26/1/16: 'More than 1,000 jobs per week' Government Claims v Reality

One senior TD and a Junior Minister with position relating, indirectly, to employment and the labour market has just posted an interesting statement. A part of the statement goes thus: “we used the Action Plans for Jobs process to drive job creation, creating more than a 1000 jobs a week”.

Now, let’s raise two points. One philosophical, another purely arithmetic.

Philosophically, I am not aware of any Government that claims creation of jobs. Technically, public jobs are either created by the Civil Service or another Public body, as opposed to the Government itself. Practically, any jobs creation, in public or private sector is enabled by the economy (people working in, investing in, paying taxes in and interacting with public and private sectors) and not by the Government. Thus, Government may facilitate jobs creation by enacting supportive legislation or providing legislative and/or regulatory strategy, or not impede one, but it cannot create jobs. Minister can act as PR middle(wo)men and announce jobs created, but that is about as close to jobs creation as they ever get.

Aside from this, there is a simple matter of arithmetic.

Recall that the current Government came into power at the end of 1Q 2011. Let us suppose the Government really got down to ‘creating jobs’ by 1Q 2012. Which means the Government has been at its jobs game for roughly 14-15 quarters through 3Q 2015 or, at the lower end 3 years and a half. That means that the Government should have created “over” 182,000 jobs in that period. This benign to the Minister claim, because if we are to look at the record of the entire duration of the Government, his claim would have equated to roughly 221,000 jobs created.

Let us note that 1Q 20912 was the lowest point in employment levels during the crisis, so comparatives to that base should improve Government position: prior to 2Q 2012 jobs were being destroyed in the economy, past the end of 1Q 2012 they were being added.

Keep the two numbers in your mind: we are told that the Government has ‘created’ either more than 182,000 or more than 221,000 jobs over its tenure, depending on where one starts to count.

Now, consult CSO QNHS database - the source of official counts for numbers in employment. Between the end of 1Q 2012 and 3Q 2015 (the latest for which we have data), total employment rose 158,000. But wait, these are not all jobs. 4,500 of that increase is in the category of Assisting Relative. And 121,200 of these additions are employees, including schemes. Beyond this, the above increase also includes 30,100 new (added) self-employed with no employees.

It is hard to assume that the Government can claim it 'created' self-employment jobs where there is not enough activity to hire staff, or that it increased the need to help relatives.

So put things together in a handy table:

Numbers speak for themselves. By the very best metric, Government is more than 1/2 year shy of the lowest end of the claim of 'more than 1,000 jobs created per week'. It is more than 1/2 year shy of the claim that there were '1,000 jobs created per week'.

This Government deserves credit for helping sustain conditions for the recovery. Some of these conditions trace to the policies put in place by its predecessor and continued by the present Government, some are down to Troika and implemented by this Government, some are undoubtedly facilitated by the efforts of the current Government. The economy is recovering and, by some metrics, very robustly. And jobs are being created by the economy (yes, by entrepreneurs, enterprises, their employees and their clients and investors, but not by the Government).

This is not to take away from the positives the Government should rightly claim. But it is to point out that some of the outlandishly bombastic claims are not quite warranted.

31/8/2014: Changes in Employment by Sector

Previous posts covering QNHS release for Q2 2014 provided analysis of

• Irish dependency ratio: http://trueeconomics.blogspot.ie/2014/08/3182014-irish-dependency-ratio-rises-in.html
• Breakdown of population over 15 years of age by their principal economic status: employed, unemployed, in retirement, students, engaged at home, and 'others': http://trueeconomics.blogspot.ie/2014/08/3182014-qnhs-by-principal-economic.html
• Unemployment and Participation Rates: http://trueeconomics.blogspot.ie/2014/08/3082014-both-unemployment-and.html
• Duration of Unemployment, including distribution by Age Cohorts: http://trueeconomics.blogspot.ie/2014/08/3082014-irish-unemployment-plight-of.html

Here is a summary of changes in employment by sector:

Good news in green, bad news in red.

Several top-level points worth raising:

• Construction employment grew, which is good news, by 3,600 in 12 months through Q2 2014. Bad news is that Industry employment (ex-Construction) shrunk 2,700 over the same period.
• Services employment grew by a sizeable 23,800 in 12 months through Q2 2014 and higher value-added sectors employment expanded by 8,300 on Q2 2013. Many jobs have been added in Professional, scientific & technical activities (+6,100) and in Administrative & Support Services (+6,200) both of which also include MNCs trading in ICT services sectors, which is consistent with strong inflows of younger migrants into Ireland recorded in the year through April 2014. 
• Non-agricultural private sector jobs expanded by 21,400 in 12 months through Q2 2014 (up 1.68% y/y) which is a far cry from the Government boisterous claims of 50-60,000 of new jobs being created. Overall across all sectors, the economy added 31,700 jobs on Q2 2013 level (+1.7% y/y).

