Work
Work, Unemployment and Job-Creation
Social Justice Ireland published its latest analysis and critique of work, unemployment and job-creation in Ireland as well as its policy proposals in the annual Socio-Economic Review published in April, 2010. The full text can be accessed here.
Ireland's unemployment continues to rise - major challenge for policy development
The seasonally adjusted number of people on the Live Register increased from 439,100 in May to 444,900 in June 2010, an increase of 5,800. According to the Central Statistic’s Office’s most recent publication the unadjusted numbers saw an increase in the Live Register of 37,420 (+9.0%). This compares with an increase of 43,788 (+11.1%) in the year to May 2010.
Is a 21-hour working week the answer to many current problems?
Many people are consuming well beyond their economic means and well beyond the limits of the natural environment, yet in ways that fail to improve their well-being. At the same time many others are trapped in unemployment and poverty. Continuing economic growth in high-income countries will make it impossible to achieve urgent carbon reduction targets.
OECD says Ireland’s short-term labour market outlook remains grim
Despite signs that the recession is slowing in Ireland as well as in many other countries, the short-term labour market outlook remains grim according to the OECD. In its Employment Outlook 2009, published on September 16, 2009, it states that latest OECD projections indicate a further decline in economic activity in Ireland in 2009, with a muted recovery surfacing only in 2010.
From December 2007 to July 2009, 166 000 individuals joined the ranks of the unemployed and the unemployment rate rose by 7.8 percentage points to reach 12.5%, the second-highest level in the OECD after Spain and the highest percentage increase in the unemployment rate witnessed during the current crisis.
The report goes on to state that past experience has shown that job creation lags output growth early in a recovery because employers still face a lot of uncertainty about their business prospects and many of their existing employees would like to work more hours.
Indeed, the OECD Employment Outlook 2009 indicates that the unemployment rate is likely to rise further in coming months, and could approach 15% in Ireland by the end of 2010 if the recovery fails to gain momentum.
Ireland has been hit harder by the jobs crisis than most other OECD countries according to the report. The collapse of the housing price bubble, compounded by the global financial crisis and economic slowdown, quickly translated into sharp job losses and increases in unemployment.
The OECD argues that to avoid a return to the high and persistent unemployment of the 1980 and early 1990s, a key priority for Ireland should be to provide effective employment services to a rapidly rising pool of jobseekers and to ensure that the most vulnerable of them do not lose contact with the labour market and drift into inactivity.
According to the OECD “it will be important now to re-invigorate past efforts to develop effective back-to-work policies in order to prevent the large hike in unemployment from casting a long shadow over the future.”
Commenting on current Government policy the OECD stated: “the increase in funding available for active labour market policies has been modest compared with the massive rise in unemployment. This has implied a sharp reduction in the resources available per job-seeker to help them find their way back into employment. This raises the question whether re-employment assistance to jobseekers is adequate to prevent the sharp recession from turning into a long-term unemployment crisis.”
Social Justice Ireland has consistently argued that the Irish Government needs to be much more pro-active in addressing the plight of those who have become unemployed recently and of those who are already long-term unemployed. Having failed to adjust to the changing world of work to ensure that meaningful work was available for all who seek it, Government is now failing to address the rapidly rising level of unemployment on the scale that is urgently required.
OECD warns 57 million people could be unemployed in better-off countries – calls for major Government action
Unemployment in better-off countries could reach 10% of the labour force if the economic recovery fails to gain momentum according to the Organisation for Economic Co-operation and Development (OECD). This would bring the total number unemployed in these countries to 57 million. It has already reached 8.5%, an increase of more than 15 million in the numbers unemployed since the end of 2007.
According to the OECD despite early signs of economic recovery, in most countries unemployment will rise further in 2010 and remain high for the immediate future.
The Paris-based OECD said that, despite the economic improvements that have been seen, governments must intervene “quickly and decisively” to prevent the sharp rise turning into long-term joblessness.
