Everywhere you look jobs are under threat
Employment fell by 1.2% or 25,000 year on year, a marked change from 2007 — a year that saw employment grow by 3.7% or 80,000. Employment growth slowed sharply in the opening half of 2008 before turning negative in Q3. Indeed, there was an even bigger decline in full-time employment, which fell by 33,000 or almost 2% in the year to Q3 2008.
Meanwhile, the unemployment rate climbed to 6.3% in Q3 2008, up from 5.4% in the previous three months and 4.4% a year earlier. The Q3 2008 QNHS puts the number of unemployed at 161,000, up from 107,000 in Q3 2007. Live register data suggests that the trend in jobless numbers remains strongly upwards.
While the fall in employment is mainly concentrated in construction and manufacturing, jobs are also beginning to be lost in the service sectors of the economy. The hotel/bar/restaurant trade shed 5,500 jobs (-4%), while employment also declined in the retail sector and in business and financial services. Job gains were mainly in areas dominated by the public sector, most notably health and education, which added 13,000 between them.
Labour force growth is also slowing rapidly. The labour force grew by 28,000 or 1.2% in the year to Q3 2008, down from 70,000 a year earlier. At its peak, the labour force was growing by more than 100,000 a year or in excess of 5%. But for this sharp slowdown in labour force growth, the rise in unemployment would be even more pronounced.
The slowdown in labour force growth reflects two factors. First, there has been a marked falloff in net inward migration. There was an increase of 11,000 in the number of non-Irish people in the labour force in the year to Q3 2008. By contrast, an increase of more than 60,000 in the non-Irish labour force was recorded in the year to Q3 2007.
Second, the participation rate of the population in the labour force, especially for females, had been on a long-term uptrend. However, this is no longer rising, no doubt reflecting dwindling job opportunities.
The trends evident in the Q3 2008 labour force data are likely to become even more pronounced. The economy is facing a substantial fall in employment and continued marked uptrend in the jobless total. Employment in construction has yet to feel the full force of the downturn in both residential and non-residential building activity. The latest data shows 257,000 were still employed in the sector in Q3 2008. This number will shrink considerably.
The global recession and appreciation of the euro against other European currencies makes for a very difficult backdrop for the export-orientated manufacturing sector, where further job losses seem inevitable.
The services sector accounts for the vast bulk of employment in the economy. It is hard to be optimistic about job prospects in the retail trade with consumer spending in sharp decline. A further contraction in employment is likely in the hotel/restaurant sector also. Employment in financial and business services is also likely to shrink further, given the difficulties in these sectors.
The Government is also trying to secure a reduction in the numbers employed in the public sector to help contain the sharp rise in the budget deficit. Thus, no matter where one looks, jobs are under threat. It is entirely possible that the economy could shed as many as 150,000 jobs in this recession, with the unemployment rate rising towards 10%.
Oliver Mangan, chief bond economist, AIB Global Treasury