Slower rates of growth:

Overall rate of jobs creation has declined significantly in Q2 2014. In Q2 2014, y/y growth in all employment has stood at 1.70%, down from 2.31% growth recorded in Q1 2014 and the slowest rate of jobs growth since Q1 2013. Industry and construction sector jobs growth fell from 1.5% y/y in Q1 2014 to 0.26% in Q2 2014, the slowest rate of jobs growth since the onset of recovery in the sector back in Q2 2013. Services sectors jobs growth also fell to 1.67% in Q2 2014 compared to 1.71% in Q1 2014, and currently stands at the slowest rate of growth in 3 quarters. Non-agricultural private sector jobs growth in Q2 2014 was 1.68%, down from 2.18% in Q1 2014 and the slowest rate since Q2 2013. High value-added sectors jobs growth is down to 1.22% in Q2 2014, the lowest reading in any quarter since Q3 2012.

18/2/2014: Wages and Employment: Irish labour market plight

This is an unedited version of my Sunday Times column from February 9, 2014.


In recent months, Irish Government has gone into an overdrive, producing various reports, scorecards and papers on the Irish economy. Much of this activity is a welcome sign that various Departments are starting at last to engage with the world beyond the halls of civil service and political establishment.

The most recent report card on the Irish economy, courtesy of the Department of Finance, presents an interesting read. The document provides an insight into Official Ireland's view of the future, with forecasts covering 2015-2018 medium-term priorities for the Government, including: managing public finances, focusing on jobs, and restructuring the financial system.

To those of us inhabiting the real economy, removed from the MNCs and Government finances, of key importance here are the objectives of "reviving domestic demand" and "increasing employment". The Department’s overarching framework for achieving economic growth in the economy rests on the assumption that over 2014-2016, both total domestic demand (sum of public and private consumption of goods and services and investment) and exports will be positive contributors to growth. In fact, domestic demand is forecast to add, on average, 1.2 percentage points to economic growth annually, accounting for more than half of the GDP expansion in 2014 and 2015 and over 40 percent of growth in 2016.

The Department of Finance vision of the future is a positive one, especially for the financially battered Irish households. Alas, it also reflects some potential contradictions – a sign of the overall dilemma inherent in our economy’s structure. For all the talk about recovery and regaining of our economic independence, Ireland is still facing years of dealing with the debt crisis as well as sustained fiscal austerity. Growing out of this predicament can only be achieved by pushing up exports. But this, in turn, requires moderation in production costs and, thus, suppression of domestic demand. As the 1990s showed, you can’t have both, growth in exports and growth in the domestic economy, until we erase the debt overhang.


By definition, increases in domestic demand can only come from either public or households' consumption and investment uplifts or both.

Growth in Government spending on both current and capital goods and services is not on the cards. In 2014 and 2015 Irish fiscal tightening will continue to reduce domestic demand. In particular, fiscal consolidation, as planned, will take 1.8 percent of GDP in 2014 and 1.1 percent of GDP in 2015. Thereafter, we are still set to face the so-called 'preventative arm' of the EU’s Stability and Growth Pact (SGP). Under the 2011 Six-Pack legislation amending the SGP, a number of fiscal rules will apply to Ireland, including the requirement to continue reducing structural imbalances by at least 0.5 of GDP per annum, plus the debt break mechanism designed to draw debt to GDP ratio down toward 60 percent benchmark over time.

Which means the households are expected to fund the fiscal adjustments in 2014-2015, and fiscal maintenance in 2016 and beyond. All while delevaraging own debts and paying for the banks deleveraging their loan books, without dipping into deposits which will have to remain high to sustain core banking sector performance metrics.

Meanwhile, the Department of Finance forecasts that Ireland's unit labour costs adjustments over 2008-2015 will total 21 percent, relative to the Eurozone average. This projection, turn, underwrites the forecast growth in our exports.

Just how the households of Ireland can be expected to deliver on all of this is anyone's guess. An even bigger guess is required to explain as to how all of the above financial pressures on Irish households can be dealt with while increasing private investment and consumption, e.g. growing domestic demand.


The answer to the above questions rests with the outlook for the labour markets and wages.