In its annual employment outlook published on September 16, 2009 the OECD expressed fears that a recovery without jobs might emerge, even if the tentative return to economic growth currently being seen in some countries is sustained.
In 2007 the unemployment rate in the OECD was at a 25-year low of 5.6 per cent, but it rose to a postwar high of 8.5 per cent this July. The US, Spain and Ireland, where the banking crisis has been accompanied by a housing market collapse, have been worst hit. The rise in unemployment has been slower in European economies such as Germany and Italy.
The report suggests that Ireland, Japan, Spain and the US may have already seen most of their likely job losses. It also states that countries such as France, Germany and Italy may yet see substantial increases in their unemployment levels.
Social Justice Ireland welcomes the OECD recommendation that, in light of these developments, governments must urgently reassess and adapt their labour market and social policies in order to prevent people from falling into the trap of long-term unemployment.
The report notes that most OECD countries have introduced measures to support labour demand. These include temporary cuts in employers’ social security contributions and short-time working subsidies to compensate workers for working fewer hours or to encourage firms to hire such as the German Kurzarbeit, which involves about 1.5m workers.
As part of an overall strategy to tackle the jobs crisis, the OECD also recommends governments to:
- Help young people who have been hardest hit by the crisis, especially those with few or no qualifications. Targeting this group will reduce the risk of a “lost generation” of young people falling into long-term unemployment and losing touch with the job market.
- Reinforce social safety nets to avoid jobless people falling into poverty: on average in the OECD area, 37% of individuals living in jobless households are poor - five times higher than for individuals living in a household where at least one person has a job.
- Increase spending on active labour market policies, such as job search assistance, and training, to help the unemployed back to work. Spending on these policies has risen in many countries over the past year, but only modestly compared with the magnitude and pace of job losses. In Ireland, Spain and the United States, which have seen the fastest rise in unemployment in OECD countries, spending per unemployed person on active labour market policies has fallen by 40% or more over the past year.
- Foster skill formation to ensure that workers are well-equipped with the appropriate skills for emerging jobs, including green jobs.
In the short-term, the OECD acknowledges that these measures are playing a positive role. 21 countries have sought to save jobs by introducing or expanding short-time working schemes. But the OECD insisted that such schemes must be focused on companies where demand was only temporarily depressed, otherwise they could hamper the recovery by putting a brake on the required reallocation of workers from declining to expanding companies.
The report went on to say that governments must urgently adapt their labour market and social policies to prevent people falling into the trap of long-term unemployment. Measures should be focused on helping young people, who have been hardest hit by the crisis, to reduce the risk of producing a “lost generation”.
The OECD report also said that social safety nets should be reinforced to avoid jobless people falling into poverty. It urged an increase in spending on active labour market policies, such as job search assistance and training, to help the unemployed back to work. According to the report spending on these policies has increased in many countries but has not kept pace with the scale of job losses.
Unemployment up 1.8m in EU in past year. Now at 10% of labour force
More than 23 million people in the EU were unemployed in May 2010 according to the latest statistics published by Eurostat equivalent to 10% of the labour force. Of these, 15.789 million were in the 16 countries in the euro area. In the year since May 2009, unemployment rose by 1.8 million in the EU, and by 1 million in the euro area.
The number of persons unemployed decreased by 37 000 in the EU since April 2010. By contrast, in the euro area the number of persons unemployed increased by 35 000 over the preceding month.
These figures were published by Eurostat, the statistical office of the European Union.
Among the EU Member States, the lowest unemployment rates were recorded in Austria (4.0%) and the Netherlands (4.3%), and the highest rates in Latvia (20.0% in the first quarter of 2010), Spain (19.9%) and Estonia (19.0% in the first quarter of 2010). In Ireland the unemployment rate recorded by Eurostat at the end of May 2010 was 13.3%.
Compared with a year ago, five Member States recorded a fall in the unemployment rate and twenty-two an increase. The largest falls were observed in Austria (4.9% to 4.0%) and Germany (7.6% to 7.0%). The highest increases were registered in Estonia (11.0% to 19.0% between the first quarters of 2009 and 2010) and Latvia (13.5% to 20.0% between the first quarters of 2009 and 2010). In Ireland there was an increase from 12% to 13.3%.
