6/4/2014: IMF forecasts of unemployment; 'peripheral' countries

Note to my previously posted Sunday Times column from March 23, 2014 and to my Sunday Times column from March 30, 2014 (still to be posted here, so stay tuned).

Here is a chart summarising 'troika' programmes forecasts and revisions of unemployment:

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.

13/2/2014: Sticky Wages, Job Effort and Jobless Recoveries

In two posts earlier I discussed some new studies relating to the problem of a jobless recovery (http://trueeconomics.blogspot.ie/2014/02/1222014-jobless-recoveries-post.html) and the ICT-driven displacement of workers (http://trueeconomics.blogspot.ie/2014/02/1222014-ict-productivity-employment-in.html). Here is another recent study dealing with labour markets outcomes in the case of a recessionary shock.

Here is another paper on employment adjustments, this time looking at cyclical shocks and wages rigidity: "HOW STICKY WAGES IN EXISTING JOBS CAN AFFECT HIRING" by Mark Bils, Yongsung Chang, Sun-Bin Kim (NBER Working Paper 19821: http://www.nber.org/papers/w19821, January 2014).

There is much evidence that wages are sticky within employment matches, so that incumbent workers face wages that do not adjust significantly fast downward in the downturns, thus creating a wage mis-match with entry of new workers. "For instance, Barattieri, Basu, and Gottschalk (2014) estimate a quarterly frequency of nominal wage change, based on the Survey of Income and Program Participation (SIPP), of less than 0.2, implying an expected duration for nominal wages greater than a year."

"On the other hand, wages earned by new hires show considerably greater  flexibility. Pissarides (2009) cites eleven studies that distinguish between wage cyclicality for workers in continuing jobs versus those in new matches, seven based on U.S. data and four on European. All these studies find that wages for workers in new matches are more pro-cyclical than for those in continuing jobs."


"Consider a negative shock to aggregate productivity. If existing jobs exhibit sticky wages, then firms will ask more of these workers. In turn this lowers the marginal value of adding labor, lowering the rate of vacancy creation and new hires. Note this impact on hiring does not reflect the price of new hires, but is instead entirely a general equilibrium phenomenon. By moving the economy along a downward sloping aggregate labor demand schedule, the increased effort of current workers reduces the demand for new hires.

The result of this mechanism of adjustment is that "wage stickiness acts to raise productivity in a recession, relative to a flexible or standard sticky wage model. Thus it helps to understand why labor productivity shows so little pro-cyclicality, especially for the past 25 plus years (e.g., Van Zandweghe, 2010)."

The authors set up two versions of the model for such an adjustment.

First model allows firms "to require different effort levels across workers of all vintages… During a recession the efficient contract for new hires dictates low effort at a low wage, while matched workers, whose wages have not adjusted downward, work at an elevated pace."

In the scone variant of the model, authors "impose a technological constraint that workers of differing vintages must operate at a similar pace. For instance, it might not be plausible to have an assembly line that operates at different speeds for new versus older hires."

The study finds that the second model "generates considerable wage inertia and greater employment volatility." In other words, if contracts do not allow firms to impose greater effort requirement on new hires against incumbent workers, there will be more shocks to unemployment and stickier wages for incumbents. Or in other words, there will be a more jobless recovery.

The authors provide an example: "Again consider a negative shock to productivity, where the sticky wage prevents wage declines for past hires. The firm has the ability and incentive to require higher effort from its past hires, in lieu of any decline in their sticky wages. But, if new hires must work at
that same pace, this implies high effort for new hires as well. For reasonable parameter values we find that firms will choose to distort the contract for new hires, rather than give rents (high wages without high effort) to its current workers. This produces a great deal of aggregate wage stickiness. The sticky wage for past hires drives up their effort and thereby the effort of new hires. But, because high effort is required of new hires, their bargained wage, though flexible, will be higher as well. In subsequent periods this dynamic will continue. High effort for new hires drives up their wage, driving up their effort in subsequent periods, driving up effort and wages for the next cohort of new hires, and so forth. By generating (counter)cyclicality in effort, this model can make vacancies and new hires considerably more cyclical." (Or put differently, it creates more unemployment at the shock and retains more unemployment in the adjustment period.

