Post on 12-Jan-2022
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?