It is interesting to note that in Germany unemployment has fallen continuously since last summer, to reach 7.0%. Employment there is boosted by short-time work schemes, where companies are paid by the authorities to retain workers through the downturn rather than making them redundant.
Government Must Act Urgently on Long-Term Unemployment
Social Justice Ireland urges the Government to act immediately on unemployment, especially long term unemployment. A report just published by European Foundation for the Improvement of Living and Working Conditions (Eurofound) has found that the Irish labour market suffered more job losses proportionately between 2008 and 2010 than any other country in the 27 States of the EU.
At present 300,000 people are unemployed in the Irish labour market. Almost 150,000 of these are long term unemployed.
The report found that the impact of the crisis has also differed in terms of its effects on different categories of worker:
· Younger male workers, those with lower educational levels or in temporary contracts have been most affected.
· The crisis has largely spared, thus far, those in higher-skilled occupations, especially experienced, older workers.
· Ireland suffered a 14.5% drop in employment levels between Q2 2008 and Q2 2010.
· The greatest decline was amongst males employed in the construction sector
· The foreign-born working population in the EU 27 States declined most over the period in Ireland (where it fell by 105,000)
Social Justice Ireland has long argued that the unemployment crisis must be addressed and has presented to government a fully-costed proposal on a Part Time Job Opportunities Programme which would take 100,000 of those who are long term unemployed off the live register and back into the labour market. This proposal has already been piloted successfully between 1994 and 1997 and presents Government with a clear opportunity to tackle the structural problem of long term unemployment.
As found in the report those with lower education levels have been most affected by unemployment. This issue needs to be addressed urgently and Social Justice Ireland has argued that Government needs to invest €20m in Adult Literacy in the coming budget in order to support these people in gaining the skills to allow them to take up jobs when they become available.
To read the Eurofound report click here.
To read Social Justice Ireland’s Part Time Job Opportunities Programme click here.
To read Social Justice Ireland’s position on Adult Literacy, education and educational disadvantage click here
Government's latest response to job creation challenge: Give 5,000 small firms €2,000 a year for ten years
Minister Richard Bruton has announced the launch of the Government’s multi-annual Action Plan for Jobs. This has been announced on several previous occasions but this time it has a little more information. Government’s target is to create 100,000 extra jobs by 2015 and to have two million people ‘back at work’ by 2020. Towards reaching this target it proposes to make €2,000 a year available to 5,000 businesses for a decade.
In support of its job creation targets the government has set out its plan to make €100m available in a Micro Finance Loan Fund to benefit 5,000 businesses over a ten year period. On examination of the proposal the government hopes that by providing an average of €2,000 per annum to 5,000 businesses for ten years it will get two million people back to work by 2020.
Social Justice Ireland believes that this plan is neither adequate nor credible in terms of job creation. Domestic demand has fallen by 20% since 2007and is expected to fall again next year according to the Government’s own forecast. Serious questions must be asked of government. Policy is relying on export led economic growth at a time when there is extreme uncertainty in international financial markets and the expected growth rates in the Eurozone, the UK and the US are all looking bleak. Government will not see any great increase in job numbers without first creating a situation where domestic demand increases.
The government acknowledges in its Medium Term Fiscal Statement that its own projection of a decline in unemployment to 11.6% by 2015 (a reduction of approximately 52,000) is based on assumptions that more job seekers will emigrate or otherwise withdraw from the labour force.
Yet again the government has shown that it has neither the vision nor the strategy to tackle the growing unemployment problem. Social Justice Ireland has presented to government a fully-costed proposal on a Part Time Job Opportunities Programme which would take 100,000 of those who are long term unemployed off the live register and back into the labour market. This proposal has already been piloted successfully between 1994 and 1997 and presents Government with a clear opportunity to tackle the structural problem of long term unemployment.