Now onto empirical evidence: "There is only sparse direct evidence on cyclicality of worker effort. Anger (2011) studies paid and unpaid overtime hours in Germany for 1984 to 2004. She finds that unpaid overtime (extra) hours are highly countercyclical. This is in sharp contrast to cyclicality in
paid overtime hours. Quoting the paper: "Unpaid hours show behavior that is exactly the opposite of the movement of paid overtime." Lazear, Shaw, and Stanton (2012) examine data on productivity of individual workers at a large (20,000 workers) service company for the period June 2006 to May 2010, bracketing the Great Recession. At this company a computer keeps track of worker productivity. They find that effort is highly countercyclical, with an increase in the local unemployment rate of 5 percentage points associated with an increase in effort of 3.75%."

The authors use their model to "show that sticky wages for current matches exacerbates cyclicality of hiring when effort responds. In particular, for our benchmark calibration with common effort, the effort response markedly increases the relative cyclical response of unemployment to measured productivity. It does so by increasing the response of unemployment to productivity, but also by making measured productivity less cyclical than the underlying shock."

The authors then look at the data to see if their "model is consistent with wage productivity patterns across industries, especially the cyclical behavior of productivity in industries with more versus less flexible wages. We measure stickiness of wages by industry based on panels of workers from the Survey of Income and Program Participation for 1990 to 2011."

The study finds that 

• "productivity (TFP) is more procyclical in industries with more flexible wages"; and 
• "this impact is much greater for industries where labor is especially important as a factor of production. 
• "However, we do not see that wages are more procyclical for industries with flexible wages, suggesting that frequency of wage change may not capture wage flexibility particularly well."

15/1/2013: ARRA - some evidence of a US welfare trap

A very interesting paper by Casey Mulligan of UofChicago on the effects of the American Reinvestment and Recovery Act (ARRA) - the act that underpinned early stage stimulus to the US economy and extended unemployment benefits.

In the paper, Mulligan estimates "distributions of marginal labor income tax rates for unemployed household heads and spouses …for three benefit and tax rule scenarios:

1. Actual rules under the ARRA, 
2. "Rules as they would have been if they had not been changed since 2007" (in other words 'no ARRA' scenario), and 
3. "Rules as they might have been with a bigger fiscal stimulus."

Conclusion: "About three million unemployed, with a variety of tax situations, had more disposable income while unemployed than they would have by accepting a job that paid 80-100 percent of their previous one. The number would have been less than one million under 2007 rules, and about eight million under a bigger stimulus."

Thus, per Mulligan, "Tax obligations and foregone unemployment insurance about equally erode the rewards from retaining a job, or starting a new one."

Source: Mulligan, Casey B., The Arra: Some Unpleasant Welfare Arithmetic (December 2012). NBER Working Paper No. w18591. Available at SSRN: http://ssrn.com/abstract=2186320

17/4/2012: EU27 - Minimum wages v unemployment

A very good infographic on relationship between minimum wages and unemployment from one of the blog readers linked here. Please keep in mind: correlation does not mean causation. There is much of a debate in economics as to the causal links (or their absence) between minimum wages and unemployment (general unemployment, rather than age-specific and skills-specific).

17/3/2012: Long-term impact of unemployment - US study, Irish implications

An interesting study by Steven Davis and Til Wachter titled "Recessions and the cost of job loss"published by Becker Friedman Institute for Research in Economics Working Paper No. 2011-009 aims to quantify some of the effects of jobs displacement in the recession on cumulative losses in earnings. The study uses microdata from Social Security records for US workers from 1974 to 2008. 


Some findings:

• In present value terms, men lose an average of 1.4 years of re-displacement earnings if displaced in mass layoff events that occur when the US unemployment rate is below 6 percent. 
• Men lose double that - 2.8 years - of pre-displacement earnings if they lose their job when the unemployment rate exceeds 8 percent. 
• To add to authors conclusions: if you think of it in terms of the life-time losses, this is equivalent to roughly 14% loss in life-time earnings. Now, if you put this into a retirement perspective - this amounts to roughly 1/3 of an average funded retirement stream of earnings.
• Some more granularity on the study results: "For men with 3 or more years of prior tenure who lose jobs in mass-layoff events at larger firms, job displacement reduces the present value of future earnings by 12 percent in an average year. The present value losses are high in all years, but they rise steeply with the unemployment rate in the year of displacement. Present value losses for displacements that occur in recessions are nearly twice as large as for displacements in [economic] expansions. The entire future path of earnings losses is much higher for displacements that occur in recessions. In short, the present value earnings losses associated with job displacement are very large, and they are highly sensitive to labor market conditions at the time of displacement."
• The study also finds "large cyclical movements in the incidence of job loss and job displacement and present evidence on how worker anxieties about job loss, wage cuts and job opportunities respond to contemporaneous economic conditions". 
• More specifically on the above point: "Drawing on data from the General Social Survey and Gallup polling, we examine the relationship of anxieties about job loss, wage cuts, ease of job finding and other labor market prospects to actual labor market conditions. The available evidence indicates that cyclical fluctuations in worker perceptions and anxieties track actual labor market conditions rather closely, and that they respond quickly to deteriorations in the economic outlook. Gallup data, in particular, show a tremendous increase in worker anxieties about labor market prospects after the peak of the financial crisis in 2008 and 2009. They also show a recent return to the same high levels of anxiety. These data suggest that fears about job loss and other negative labor market outcomes are themselves a significant and costly aspect of economic downturns for a broad segment of the population. These findings also imply that workers are well aware of and concerned about the costly nature of job loss, especially in recessions."