In 2013, Irish economy seen the return of growth in employment - the only significant bright spark on otherwise bleak economic horizon. Based on the latest data we have, in 12 months through September 2013, numbers in employment rose in all sectors in Ireland, with exception of Transport and storage, Administrative and support services, Public administration, and Health and social work. Non-agricultural employment rose by 33,000 and the bulk of new employment was generated in the jobs with 35 and higher average weekly paid hours. In fact, in Q3 2013 compared to Q3 2012, the number of people in employment more than 35 hours per week rose 52,500.

This means that employment growth is now beginning to support domestic demand growth.

The problem is that this support is coming off extremely low levels. Between 2008 and 2013, number of jobs with weekly work hours in excess of 35 hours has fallen 242,500. And gains in employment so far are still fragile. At current rates of growth, it will take us some 13 years to get back to the same levels of full-time employment. Of all sectors, only three are currently registering larger number of jobs than in 2007-2008 period: Accommodation and food, Information and communication, and Health.

And the latest Live Register figures released this week show that controlling for State Training Programmes participation, declines in the numbers on the Live Register remained rather static over the last 4 months.

With employment rising off low levels the other source for growth in domestic demand can be found in earnings. And, aptly, in recent months, there has been resurgence in political chatter about the need to raise wages.

In part, these calls are driven by wages dynamics during the crisis. As of the end of September 2013, average weekly earnings in Ireland were down across all sectors by EUR16.40 compared to the same period in 2012 and down EUR31.37 compared to 2008 average. However, earnings were up significantly in Information and communication: rising EUR40.28 per week on Q3 2012 and up EUR64.28 on 2008 levels. This is a sector with employment that is predominantly capturing foreign workers into new jobs. In turn, these workers have only tenuous connection to the domestic economy: they rarely invest in Ireland, do not save here and are more likely to spend money abroad than the long-term residents. In almost all sectors of the economy linked more directly to Irish resident workforce, earnings are still declining.

So employment might be growing, but wages are declining or stagnant. Which does not bode well for household incomes and, in return, for domestic demand growth story.

More importantly, earnings deflation or stagnation must continue if the Government projections for exports growth were to materialise.

The maths are further stacked up against the theory of domestic demand growth fuelled by wages rises. Given changes to taxes over recent years, a euro increase in wages from current levels for an average household will yield less than 50 cents in the gains in the disposable income. When juxtaposed against the non-discretionary spending, such as funding mortgages, this means that wages increases are not exactly an efficient path to growing domestic demand. Based on Central Bank data, average mortgage in arrears today is EUR190,372. Per CSO, average household income is around EUR61,000pa, once we adjust for unemployment. Which means that at current tax rates, a 1.5 percent increase in income (corresponding to average weekly earnings rising by EUR10.13 on their Q3 2013 levels) is not enough to offset a 0.25 percent rise in mortgage interest.

This week, we have seen the publication of the research paper showing that some 100,000 households in Ireland are unable to pay their mortgages despite having regular income from employment. That is roughly 63 percent of all mortgages in arrears.

Put simply, from economy’s point of view, it is more effective to raise and extend mortgages interest relief than attempt fuelling wages inflation. With ECB’s policy firmly geared toward lower rates, one might be excused thinking that interest rates increases are for now a distant prospect, but in 2013, house loans rates for outstanding mortgages in Ireland went up 0.1 percent compared to the same period in 2012, while rates of outstanding consumer loans were up 0.34 percent. Overall, these increases, suggest that just to keep up with the cost of funding our immense household debt overhang, households need to see wages increases of some 2.2-2.4 percent per annum. Unless you work in ICT, this is not on the books, given supply-demand imbalances in skills and jobs in this economy.

Which leaves us with only one sector where realities of supply and demand have little to do with pay and employment and where wages increases can be imposed by the state: the public sector. This is precisely where pressures to raise wages are currently emerging, driven by political, not economic considerations. With local and European elections approaching, Labour wing of the current Government is trying desperately to force the reversal of their slide in electoral approval ratings. Labour's traditional support base - the Unions - are happy to oblige, in return for concessions of value to their members.

The problem with this, however, is that in order to keep labour costs competitive on the aggregate, wages hikes in the public sector will require more wages ‘moderation’ somewhere else in the economy. Furthermore, with fiscal policy breaks still in the hands of the EU, increases in the lower skilled wages in public sector are likely to benefit incumbent employees at the expense of the newcomers. And if productivity growth in private sectors does not compensate for labour cost increases in public sector, we will be heading for new layoffs, slower jobs creation and, thus, contracting domestic demand.


