Chap. 6 POPULATION,

EMPLOYMENT AND

UNEMPLOYMENT (T.

McIndoe-Calder)

1 Introduction (Table 6.1)

Growth in E: Table 6.1

Down from 2.11m in 2008 to 1.83m

2012, back to 2.01m in 2016?

UE = 15.7% 1993; 4.6% 2006; c

14.5% 2011 to 2013; 8.5% end 2016

2 Population

P (2026) depends on: P (2016), plus

natural increase, plus net migration

Natural increase (Table 6.3): around

40K per annum

DR depends on age distribution. BR

depends also on age distribution,

partly

Huge variation in net migration

(Table 6.3 and chart later)

1900 to 1951, natural increase =

migration; 1950s, 0.5m migrated

(see ‘Brooklyn’); 1970s, some in-

migration; 1980s, 0.5m migrated;

1990 to 2006, huge in-migration;

2007 to 2016 (see chart)

Composition (Tables 6.4 and 6.5).

Destination, age, occupational level

Net versus gross migration (see chart

below). Could have zero former but

large gross flows

Nationality (Table 6.4). Huge social

change brought about.

Age profile (Table 6.5): 1m now aged

under 14

Population (Table 6.2): now at 4.6m,

increased every year during

recession: 1841, 6.5m; 1901, 3.2m;

1971, 3.0m; 1991, 3.5m; 2016, 4.6m

Absolute size: tiny. One third size of

Paris

Geographic distribution: even pre

Famine; regional policy today

Density, etc. Netherlands v Ireland.

Higher the density the lower the cost

per head of electricity, transport,

water and sewage etc

3 Labour Supply (L)

1. L = (P) . (Pa/P) . (L/Pa)

2. L = E + UE

3. (E/P) = (E/L) . (L/Pa) . (Pa/P)

4. (E/Pa) = (E/L) . (L/Pa)

Working Population

Pa/P (Table 6.6): ‘young’ share

decreased from 1980s, hence Pa/P

increased

L/Pa (Table 6.7); huge increase in

L/Pa for females but still below

others: 63% Irl, 76% Denmark, 69%

US, 58% Greece

Male rates: 78% Irl, 83% Denmark,

79% Greece, 80% US

Immigrants: enter ranks of UE or

return home when jobs lost? Former

if settled here with children

4 Employment (E): Growth and

Composition (E/L)

Overall (Table 6.8)

Small scale: 2.0m Irl, 9m

Netherlands, 33m UK

Failure to grow in 1980s

Staggering growth 1995 to 2007

Dramatic decline 2008-10, but huge

increases again since 2013

E/Pa still only 63% here: due mainly

to high UE. 76% Denmark and

Netherlands, 72% UK. US the

surprise, down to 62%

low participation rate for married

females: not compared to all EU

countries though

Part-time and temporary work (Table

6.9)

Most of E increase in full-time work

Gender difference striking; females

p/t 37%, males 10%; Netherlands

60% and 17%; UK 39% and 10%.

Not involuntary though: implies

desired

Temporary work: Ireland not out of

line

Sectoral Composition of E (Table 6.10)

Dominance of services

Construction ‘story’: decline of 170K

2007 to 2013. Increase in

2014=2016. 60K decline in

‘industry’.

Little declines and some increases in

other areas: e.g. IT, education and

health

5 Unemployment (UE): Extent and

Features

International comparisons (Table

6.11): Ireland rate well down since

then

Dramatic changes since 2006: see

earlier: huge increases everywhere,

except UK and Germany

Measurement: valid over time and

between countries? Are Greek and

Spanish figures believable?

LFS and LR in Ireland; give totally

different figures. Latter much

higher but former best measure

Same in Germany: but in UK, LR

figure below LFS. LFS best for

international comparison

Invalidity v unemployment benefit

Germany v UK, US v Spain,

Netherlands v Ireland

QNHS or LFS v LR: former 35% lower

than latter as seen earlier

Long-term UE (Tables 6.12 and 6.13):

62% of total UE.

Extraordinary swings: 2% in 1982,

9% in 1992, 1.5% in 2005, 6.4% 2015

Could be lower in some countries

because of discouraged worker

effect

Flow from STU and length of time in

LTU the key factors

Youth unemployment v youth

inactivity (Table 6.14)

For example: 100 youths, and say 80

in education and 20 in labour force.

10 of these in E and 10 in UE. UE rate

= 50%, inactivity rate = 10%.

6 Solutions: Adapting to New

Technology and other Global Factors

Single Market, Trade and Technological

Change

They affect ALL countries; hence

outside domestic control

Trade alters composition of E: maybe

increase in skilled E and decrease in

unskilled E

Increases living standards and

reduces working year (Table 6.15)

But ‘so what’ if you an unskilled

worker who has lost job?

Investment going to low-wage

countries (e.g. China and Poland)?

Investment two-way: e.g. China big

investor in Europe and Africa

Globalisation and spread of

technology

Increased trade means more

competition. More competition

means search for innovation and

new technology. Implies decreased

in E?

Tractors for horses, computers for

people: the Luddite debate!

Driverless trains and maybe cars

soon means less E? e-banking and e-

shopping means less E?