While re-parameterizing the US labour market experience as revealed in the study into that in Ireland is not possible, the above results very clearly point to the extremely significant implications of the current unemployment in Ireland on expected future life-time earnings of a large proportion of our population. In Ireland, we have not even began assessing the impact that current unemployment crisis will have on:

• future economic growth (via earnings-savings-investment and earnings-consumption links which imply that previous unemployment-related reduction in life-time earnings will have significant, potentially double-digit-sized adverse drag on savings, investment and consumption levels, let alone growth rates, into the future) 
• fiscal revenues in the future (via earnings-tax revenues links which imply reduced tax revenues levels from consumption, investment and income taxes into the future) 
• retirement funding and demand for public health and pensions (via earnings-savings-investment links which imply reduced funding for retirement and private health)
• education funding for children (via reduced earnings of parent impact on children education) and
• the links between current debt levels, property markets, future investment and economic activity.

Neither do the above results cover the Irish-specific case of household wealth destruction and debt overhang accompanying the stratospheric rise of unemployment.

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.

17/11/2011: INTO is correct on JobBridge Scheme

INTO has issued a direction to its members not to co-operate with the Government's JobBridge scheme. The details are reported here.

While I extremely rarely find myself in agreement with INTO, this time around I think their position is compelling. If JobBridge scheme were to be used in the case of teaching staff, then this means that there are:

1. Teaching positions unfilled (otherwise how can a JobBridge position materialise), 
2. Teachers with incomplete qualifications who can benefit from on-the-job training, and
3. There are no teachers who are fully qualified and are unemployed.

It appears that this is not the case. Per INTO, there are unemployed qualified teachers (violating 3 above) and there are, supposedly, no vacancies to employ these qualified teachers (condition 1 violated). In this environment.

If there are positions that are unfilled in the presence of unemployed teachers, these unemployed teachers should be hired with normal pay to do their jobs. 

If there are no positions unfilled, and the schools want to create new positions, there should be no discrimination between those coming into the new jobs that are identical to existent jobs in terms of responsibilities.

The JobBridge scheme should not be used to employ people doing normal work at lower pay. It should only be used to provide skills training in very limited set of circumstances where apprenticeships are suitable. In fact, we need a real apprenticeship schemes, not a JobBridge scheme.

26/09/2011: Youth unemployment problem

The latest QNHS data for unemployment in Ireland - discussed in detail here - was not a pretty picture by any means. But the ugliness of age-breakdown in unemployment is something else altogether.

Now, recall that Ireland is a young country. Per CSO, 1.5% of our workforce is age 15-19, 6.7% age 20-24, 28.9% age 24-35 and a full 37.1% of the workforce is aged less than 35. This has many good implications for the economy and the prospect for future growth, but it also places some tough demands on the economy. You see, young people are quite pesky subjects. They (unreasonably - from our, older folks point of view) want in life:

• Improved prospects for the future as far as their careers, earnings, quality of life etc go,
• Good chances for beating their parents performance in terms of gaining jobs and progressing up the career ladders,
• Ability to enjoy some of younger years' offers of decent consumption, comforts of some certainty in life, while earning returns to their efforts and education.

Not exactly an easy bunch to satisfy, younger people tend to be more mobile. And the greater their skills set / potential, the more they invested in education or training, the more mobile they are. This is why, in my view, the idea of the 'demographic dividend' is a bit of a silly old hat - the dividend is there (or rather here, in Ireland) if and only if the asset is here.

But the QNHS data does not lie (well, kinda - it does lie in so far as it underestimates true extent of unemployment by omitting those over-extending their education and training in the absence of jobs). The assets we have in the form of our younger people are... err... extremely highly jobless, pretty much deprived of hope of gaining any of the above points.