Our economy is between a rock and a hard place. We are living through the slowly unfolding nightmare of the exports-led recovery – a recovery during which households’ earnings and employment growth are unlikely to reignite domestic economy any time soon. The only way this dilemma of wages vs exports can be resolved is if it is accompanied by a rapid reduction in household debt. But, of course, you won’t find that featuring anywhere in the Official Ireland glossy presentations or in Labour Party’s exhortations about the need for wages growth.

Box-out:
This week, Irish Spirits Association published the latest statistics on our whiskey sector. According to the association data, Ireland had only 4 registered distillers delivering gross value added to the economy of EUR568 million for all spirits produced. This compares against 108 distillers of whiskey alone, pumping out value added of ca EUR3,630 million in Scotland. Total exports in Ireland stood at 6.2 million cases per annum. Scotch exports were fifteen times that number. The figures highlight both a massive potential for Irish whiskey growth and a huge gap between our sector output and that of our next-door neighbours. Looking at the Scottish model, it is clear that Ireland’s decades-old policy of industrialising production in the whiskey sector has failed spectacularly. We need a new policy approach focusing on stimulating independent distilleries, catering to higher value-added premium segment of the market, and delivering rapid innovation with focus on high quality. Marketing efforts of our trade facilitation agencies are not enough.

16/5/2013: There are jobs & then there are...

Off the start - there is nothing wrong with debt collection as business when it is properly delivered and regulated / supervised. And there is nothing wrong with debt collection agency growing its workforce.

But, then again, there is nothing particularly laudable about this either.

Unless, that is, you are an Irish Government Minister who cares none but for a headline grabbing opportunity.

Capita - some background on the company is given here: http://www.rte.ie/news/2013/0516/450722-capita-jobs/ and http://namawinelake.wordpress.com/2010/08/15/capita-aka-crapita-%E2%80%93-service-provider-for-one-of-nama%E2%80%99s-most-lucrative-contracts/ - is to double its workforce in Ireland by bringing in 800 new jobs. There is no information on the split of Capita's activities in the ROI, but one can venture a guess that booming business of debt collections here will take up the bulk of the new jobs 'created'.

Irony has it - Capita's new HQs in Dublin will be at the heart of the pride of Irish economy: the Barrow Street cluster that houses top firms in law and ICT services, but also has the dubious distinction of housing Ireland's 'bad bank' Nama. Nothing like calling the 'knowledge economy neighbourhood meets debt collectors' a 'vote of confidence in the Irish economy'.

Have we lost all bearings and compases?

I, for one, can't wait for the next congratulatory flyer from FG to my home - it will undoubtedly explain how the misery of thousands of Irish homeowners facing repossessions benefits my local economy of Ringsend-Irishtown with blessed new jobs.

22/4/2013: Government Latest Hair-brained Idea

Earlier today, RTE has reported that:
"The [Irish] Government has launched a plan to facilitate the creation of 20,000 jobs in the manufacturing sector by 2016." Frankly speaking, I can't be bothered to read much more into the idea. In times of aplenty it is bonkers to allow the state to pick winners in the economics game and then let civil servants lavish 'investment' supports onto them. In times when debt/GDP ratio is up at 120% of GDP marker and private debt is bending the nation into the ground, the very same idea is simply a prescription for massive waste we can't afford. 

But here's what, according to RTE report is even worse: 

1. "Under the plan fledgling manufacturing companies will get to apply for support from a specific start-up fund." Wait... start-up funds invest in start-ups which, by their definition can't be in existence long enough to become 'fledgling' - unless they are 'fledging from the start-up phase' which is equivalent to being dead-on-arrival. So question for Irish boffins: you will be investing in freshly-dead firms or fledgling ancient 'one-day-were-start-ups'?
2. "There will also be a support fund for capital investment by manufacturing companies and additional financial support for R&D investment in engineering firms." Aside from capital investment (presumably, having nationalised most of the banking system, our markets-supportive Government now has appetite to take on equity in manufacturing firms too) idea which suffers from the same problem of 'winners-picking', leading to risk-mispricing (which in current fiscal conditions can be labeled 'waste' outright), there is a problem of R&D supports. Targeted tax and sponsorship allocations to R&D supports are not a good policy for stimulating high value-added R&D. Here's one study that found as much. 
3. "The plan also contains proposals to maintain or reduce company costs for energy, waste, regulation and tax." Wait, how is that going to be achieved, if, per our semi-state behemoths and the Government, there is no ripping-off of consumers/users going on in Irish energy, waste and tax environments? Either things are being priced to rip-off customers today (thus allowing for some price reductions), or there is no room for price reductions, or - as most likely - the Irish Government is planning to increase rip-off of other customers (e.g. households) to subsidise select manufacturing ones.
4. If Irish Government pumps said subsidies into select manufacturers, how does this square with the equal markets treatment laws within the EU? And how will the Irish Government deal with the pesky problem that you can engage in industrial favouritism while making any serious claims about having a real markets-oriented economy here?

