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Column Unemployment stats mislead us – our ‘jobs plan’ is a dud rocket

With 200,000 long-term unemployed we’ve still got our heads in the sand, writes Aaron McKenna.

OUR PAST TWO governments have developed a string of slogans about the economy that inevitably lead to parody, as Ireland keeps threatening to turn corners and take off like a rocket.

In looking at the data for the first half of 2012 I’m reminded of a scene from The Right Stuff that about encapsulates how we’ve been managing:

YouTube/ugowar

Retail sales are lower than they were in 2005; manufacturing is going the wrong way fast; and unemployment is, at 14.8 per cent, the highest it has been since the beginning of the recession. Indeed, every month so far in 2012 has had a higher unemployment rate than the average for 2011, 13.6 per cent.

The last time unemployment was at the levels seen in every month in 2012 to date was for two months in 1994. I suppose we have a government half of whom served in the mid-90s, so we might as well have the same old unemployment rate.

Cast your mind back to the national recovery plan, where it was expected that we would have an unemployment rate of 12 per cent in 2012. Good luck with that.

Every month we are bombarded with reams of economic data – Live Register this, retail sales that, GDP the other – that is hardly analysed on its own merits, let alone together. The quality of economic reporting, painting a whole picture for the public, is woeful. What does it really mean when we’re told that the Live Register went up or down by 2,300 people in a month? Did those folks get jobs, emigrate, or disappear into a big black hole?

Deeper problem

The seasonally adjusted Live Register did decrease by 2,300 in July. Indeed, there were about 10,000 fewer people on the adjusted Live Register in July 2012 versus July 2011 – though the unemployment rate is actually higher than the 14.5 per cent we recorded at that time. The commentators on this website often jump straight in and point out that emigration is probably the source of any drop, and while they’re not wrong that it’s a part of it the problem runs deeper.

Indeed, people who emigrate are – if they get work abroad – probably doing better than some of the people who stay behind in Ireland but fall out of the workforce. We’re brewing a major long term problem in our workforce that is analogous to the collapse in the workforce of mining towns in the UK, when thousands found themselves trapped on benefits and entire families become reliant on welfare as the trap is spread from parent to child.

The Live Register, as we’re told every month, is not a measure of unemployment. It includes people who are casual or part time workers; and it does not include people who are involved in state training, for example, or who have left the workforce completely because – say – their benefits run out. These things in and of themselves tell a story.

There is a little reported statistic, because it can be difficult to quantify, called “Under Employment”. It differs from unemployment because it looks at all those who would, if they could, be working full time. People in part time or casual work; people who are no longer claiming benefits because, for example, their stamps ran out and they are no longer eligible because of, say, their spouses income; and, if you like, those who emigrate because they can’t find work here.

Crazy Frog

Some 88,000 of the 460,000 people on the Live Register in July were casual or part time, representing 19.1 per cent of the total. This was up from almost 86,000 a year earlier, or 18.3 per cent of the total at that time. It is better to have some work than no work at all, but we can assume many of these people could prefer full time work.

The amount of people in the workforce has been steadily trending downwards. The number of people in the workforce is, like our retail sales, back in 2005, a year when Crazy Frog made it to number one in the singles chart for four weeks. (That’s how bad things are getting). There’s 2.09 million people in the workforce today, down from a peak of 2.24m in mid-2008. Those no longer with us haven’t all emigrated, but have fallen into the black hole of discouraged workers and those without further entitlement to benefits.

The long term unemployment rate continues its steady march upwards, now over 200,000 people. When the numbers get this high it’s difficult to conceptualise it properly in your head, but that’s 200,000 people who haven’t had a job for over a year. Their skills are eroding, they’re losing contact with their old peers and colleagues, and find it more and more difficult to get work when there’s plenty of young up and coming blood graduating college each year behind them.

Speaking of young blood, there’s fantastic news! That is, if you’re doing the usual Irish press thing of reporting the top line numbers. The unemployment rate for people under 25 is now at a mere 17.5 per cent, down from 20.3 per cent in 2010. There really aren’t any hard numbers on where they’re all gone, though rumour has it that Skype’s revenue in Ireland is growing well.

Not counted at all in the 460,000 on the Live Register are the additional 76,500 people who are engaged in state programs like JobBridge and training programs.

Given the effectiveness of many of these programs – stacking shelves in supermarkets for an extra €50 a week, or FAS courses that leave people less likely to get a job than those who don’t take them – one has to wonder if ministers spend millions and billions of our money on them for the benefit of the unemployed, or to massage the unemployment figures.

Pulled from a hat

In all the jumping around about jobs initiatives and the 100,000 that are going to be pulled from a hat any day now, we haven’t heard much about what the grand plan is to deal with the systemic levels of unemployment that have set in; particularly for people from certain industries that, one way or another, ain’t coming back to deliver 200,000 jobs.

I’ve suggested in the past that we might spend our money for training the unemployed a little better, but it seems the government is focused on doubling down on bets like job placements valeting cars to upskill our unemployed.

As per usual however, there is a head in the sand approach from government (“Problem? What problem? Haven’t you seen our latest jobs press conference? We must have employed at least ten people to do the catering.”) Their tax increases are exacerbating the situation – surprise, surprise, you take money from individuals and families, they spend less, shops and businesses close, the economy contracts – and they continue to deliver crappy training programs. On top of that, they then go and sanction huge price rises for state owned monopolies in everything from public transport to energy and heating while the rest of the world fights to reduce costs and keep competitive.

Our economic data is bad, but worse than the headlines is the stuff we’re missing under the surface beyond worrying about emigration. We’ve got hundreds of thousands of people who have careers and future life prospects disappearing before their eyes. We’re four years down the rabbit hole and nowhere near climbing back out, and we’re hardly taking a step to mitigate the damage that will do to the lives of those stuck.

It would be good if we could acknowledge that, and start to do something about it.

As for those rockets, it should be noted that after the work of millions of people involved in the space program they got off the ground. The first American to ride one of them into space, Alan Shepard, eventually went on to play golf on the moon after overcoming his own personal challenges. Hard work, perseverance and ingenuity will always pay off.

Aaron McKenna is a businessman and a columnist for TheJournal.ie. You can find out more about him at aaronmckenna.com or follow him on Twitter @aaronmckenna.

Read: More columns from Aaron McKenna on TheJournal.ie>

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