The latest labour market figures: positive trends, but participation and employment rates still down


The Central Statistics Office recently released the results of the Labour Force Survey (the newly minted official source of employment data) for the first quarter of 2019. The release corroborated much of the recent good news for the Irish labour market as general positive trends continue. In many respects however, the Irish labour market had a way to go in 2019 to full recovery from the impact of the 2007-08 financial crisis.

Looking at data concerning the proportion of people in work or attached to the labour market, we see a far more mixed picture. The seasonally adjusted ILO participation rate (the share of the population over 15 either working or seeking work) was over four percentage points lower in Q1 2019 (62.5 percent) than it had been in Q1 2007 (66.7 percent).   Economic inactivity (the opposite of participation) was already a big problem in an Irish context before the financial crisis and the Irish rate is as much as ten points higher than top performers in the EU, such as Sweden (see Nugent 2019). The employment rate (the ratio of those who have worked at least one hour in the past week to the working age population (15-64)) was also down over two points on the same quarter in 2007 (69.3 percent compared to 71.4 percent). The data show a narrowing gap in employment rates between women and men. This is due to both an increasing rate for women and a lower rate for men over a decade, which has not recovered from the property crash and is over six points lower than in the first quarter of 2007 (80.4 percent compared to 74.3 percent). Ireland still lags behind top performers in the participation rate of women however, negatively affecting our overall performance. The excessive cost of childcare in Ireland is likely contributing to this underperformance.

Though the unemployment rate has been on a steady trajectory downwards, seasonally adjusted unemployment was still higher in the first quarter of 2019 (5.0 percent) than in the same quarter in 2005 (4.4), 2006 (4.7) and 2007 (4.9). There are also in the region of a third more people long-term unemployed (1 year +) in 2019 (40,900) than in 2007 (30,900).

Underemployment (the share of part-time workers who wanted but could not find a full-time job) in 2019 Q1 (16 percent) had come down significantly from a peak in 2013 (39 percent) but is yet to recover from the financial crisis (10 percent on Q1 2007). A worrying trend is that a growing share of part-time workers are not working full-time due to caring responsibilities related to children or incapacitated adults since the turnaround in the labour market in 2012. Nineteen percent of part-time workers in Q1 2019 gave this as their reason for not working full-time compared to just 12 percent in 2012. This is more evidence of the difficulties for women, who make up overwhelming majority of this group, in engaging fully with the labour market in Ireland.

The job vacancy rate is a key indicator of labour market vibrancy, which captures the relationship between overall employment and the number of new jobs in an economy. In the first quarter of 2019, this figure was just 1.0 percent in Ireland, less than half the EU average (2.4 percent). Worryingly, the rate has not improved at all since the first quarter of 2015 and four years of strong economic growth.

The data suggest there was a degree of slack in the Irish labour market in 2018 with little evidence of overheating. 

The Earnings Hours and Employment Costs survey provides data on wages by sector. Following years of stagnant average real wage growth, 2018 saw significant gains. However, this growth was concentrated in a handful of sectors, all of which also experienced strong employment growth over the year: Administrative and support service activities, Transport and storage, Education and Construction. Employment growth in Administrative and support service activities, Transportation and Storage and Construction represent over 50 per cent of all employment growth in the past year. Average nominal earnings grew 10.5, 9.1 and 8.0 percent year-on-year in these sectors respectively. Education, one of the biggest sectors and one of the better paid represented just over 20 per cent of employment growth between Q4 2017 and Q4 2018, and estimated average earnings growth was 2.6 percent. 

The data are also concerning in terms of what they indicate has occurred to young workers. They show not only that the financial crisis disproportionately affected labour market conditions for younger cohorts, but that improvements in conditions for younger workers have been much slower in recovery, leading to higher intergenerational inequalities in many respects than existed pre-crisis. Younger workers have lower employment rates, higher unemployment and are more likely to be precarious workers than in the years leading up to the financial crisis.




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Ciarán Nugent

Ciarán Nugent is an Economist at the Nevin Economic Research Institute and is based in the Dublin office. He is currently working on a number of projects relating to the Just Transition and the Irish labour market. Ciarán has an MA in Economics from NUI Maynooth and a BA in International Politics. His research interests include income distribution, wages, precarious work, the cost of living and intergenerational inequality. He graduated with an MA in Economics and BA in International Politics from NUI Maynooth.

Ciarán also produces the NERI video and podcast series.

Contact: [email protected] or 00353 1 889 77 22.