I can go on about this latest idea. It is promised that it will 'create' 20,000 jobs by 2016 - a claim that is, as always is the case with the Irish Government pronouncements, is neither verifiable, nor based on any serious analysis. But, needless to say, there will be loads of PR opportunities involving flowers, ribbons, Ministers and RTE cameras in months to come. Meanwhile, when your taxes go up comes December 2013 once again, don't ask why, think Government 'jobs creation' plans... Think big... Think someone else is getting subsidies so you don't have to...

3/2/2012: Ireland's Jobs Creation & Destruction data

CSO recently published its analysis of the labour market looking into jobs creation and destruction in the economy - a new study, currently in the 'experimental' stage and a very welcome addition to CSO tools, in my view.

Here's the core data:

Per charts (source for the chart is CSO):

• Job creation has increased slightly from 9% in 2009 to 12% in 2010
• Job destruction has fallen significantly from 28% in 2009 to 18% in 2010 
• Net job creation (job creation less job destruction) remained negative at – 6% in 2010

Note to CSO - a table with data would be good - or at least labeling of values in the chart. And do please continue with this analysis.

30/1/2012: Irish Long-term Unemployment Saga

Unemployment figures, by age - distinguish youth and adult unemployment - have been preoccupying many analysts in recent weeks. Loads of media attention has been paid - internationally, if not in Ireland - to the plight of youth unemployment. In the next several posts, I will take a closer look at the data for EU27, including Ireland. All of the data comes courtesy of the Eurostat and covers the latest available period Q3 2011.

First, let's take a look at long term unemployment (defined as unemployment spell of 12 months or more) and very long-term unemployment (defined as 24 months or more).

Table below summarizes the data:

As you can see, we are not exactly a good performer. Prior to the crisis, Irish long-term unemployment averaged just 1.4% of the active age population - 23rd lowest in the group of EU27 plus Norway. In Q3 2011 our long-term unemployment stood at 8.8% - the third highest in the sample of 28 states. Over the period covered we have experienced an increase in long-term unemployment of 7.4 percentage points - the steepest rise in the EU27+Norway.

Matters are even worse when it comes to very long-term unemployment, where our rate has moved from  0.7% average for Q3 readings pre-crisis to 5.4% in Q3 2011 - an increase of 4.7 percentage points. Only Slovakia (6.0%) is worse performer than Ireland in terms of overall very long-term unemployment rate and we are the absolute worst in the EU27 + Norway group in terms of increase in very long-term unemployment.

Here is a chart to illustrate some of the above:

\Broken down by gender:

Long-term unemployment rates for men and women:

Ireland used to rank 22 in the EU 27+Norway in the size of its long-term unemployment pool amongst the males prior to the crisis. By Q3 2011 we had the highest rate of male long-term unemployment. We fared much better in terms of long-term female unemployment, moving from the lowest unemployment in the sample of countries prior to the crisis to 9th highest position. However, in both male and female long-term unemployment, Ireland experienced the largest and second largest, respectively, increases during the crisis.

Things are even worse for Irish very long-term unemployed figures. Prior to the crisis, very long term unemployment amongst Irish males averaged 1.0% (22nd highest in the EU27+Norway). In Q3 2011 that number rose to 7.5% (the highest in the EU27+Norway). This increase was the largest in the sample of countries over the period.

Very long-term unemployment amongst the females in Ireland averaged just 0.4% in pre-crisis period - third lowest in the EU27+Norway sample. In Q3 2011 this rose to 2.4% - 10th highest reading in the sample. Ireland's rate of increase in female very long-term unemployment was the fastest in the EU27 + Norway group of countries.

In the next post we will take a look at the unemployment figures by age.

31/08/2011: Irish Live Register - unemployment's up in August

Live Register data for August shows that the seasonally-adjusted number of signees increased from 448,000 in July to 449,600 in August - a rise of 1,600 mom. The same rate of increase was recorded in June.

