Record employment fends off economic fears for now

Finance Minister Michael McGrath warned again about the public finances relying on the significant amounts of corporation tax receipts paid by a handful of multinationals.

Employment levels set a fresh record of 2.64 million people working at the start of the summer which has seen unemployment falling to 4.4% despite the global economic uncertainty caused by surging interest rates, the latest Labour Force Survey has revealed.

The Central Statistics Office figures confirm that most parts of the economy with the exception of agriculture, forestry, fishing, and the industry sector expanded employment from the same period last year. Employment also rose in every region, although growth in employment numbers was slight in the Midlands region, according to the figures. 

The strong employment figures are already being reflected in the increase in income tax revenues collected by the Government in the face of the global economic slowdown. Finance Minister Michael McGrath highlighted the increase in information technology jobs despite the much-publicised lay-offs involving well-paid jobs by some US corporate giants based in Ireland. 

Mr McGrath told reporters that “smaller tech companies, indigenous tech companies" were recruiting staff, and referred to the Government’s so-called Annual Taxation Report which again highlighted the risks should the the public finances rely on the significant amounts of corporation tax receipts paid by a handful of multinationals. 

The report warned that should there be a “more sustained downturn” in the information technology sector there would be “severe implications for the public finances”. “I think the situation is fluid, we may well see further announcements of job losses driven by global trends, but overall I think the trend is positive given those headwinds,” Mr McGrath said. 

Other surveys have shown that Irish manufacturing faces a high level of uncertainty, as some major economies teeter on the brink of recession after global central banks hiked interest rates in their attempt to tame inflation. 

Economists have for some time commented on the performance of the Irish economy which has weathered fears about a shakeout in well-paid jobs by the US tech giants based in Ireland. 

Employment rate of over 74% for persons aged 15-64 years in Quarter 2 2023 was the highest recorded since 1998https://t.co/QmHyZbVCL5#CSOIreland #Ireland #LabourForceSurvey #LabourForce #Households #Families #LabourMarket #Jobs #Employment #Unemployment pic.twitter.com/rw8qkdzQXx

— Central Statistics Office Ireland (@CSOIreland) August 24, 2023

However, employment levels holding up in the face of the huge rise in inflation and interest rate costs is not solely an Irish phenomenon, and there has been little sign of significant increases in other European economies and the US during the current crisis. 

Economist Jim Power highlighted the increase in the number of women in the workforce, saying that the employment survey was "unambiguously positive". Still, elevated levels of youth unemployment will require scrutiny by Government, Mr Power said. 

The Irish figures mean that the employment rate at over 74% for people up to the age of 64 was the highest since records began in 1998, said CSO statistician Sam Scriven.

The CSO said its survey showed the the total level of unemployment in the quarter had fallen to 4.4%, representing 121,200 people. There were 31,900 people in long-term unemployment, little changed from the same period last year.