Social Justice Ireland urges government to act on this proposal immediately to prevent a worsening situation of structural unemployment developing in Ireland. The plans unveiled by Minister Bruton yesterday are wholly inadequate to deal with the present situation.
To read Social Justice Ireland’s Part Time Job Opportunities Programme proposal click here
To read information regarding Government’s Action Plan for Jobs click here
To read the Medium Term Fiscal Statement click here
OECD proposal on unemployment payments is preposterous and perverse
Social Justice Ireland has strongly criticised a proposal from the OECD that unemployment payments should be reduced over time to encourage unemployed people to take up employment. The vast majority of unemployed people would take up any job that was available. Just a few years ago the long-term unemployment rate in Ireland was one of the lowest in the world at 1.3%. Many people became unemployed because of the collapse in the economy. The greatest devastation of this recession is being borne by those who have lost their jobs. There is no evidence to suggest these people would not take up a job if it were available. Blaming unemployed people for the failures in the economy and the inability to produce jobs is perverse in the extreme.
Social Justice Ireland wishes to point out that:
- Two thirds of a million people in Ireland are at risk of poverty.
- At least 90,000 of those employed in Ireland are at risk of poverty. These are the ‘working poor’.
- Social welfare payments for unemployed people are €34 a week below the poverty line for a single person and €56 a week for a couple over 25 years of age.
- Social welfare payments for unemployed people below 25 years of age are up to €122 a week for a single person and €168 a week for a couple belo! w the poverty line.
The proposal by the OECD that unemployment payments should be reduced further shows the OECD is totally out of touch with the reality of the lives of people who are unemployed and are ignoring the fact that they are unemployed because a sufficient number of jobs don’t exist in the economy.
The claim that everybody should make a contribution to the adjustment required in Ireland at present has been repeated like a mantra in policy discussion and public commentary. Yet it is only half true. Yes, Social Justice Ireland agrees everyone should make a contribution insofar as they can. But we do not accept that some people should be driven into poverty because of the contribution that is demanded of them. To do this is to try to solve one problem by creating a deeper and more long-lasting one. “We reject any attempt to solve Ireland’s problems by increasing inequality or by forcing the most vulnerable members of the popu! lation into a situation where they do not have the resources to live life with dignity” according to Fr Healy. ‘Hits’ on poor people and the low-paid have far bigger negative impact than larger hits on the better off who have resources to absorb the hits. It is profoundly wrong for example that poor people carry a major burden while senior bond-holders, who carry a large part of the responsibility for Ireland’s implosion, make no contribution to sharing the burden.
- Social Justice Ireland’s annual Socio-Economic Review, entitled A New and Fairer Ireland was published last week.
- The full text of the Review may be accessed here.
- Social Justice Ireland’s most recent Policy Briefing addressed the topic of Work, Jobs and Unemployment.
- The full text of this Policy Briefing may be accessed here.
Twin-track approach required to have significant impact on reducing long-term unemployment
As unemployment reaches its highest point in 2011 Government requires a twin-track strategy – one track focused on job-creation and the other track focused on creating real meaningful work opportunities for people who are long-term unemployed. Social Justice Ireland believes that while initiatives focused on improving job creation and protecting jobs that already exist are very welcome and necessary, they should not be allowed to create an illusion that Ireland’s unemployment crisis will be resolved in the period immediately ahead.
- Would create 100,000 part-time jobs for unemployed people;
- Paid at the going hourly rate for the job;
- Participants working the number of hours required to earn the equivalent of their so! cial welfare payment and a small top-up;
- Up to a maximum of 19.5 hours a week.
- Access would be on a voluntary basis only;
- Jobs would be created in the public sector and the community and voluntary sector;
- Participants would be remunerated principally through the reallocation of social welfare payments.
- Working on these jobs participants would be allowed to take up other paid employment in their spare time without incurring loss of benefits and would be liable to tax in the normal way if their income was sufficient to bring them into the tax net.