In 3 months through August, Live Register rose by 5,700, while in preceding 3mo period (through May) it was up 3,300. Year on year LR rose 4,600 in July or 1.04%, in August, yoy increase was 2,500 or 0.56%.

Live Register-implied unemployment rate rose from 14.3% in July to 14.4% in August.

Charts to illustrate:

Some more details on the latest figures:

• In August, the numbers of those 25 years and older on the LR has increased by 2,000 (+0.55%) mom from 366,100 in July to 368,100. Year on year, this category of LR is now up 7,100 or +1.97%. For the 3 months through August, the number of LR signees rose 2.24% compared to the 3 months through August 2010.
• Number of persons under 25 years of age on LR has fallen 400 in August, compared to July and now stands at 81,500. The number is down 6.54% yoy (-5,700).
• Numbers of casual and part-time workers on LR in August stood at 85,296 (down 569 on July) - first monthly drop in the series since May 2011. Part-time and casual workers numbers are now up 7,014 yoy (+8.96%).
  

• Numbers of non-Irish nationals on LR has declined 290 in August, compared to July, from 79,285 in July to 78,995 in August. Year on year, August numbers are up 138 (+0.18%)
• Numbers of Irish nationals on LR have also fallen in August from 390,999 in July to 390,719 in August. This follows 11,972 increase in June-July and 15,058 increase in May-June. Number of Irish nationals on the LR are now up 2,653 in August 2011 compared to August 2010 (+0.68%).

In unadjusted terms there were 469,713 on the LR in August 2011, up 2,790 (+0.6%) over the year. This increase was, per CSO, "slightly less than that recorded in July 2011 (+3,460 or +0.7%) and is far less than the increase of 30,198 (+6.9%) seen in the year to August 2010."

Per CSO: "The number of female claimants increased by 5,888 (+3.5%), to 172,860 over the year while the number of male claimants decreased by 3,098 (-1.0%) to 296,853. This compares with increases of 14,419 (+9.5%) and 15,779 (+5.6%) for females and males respectively in the year to August 2010." Which suggests that we are still in the second stage of jobs destruction, with services jobs going at a faster pace and with women (traditionally last to be laid off) continuing to suffer from jobs destruction.

Perhaps the most worrisome sign of the labour markets flat on the ground is that the number of long term claimants continued to increase with 40.8% of claimants in August 2011 on the Live Register for one year or more. In August 2010 long term claimants made up 31.8% of the total Live Register. Further, per CSO: "The number of male long term claimants increased by 30,488 (+28.3%) in the year to August 2011, while the comparable increase for females was 12,688 (+31.3%) giving an overall annual increase of 43,176 (+29.1%) in the number of long term claimants".

05/07/2011: Employment in Services and Manufacturing - June 2011

As promised earlier, analysis of employment data from Manufacturing and Services PMIs for June 2011.

• Headline on Services PMIs: After posting only marginal growth in the previous month at 50.5, Irish services activity rose at a faster pace in June to 52.4. However, overall Q2 2011 average at 51.0 signals lower rate of expansion than Q1 2011 at 53.4. Current index is above it's 12mo MA of 51.6.
• Headline on Manufacturing PMIs: June activity signals a slowdown at 49.8, down from expansionary May reading of 51.8. Q1 2011 expansion of 56.1 average has moderated through Q2 2011 to 52.5. 12mo MA is at 52.6.
• Employment sub-index in Manufacturing showed further acceleration in the rate of decline from 49.9 in May to 48.3 in June. The sub-index now stands below 12mo MA of 50.2. Q1 2011 average was expansionary 53.2 and despite two consecutive months of contractions, Q2 sub-index still reads 50.7. This compares favorably relative to Q3 2010 reading of 46.8 and Q4 2010 reading of 49.9. Employment in Manufacturing has now fallen for two months, breaking expansionary readings trends established over December 2010-April 2011.
  
• Employment sub-index in Services remained flat at 48.1, signaling continued contraction in May and marking a second consecutive month of contractions since an outlier expansion in April 2011 to 51.1. 12mo MA is now at 48.7, while Q1 2011 reading was 49.2, accelerating down to 49.1 in Q2 2011. In comparison, Q3 2010 reading was 48.9 and Q4 2010 reading was 47.6, so the rate of jobs attrition in the sector has declined in H1 2011 relative to H2 2010. With April 2011 out-of-line reading of expansion, this index remains in contractionary territory in 39 out of 40 last months

With both Manufacturing and Services signaling contractions in employment, we are now firmly into jobless recovery territory in Services and stepping into the recessionary territory for Manufacturing.

