Tuesday, May 10, 2011

Irish Men without Work

Brendan Walsh, emeritus professor of economics at UCD, writes in the Irish Economy Blog that the rise in the Irish unemployment rate reveals a grim picture of the impact of the recession. The overall unemployment rate has risen from 4.4% at the beginning of 2007 to 14.6% today. Male unemployment is now 17.3%, while unemployment among men aged 20-24 is 32.3%.

Concentrating on the situation of males in some key age groups, unemployment rose dramatically in all fours age groups, but younger men were most severely affected.

Irish Economy thread

I wrote: This is an impressive presentation and there are interesting parallels with the US.

Economists at the Hamilton Project of the Brookings Institution, say that up until the early 1970s, virtually all prime-aged men were gainfully employed - - regardless of whether they had a high school diploma or a college degree. Over the last 40 years, however, the United States has witnessed a dramatic change in the employment situation for men, particularly for less-educated workers who have faced greater challenges finding jobs and have increasingly dropped out of the labour force.

Separately, Prof. Michael Spence and a colleague have produced research which shows that in the period 1990-2008, almost all the additional increase in US employment was in the non-tradeable sector led by government and health care.

Almost all US jobs added in 1990-2008 were in non-tradeable sector led by government and health care

In the last decade of the Irish boom, almost all the new jobs were in the non-tradeable sector.

To me one of the enduring problems at policy level in the jobs area is that spin invariably trumps an unvarished assessment of the challenges.

In the FDI area, because we already host most of the top firms in high-tech, health/pharmaceuticals and financial services, it's evident in recent years that new projects tend to be small and while only 10,000 jobs were added in the tradeable sector in the period 1998/2007, recent job losses have reduced employment in the tradeable goods and services sectors (FDI + local) to about 268,000 - - back to 1997 when the workforce was 25% smaller.

The number of Irish firms involved in exporting is much lower than comparable firms in other small economies. Irish SMEs do not grow to a size that is considered essential for developing overseas markets.

There is very little useful data on firms. Stephen Kinsella has done some work on firm mortality but there is no useful data on startups, survival rates and no longitudinal studies tracking growing firms.

According to Forfás, science related public spending across 39 government departments and agencies rose from €1.2bn in 1999 to €2.5b in 2009. €500m could likely be chopped off this sector without impacting outcomes.

The so-called smart economy has got the lion's share of Irish enterprise public funding in recent years with research and development spending in higher education almost trebling from €322m in 2002.

While research can have several benefits, direct commercialisation is an insignificant one. For example, in the US the income from intellectual property is 4% of university research spending and in England in 2009, only £73m was earned.

The officially policy is a muddle but the goal to create a jobs engine from research is a delusion.

A UCD study shows that in 2009, firms supported by venture capital companies, employed 9,700 people; according to Enterprise Ireland, 100 spinouts from research created 1,000 in 10 years.

Given the growing world population, there should be focus on food and commercial research should prioritise this area.

In the EU in 2006, manufacturing as a percentage of total employment was 18.2%, 13.3% in Ireland and 22% in Germany.

Despite the recession, the costs of doing business in Ireland are still excessive.

Irish Economy 2011: The Jobs Initiative and a promised ambitious long-term strategy