted figures, there were 49,827 new registrants on the Live Register in October. 62,691 persons left the register in October.

It does appear as if job shedding is easing in the economy with redundancies (separate statistics from Live Register) in September down 30% from September 2009 levels . In Q3 2010 redundancies were down 24% from Q3 2009, but despite this the rate of inflows into the Live Register is still elevated highlighting that net job creation is still anaemic given the growth in the labour force.

We have no timely data on employment creation and emigration. In other words it is impossible to decipher whether emigration rather than job creation is causing the large outflows from the live register. It is likely a combination of both, as even in the good times Ireland was characterised by a large amount of churn in the labour market, with for example approximately 13% job gains in 2006 versus 10% job losses for a net gain of 3%. This points to the flexibility of the Irish labour market, which is ultimately required for Ireland to dig its way out of its problems.

The standardised unemployment rate in October was 13.6%, down from 13.7% in September and the peak of 13.8%."

So my two cents to add are:
  • Decreases in long term claimants numbers (173 yoy) are small compared to unadjusted decreases in short term claimants (36,008 yoy) suggesting that we might be witnessing some exits from the long term list of older LR recipients (by duration, not age) and simultaneous transfer of newer vintage LR recipients into the long term lists. If true, then it is more likely that as older LR claimants lose their benefits or migrate or both, newer recipients move into their places.
  • Net decreases in LR claimants can be accounted in part by the terminations of JB claims and failures to secure means-tested JA status.
  • The numbers of part-time and casual workers on LR is still rising (+ 1,045 mom), suggesting that quality of employment (remember, we are after higher quality jobs in this country, aren't we) is deteriorating.
  • 3,100 exits from the LR are accounted for by workers of age 25 or less, in other words the very demographic that is more likely to engage in education or is at a higher risk of emigrating, suggesting that a significant proportion of the LR decrease might have little to do with net jobs creation in the economy.
  • Lastly a quick comment on labour force flexibility referred to in NCB note. In my view,w e do have much more flexible flows out of the country (disregard for now inflows into the country, as these hardly matter in our current economic environment). However, in contrast with previous recessions and certainly in contrast with 2006, the little data we have shows that foreigners and younger Irish are dominating the outflows through emigration, while the longer term unemployed of older age and middle-aged families are stuck either due to lack of skills (the former) or due to negative equity (the latter). This implies that if the current trends continue, we are at a risk of encountering significant drain of talent and human capital out of this country. Of course, our bankruptcy laws will make it impossible for those who emigrate alongside defaulting on a mortgage to come back into the country when recovery takes place.

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