It is worth noting that volatility of employment sub-index has risen since the beginning of the crisis in Manufacturing, but declined in Services, most likely due to the persistent trends in domestic services. The same pattern is true for core PMIs.

02/03/2011: Live Register February 2011

Live register for February is out today and makes for some interesting reading.

Headline figures are mildly encouraging. In February 2011 there were 444,299 people on the Live Register an increase of 7,343 (+1.7%) yoy. This compares with an increase of 5,741 (+1.3%) in the year to January 2011 and an increase of 84,503 (+24.0%) in the year to February 2010.

On a seasonally adjusted basis there was a decrease of 1,700 on the Live Register in 2011. M decrease of 5,800 was recorded in January 2011.

Overall the Live Register has now fallen by 10,000 on a seasonally adjusted basis since its peak in August/September 2010.

Let's update some charts:
To put the LR changes into perspective, consider weekly average changes:
and monthly averages:
Live Register-implied unemployment rate (pretty good measure of unemployment) is now at 13.5% - same as in January:
Now to some numbers in more detail:

• Year on year January 2011 saw increase in LR of 19,300. This has fallen back to 17,800 in February;
• In percentage terms, yoy change in LR in January was +4.522%, which eased to +4.150% in February
• For 25+ year olds, January LR increased by 10,000 year on year (+2.879%), while February increase was 11,300 (+3.272%) - so things are getting better here, but by only 600 mom
  
• For <25 year olds, January 2011 saw a decrease in numbers of 3,400 (-3.908%) yoy, but February decrease was 2,600 yoy (or -3.055%) - an improvement mom of 1,100
  
• Casual and part-time employment increased 5,770 in February (yoy) or +7.277% against an increase of 6,369 in January (+8.286%) - or mom increase of 1,827 (more people taking part time and casual work than the seasonally adjusted drop in overall LR)
• Non-nationals accounted for 79,162 of the total LR count against nationals with 365,137. So non-nationals count increased 635 month on month in February, while nationals saw an increase of 987.
• Non-nationals LR signees numbers fell 2,868 yoy in January (-3.524%) and by 2,104 (-2.589%) in February
• Nationals signees numbers increased 8,609 yoy in in January and 9,447 in February
• The above points on nationals v non-nationals signees imply rather rampant emigration or outflow from the labour force of non-nationals.

All of the decrease in the seasonally adjusted series over the last six months has been recorded for males.

One core problem has been the increasing duration on LR. Month on month, February saw an increase of 2,413 males and 858 females (total of 3,271) of signees on the LR for a year or longer. This contrasts with decreases of 2,610 males and and increase of 961 females with duration under 1 year. This suggests that the unemployment is, predictably, sticky for earlier LR signees.

Finally, separate figures released today by the Dept of Enterprise, Trade & Innovation show that notified redundancies were down 44% year on year in February. In addition, as reported earlier, PMIs for Manufacturing have signaled for the third month running that employers are starting to add jobs in the sector. These two developments suggest that barring some significant shocks, LR is now stabilizing and possibly reverting to a shallow downward trend. This trend, however, still appears to be driven by exits and emigration, rather than jobs creation.

Economics 2/12/10: What PMIs tell us about the job market

An interesting additional point of view on jobs market. Today's Manufacturing PMIs suggest no improvement in November jobs outlook in Manufacturing sectors:
So far, there are absolutely no signs of jobs creation here with employment PMIs indicators:

• Services - October reading (latest so far) at 46.2 - well below expansion 50+) and declining on September reading of 49.8; and
• Manufacturing - November reading at 49.3, signaling worsening performance from already contractionary 49.8 in October.
  

Economics 1/12/10: Live Register

Live Register data was out today, throwing some positive news into the generally adverse newsflow. The headline figure is that November LR has declined 4,200 in seasonally adjusted terms month on month.

This follows declines of 5,400 in September and 6,200 in October. In 11 months through November we are still clocking and increase of 9,900. Expressed in weekly terms, chart below illustrates the dynamics.


Now, net average and monthly changes:
Seasonally-adjusted implied unemployment rate dipped slightly again, for the third month in the row:
Unemployment, as estimated by the LR, now stands at 13.5%, having slipped from the high of 13.8% back in August. It is impossible to tell, based on LR, whether the moderation is driven by contracting labour force (with LR dropouts) or emigration (ditto) or outflow of LR recipients to education, or all three. However, some reduction in new jobs destruction can be expected over a period of time of 3-5 months, given the level of jobs destruction prior to mid 2010. Whether this is sustainable trend or a 'dead cat bounce' effect is a matter of time.

