So how smart really is the economy?

A perennial trope of the Irish economic debate is that of the “smart economy”. This is to be contrasted, one imagines, with the “dumb politics”. So how smart is the economy?

Persons in employment are classified according to where they work, among other categories. These get quite detailed, allowing a fairly high granularity. At a higher level a standard international classification is used. Each coding contains a fairly exhaustive description of what exactly is and is not in that section.

The CSO collects data on a quarterly basis on employment, including details of where, in the above sense, people work. This gives a great picture of where we are and as it is longitudinal, where we have come from. Starting in 1998 it gives us now a 16-year picture: over the end of the tiger, through the boom, the crash and now into the nascent recovery.

First, the overall picture. Employment now is 30% more than it was in Q1 1998, some 400,000 persons but still remains some 10% below peak, approximately 200,000 persons. It is when you dig into the sectors that the changed landscape becomes clear.

First, every sector is down from its peak, around the 2007 period, for most. Some sectors have seen small changes, such as education. Others have seen massive changes, notably construction but also manufacturing.

Compared to their sectoral peaks we see some massive losses in construction: construction of buildings and specialised construction activities are down over 75,000 jobs each from peak.

Other areas that have seen losses of over 20,000 employment since peak are crop and animal production (33,000), retail (20,400) and, perhaps surprisingly, manufacturing of computers (21,000 losses).

Other big losses have happened in wholesale trade, warehousing, and public administration.

However, change in structure is to be expected.

The boom, we can argue, was somewhat artificial in its credit basis. If we look at the structure of employment, in terms of the percentage of total workforce employed by sector in the Irish economy since 1998 some interesting facts begin to emerge.

Trade remains the largest employer, with 14% of the workforce; agriculture has almost halved from 9% to just over 5%, manufacturing has fallen from 18% to 11%.

Despite its pivotal role in the fuelling of the boom the finance and real estate sectors together are not major employers, rising from 4% to 5.2% of the workforce. By contrast, employment in health and social work has almost doubled from 7.5% to 13%.

But the story doesn’t end there. Within these sectors, as we have seen are sub-sectors.

Some are ostensibly more skilled than others, at least at the EU classification level. They classify sectors into high tech, medium tech etc. When we look at the structure of employment through these lenses a less than rosy picture emerges.

We are less high tech now than we were in 1998. The percentage of persons employed in the high tech manufacturing sector has fallen from 4.1% to 3.4%.

A fall in the manufacturing area, concentrated in computer manufacturing, has not been picked up by increased employment in the chemical industry.

The employment in knowledge intensive high tech services sectors is up from 3.1% to 4.4%.

Again however when you dig into this the picture is less rosy. Computer programming etc apart, the other main component is around communications – TV and radio production, telecoms etc. This area has remained essentially static, as a proportion. Through the lens of employment, we do not have a high tech economy.

What we do have perhaps is a knowledge economy. Employment in knowledge intensive market services has risen from 6.4% to 7.1%. Knowledge intensive market services consists of activities such as legal and accounting services, PR, management consultancy etc.

In summary, the economy, when viewed from the lens of where persons are employed, is not especially high tech. It is knowledge based, but a large part of this is not immediately export orientated.