Fás: Unemployment will rise by 22,000 next year

DESPITE a 16% increase in the number of job vacancies reported to it, Fás has a pessimistic outlook for the economy, believing average employment will drop by a further 22,000 during 2011.

In its latest quarterly economic commentary, the national training and employment body said the jobless rate will average 13.4% in 2010 before falling to 13.1% in 2011. It pointed out that the employment rate fell to 60% in the first quarter of 2010, the lowest it has been since 1998.

“Average employment is estimated to have fallen by 87,000 this year, and a further, smaller, fall of 22,000 is expected for 2011,” a Fás spokesman said. “Vacancies notified to Fás are up 16% year-to-date, but still remain low by pre-recession standards. Equally, redundancies have dropped from last year but are still relatively high compared with 2008 and earlier years.” The employment body said the rate of employment growth had tracked the rate of economic growth with very little lag. However, while the economy appears to be coming out of recession, albeit at a relatively slow pace, it said the jobs market is likely to recover even more slowly.

“Assuming an export-led economic recovery, then a recovery in employment growth is likely to be delayed, as the export sector is less labour intensive.

“That said, given the extent to which employers have shed labour, they may have to increase working hours and/or employment relatively quickly in response to any increase in output.”

It said the sectors which experienced the largest increases in employment during the “second wave” of the employment boom that began in 2004, construction, wholesale and retail, have also accounted for biggest falls in employment over the last two years.

However, it is not just the newly unemployed who are an issue, according to Fás.

“Of particular concern is the doubling in the numbers of long-term unemployed between Q1 2009 and Q1 2010 to 112,600,” it said.

On a more positive note Fás said that in spite of the jobs downturn, part-time employment has continued to rise and was up 8,000 over the last 12 months. It said that implied the use of reduced hours by employers, both as an alternative to lay-offs and as a cost-reduction strategy.

Also a positive for Fás is the fact that year-to-date unemployment statistics provide some tentative evidence that overall unemployment has begun to stabilise. “The increase in the Live Register has decelerated significantly this year, rising 16,000 year-to-date to 445,000 in June compared with a rise of 113,000 for the same period in 2009,” it said. “However, there has been a significant increase of 12,000 in the Live Register in the last two months.”

On the whole, Fás advised against misplaced optimism.

“While the rise in unemployment has decelerated appreciably, it is not certain that it is close to a turning point and recent unemployment trends need to be interpreted with caution, especially after the rapid acceleration that took place in 2009,” it said. “To the extent that the unemployment rate does decline, it will be due to falling labour force participation and continued emigration.”


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