One possible glimpse at what is going on relates to the males LR numbers, which has fallen by a larger proportion than female in November. Males unemployment was much faster to rise and started to do so earlier in the cycle, which means that males are now more likely to come off LR and also to emigrate. However, the emigration story might be overplayed here. There was a monthly decrease of 4,698 (-1.3%) in Irish nationals on LR and an increase of 147 (+0.2%) in non-Irish nationals. So, with non-nationals more likely to emigrate (return migration or movement to another third country for employment), these numbers suggest that emigration is most likely not a significant contributor to the LR changes.

On the other hand, based on occupational groups, the encouraging signs are clearly evident:

• The largest percentage decrease was in the Professional group (-6.0%), followed by the Clerical and secretarial group (-3.9%) - potentially, a sign that professional services are starting to stabilize

In contrast,

• In the year to November 2010 the largest percentage increase was in the Other occupations group (+11.2%), while the next largest increases were in the Personal and protective service (+8.8%) and Sales (+7.1%) groups.
  
• The largest percentage decrease was in the Managers and administrators group (-3.7%).
  

So overall, the numbers would be cautiously optimistic, at least as far as potentially signaling a bottoming out of the jobs destruction cycle.

One point of pressure that remains is the duration of unemployment:

• There was a monthly unadjusted decrease of 7,270 (-2.6%) in short term (less than one year) claimants on the Live Register in November, while the number of long term claimants increased by 2,719 (1.8%). This clearly shows that transition into long-term unemployment continues.

Likewise of concern is the quality of employment (although, of course, having at least a part-time job is much better than none at all):

• In the year to November 2010 the number of casual and part-time workers increased by 6,578 (+8.9%).

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.
  

Economics 22/02/2010: Detailed analysis of Live Register

Updated (below)

CSO published its analysis of the Live Register Data for 2009 which shows some interesting details.

Per CSO data, reproduced below, the highest risk of unemployment by sector was found in:

• Construction (with LR contribution from the sector reaching 170% of the sector own contribution to total employment);
  
• Hotels and Restaurants (with Live Register contribution from the sector standing at 161% of the sector weight in overall employment);
• Other Production Industries (136%);
• Financial & Other Business Services (131%) and
• Wholesale & Retail Trade (120%).
  

All state-dependent or provided jobs were the safest ones (see above marked in blue bold).

Update: since both Health and Education sectors are heavily reliant on public sector workers, we can consider a broader definition of the Public Sector to include the above sectors together with Public Administration & Defense. In this case, broader PS accounted for 23.1% of total employment in Q4 2008 and 6.9% of total number of new LR signees in Q1 2009, implying a 29.9% relative incidence of unemployment by sector - a number that is more than 3 times smaller than the average for the entire economy.

The above relative incidence number for the broader PS is actually biased in the direction of overstating the overall incidence of unemployment in the PS, as a number of employees who lost their jobs in Health and Education sectors were most likely from private firms providing these services.


And here is another table, also slightly adjusted by me. This time around, I am adding several categories together - people who are left on the Live Register (aka the Unemployed), people who moved from the LR to illness benefit (aka also the Unemployed), people who have retired from the Live Register to a state pension and people who are unaccounted for (aka - emigrants who left Ireland, immigrants who left Ireland and people who just dropped off Live Register into gray economy 'entrepreneurship').

Notice couple of things here - virtually the same number of foreigners and Irish who have joined LR in Q1 2009 stayed in some sort of 'Unemployment' by the end of Q2 2009. Actually, this percentage was slightly higher for the Irish LR signees, but the difference does not appear to be statistically significant.

Those over age 25 tended to remain on LR with higher probability than those who are under 25. The trick part here is that many under 25-year olds went off to training and education, dropping off the LR. One hopes they will have a job to go to, once their Fas-run courses and college programmes end.

Males were more likely to remain broadly unemployed (83.46%) than females (80.26%) but the difference is small and there are several factors here. One might wonder how the birth rate increase affects this number and also how it depends on transition to single parent family supplement. Also, younger women are more likely to undertake new training and education than younger males. Can these three factors explain the difference between men and women in re-employment rates?

Once we look at differences across sectors, one striking detail shown in the table above is that sectors with higher wages and better jobs are suffering the largest non-returns to jobs by the Live Register Signees. Table below details:
So in the nutshell - the jobs our LR signees are getting after they lose their primary occupation are of poorer quality and in less productive sectors.