Huge E in developing new

technology

Also employment in e-shops and

insatiable demand for new services

Affects composition not level of

employment

But can we adapt to change quickly

enough?

‘Lump of labour’ fallacy. Always work

to be done unless all have all needs

fully satisfied

US v Europe: adaptation costs. Is US

better at forcing through change?

Labour Market Integration

Immigration from Eastern Europe:

complements or substitutes?

Effect on unemployment and wages

unsure.

Effect on consumer prices;

decreased wages lead to lower

prices for consumers. As always,

losers and gainers

Political issues: UK and France. Of

long standing in both countries.

Not new. Enoch Powell in 1980s

Perception v reality: rise of Ukip and

National Front in France

Skills Adaptability

Adaptable labour markets key; vital

to adjust skills to face increased

competition and new technology

Employment for life maybe but not

in same job or always full time

Early school drop-out creates huge

long term problems

Choice of subjects: at secondary and

third level. Always an issue. Generic

v specific skills debate.

Type of secondary education:

Germany has three, ranging from

academic to skills to more practical

Employer involvement and

internships: German/Austrian

models.

On-going education/training; formal

education just start

German educational/employment

model: out of vogue in 2000s but

very much back, for now anyway. As

very low UE and high E/Pa there.

7 Solutions: Flexibility in Labour

Market

US/UK (free market) v Nordic (social

partnership) v Rhineland Models

(consensus, TUs on Boards, etc)

Wage and price flexibility essential

Union membership (Table 6.16):

76% Denmark, 12% US, 30% Irl, so

no pattern

Competition in product markets:

means cannot pass on wage

increased to prices. Why

competition authority essential for

NT sector (see earlier lectures)

Membership of euro zone; cannot

adjust for increased wages through

devaluation. Anyway, devaluation

decreases real incomes

Minimum wage (Table 6.17); level

the key. The higher it is the more

commitment on both sides: more

reliable employees and employers

invest in your human capital

Flexi-security (prepared to reduce

working week if demand low)

Wage is an income for a

person/family (and humans react to

price, unlike ‘bananas’, ‘ipads’ etc)

Flexible labour supply

- Hiring and firing rules (see later)

- Labour mobility: Norman Tebbitt

‘story’. Spain to Germany/UK

today

- Work sharing (suits people with

young children or elderly parents

maybe)

Tax/Social Welfare Systems (see

later). Decreased price of L, through

less taxes, leads to increased

Demand. And also decreased tax

leads to increased Supply, especially

for low-paid labour.

Hiring and Firing Regulations

Benefits to employees: job security.

Jim Larkin dealing with appalling

work conditions

Most TUs today though in protected

public sector

Can push up labour costs and hence

decreases demand for L

Strictness indicators (Table 6.18): Irl

1.6, Neths 2.7, Spain 3.2, UK 1.1, US

0.2. Which comparison most

relevant?

Result of high numbers, short-term

contracts and dual labour market

(e.g. Spain but changes there

recently). Insiders v outsiders

debate.

Taxation

Employer PRSI and Demand

(important for low income jobs and

danger of UE traps)

Employee PRSI, income tax and

Supply (again very important at low-

income levels

Unemployment and poverty ‘traps’

(especially for those with children).

These exist but how many people

really affected?

Taxation also affects high-income

internationally-mobile labour

8 Solutions: Long-term

Unemployment

Key problem in past and today

See Table 6.13: problem even in US

today

Deskilling (e.g. dentist or surgeon or

electrician)

Demotivation: how not if idle for

several years

Outside labour market: implies not

pushing downward pressure on

wages and hence labour D

Why drift from STU to LTU?

Social welfare payments (may be the

key factor)

Undoubted huge benefits for those

genuinely unemployed. 38% of

previous earnings in Irl on average,

32% Denmark, 23% in UK, 11% in US.

Thus generous here. US the ‘outlier’

but also with low UE.

Three things matter: level of

payments, duration of payments and

operation of system

May cause UE though (Table 6.19):

Ireland has one of highest levels of

payment

- leisure for work; less loss of income

and less incentive to find work

without strict checks

- increases bargaining power of

unions (if UE means good

redundancy and UE payments)

- favours black economy (perhaps

the most serious consequence if

not strict checks)

Payments v duration of payments v

enforcement of rules

Evidence of effects on UE: mixed

Enforcement the key

- verification checks for fraud

- availability for work

- active labour market policies

Active labour market policies

LTU an economic and social issue

Cannot depend on market

Withhold benefit

US (low or no benefits) v Nordic

experience (high benefits but very

strict checks, with compulsory

training/jobs)

Irish experience and OECD critique

(very slow progress)

Employment counselors

Regular contact, must apply for jobs

on constant basis, must accept

‘suitable’ job

8 Conclusions

Full employment 1998 to 2007

Re-emergence of high UE and out-

migration 2007 to 2013

Still E 95% higher than 16 years ago

Migration patterns central to ‘story’

LTU the core of any UE problem

Reduce UE by emigration?

Employment growth v increased

inequality

Unemployment and social unrest

Increased E now and infrastructure

issues (traffic jams on M50, crowded

public transport, shortage of

housing, etc)

Increase E through immigration?