Here are some stats, all from QNHS for Q2 2011.
Overall,

• 38,400 males of age 15-24 and 116.2 males of age 25-44 were unemployed in Q2 2011
• 25,100 females aged 15-24 and 53,900 females of age 25-44 were also unemployed in Q2 2011

However, these absolute numbers do not tell the entire story as the size of the labour force itself has been changing over time (shrinking). In terms of unemployment rates:

• Overall unemployment rate for those under the age of 20 is now at 40.1%, implying that a person aged 15-19 who wants to be employed is facing 2.8 times higher probability of not having a job than an average person in the workforce. For the age group of 20-24 years of age, these numbers, respectively are 27.7% and 1.94 times. For those in their prime employment years - 25-34 year olds - the numbers are 16.5% and 1.16 times.
• A woman of age 15-19 is facing unemployment rate of 33.7%, while her slightly older counterpart of age 20-24 is facing probability of unemployment of 21.8%.

Dramatic as the above figures are, the picture is much worse for males:

• A young male of age 15-19 seeking employment is facing unemployment rate of 46.1%, while a male of age 20-24 is facing the prospect of 33.7% unemployment. Unemployment amongst males age 25-34 is 21.5%.

This is desperate, folks. But it gets worse. per Table S9b in QNHS, in Q2 2011, of all persons aged 18-24:

• 79% of all early school leavers were either unemployed or not economically active a number that rose from 77% in Q1 2011
  
• 59% of all other persons in this age category were either unemployed or not economically active, same as in Q1 2011
  

For comparison, for all persons 25-64 years of age, the above numbers were:

• 55% of all early school leavers either unemployed or not economically active, up from 54% in Q1 2011
  
• 27% of all other persons either unemployed or not economically active, down from 28% in Q1 2011.
  

This is a dire prospect for our 'demographic capital', folks, as it shows that the gap by age for even educated unemployed is a vast 22 percentage points - statistically most likely indifferent from the same gap for those with little or no education.

Unemployment and more

As was widely predicted, December implied unemployment rate (based on Live Register figures) came in at 8.3%. According to CSO:
"The seasonally adjusted Live Register total increased from 277,200 in November to 293,500 in December, an increase of 16,300."

The unadjusted LR came in with a much higher increase of 22,777 - a number that might be actually closer to the reality on the ground, as seasonality adjustments are likely to underestimate the extent of actual jobs destruction in the recessionary economy.

For persons of 25 years of age and over (the prime earners' category), newly unemployed males outnumbered females almost 2:1 - a trend that underpins unemployment growth throughout the year.
Overall, there are now 293,500 seasonally adjusted individuals on the unemployment assistance in Ireland, implying the unemployment rate of 8.3%. However, this assumes static population figures. In reality, it is highly likely that net outward migration from Ireland has actually reduced the size of the available labour force in the country. If so, the actual unemployment rate should be higher than 8.3%.

Whether the actual unemployment rate is 8.3% or 8.5% is a moot point when one considers that we started 2008 with an implied unemployment rate of 4.9%. It is now clear that we are on-trend to reach 12% unemployment mark by the end of 2009 - so much for yet another childishly inaccurate DofFinance forecast of 7.3% unemployment for 2009!

On a bit more encouraging side

Yesterday's CSO data on industrial production has shown some positive signs of life in, it is worth saying, extremely volatile series. Here are some charts:
First chart above shows a robust pick up across the entire manufacturing sector in November. So much for 'uncompetitive' manufacturing story, but do not a massive overall increase in the range of volatility last year compared to 2007.
The second chart shows that most of the November increase can be accounted for by the 'Modern' sectors - aka US multinationals. This is quite interesting as December Exchequer returns have shown a massive (20%) drop in corporate tax receipts, suggesting that increased multinationals' activity was associated with increased transfer pricing. Exchange rate movements - stronger Euro - did not help either, exacerbating the impact of transfer pricing.
Really positive piece of news in on expectations front, with all but two sub-sectors (Basic Chemicals and Office Machinery & Computers) shown upward trending new orders for 2008.

These charts re-enforce the argument that I have been making for years now - Ireland Inc's productivity is wholly dependent on one source for growth: foreign firms. Forget the talk about somehow intrinsically better quality of our labour force and regulatory regimes. The formula for any real success in 1990-2007 in this country is: get them in with low taxes, for there is no other reason for them to be here.