By Joe Lynam
Unemployment in the Irish Republic remains high Unemployment in the Irish Republic has peaked at its current level, according to the main employers’ group.
The chief executive of the Irish Business and Employers Confederation (IBEC), Danny McCoy, said fundamentals were in place for a successful economy.
However, Mr McCoy warned that there was a danger of the country enduring a “lost decade” if households continue to save at current levels.
The Republic, which currently has 13.7% unemployment, has had a deep recession.
The number of people on the state’s Live Register in September stood at 442,417.
Referring to the number of those out of employment, Mr McCoy – a former economist and ex-Oxford and Harvard university lecturer – said: “We knew when firms were about to go on a job-shedding spree last year and the year before but now we see that that has dried up.
“Ireland is an easy place to do business in terms of companies being able to rescale at short notice. While it’s a bad social problem to see unemployment go up, it’s an indicator of the flexibility of the economy. Has it peaked? Yes, I think so.”
But while the main opposition party in the Republic, Fine Gael, does not dispute that unemployment may have peaked, it attributes the phenomenon to mass emigration rather than a vastly improved economy.
“The worry is that there will be a double-dip recession due to major cuts in the forthcoming budget”
Fine Gael party
“The number of Irish-born people emigrating rose by 50% to 30,000 this year,” according to Richard Bruton, the party’s Enterprise and Jobs spokesman.
“The export sector has seen its cost base improve but countering that there is set to be a further shake-out in the banking sector and there will be further job losses in the public sector.
“The worry is that there will be a double-dip recession due to major cuts in the forthcoming budget.”
But the IBEC chief said that despite the economy shrinking by a fifth over the past two years, the Irish Republic still had the second highest GDP per capita in the EU – after Luxembourg.
He also said that it had given itself a major boost in productivity through necessary but painful cuts in salaries, averaging 15% in the public sector and often much more in the private sector.
“There is a view that the markets tell Ireland what the numbers should be, rather than Ireland actually running its own affairs”
IBEC’s Danny McCoy
Mr McCoy does concede, though, that sentiment, which had been turning upwards, reversed over the late summer as the cost of borrowing on the bond markets soared and commentators predicted a sovereign default.
“Confidence was hugely hit in August and September by what has happened in the bond spreads,” he said.
“There is a view that the markets tell Ireland what the numbers should be, rather than Ireland actually running its own affairs.
“It’s incredible that we have fatalism in the commentary in some of these people [in the markets] who say things for which they have no evidence.”
Last month the Republic’s government outlined its latest, and so far highest, estimate at €50bn for the final cost of bailing out the Republic’s all but collapsed banking system – pushing this year’s budget deficit to an eye-watering 32% of GDP.
The Dublin government hopes that its policy of openness and frankness will calm international investors who had pushed the yields on sovereign debt to a record level of almost seven per cent.
‘A lost decade’
Mr McCoy said that Irish companies and foreign multi-nationals based there (which account for 90% of Ireland’s exports) needed clarity from the government and had been ‘spooked’ by reports that the EU wanted to raise corporation tax which currently stands at 12.5% – one of Europe’s lowest rates.
The IBEC boss also said that the continued economic and political uncertainty meant that Irish consumers were “clinching their purses and other body parts in anticipation of cuts about which they know very little”.
He said the savings rate in Irish households is currently around 11% of monthly income – dramatically up from a normal rate of around 4%. If people continued to save at that level we might see jobless growth and ‘we can’t rule out a lost decade.’
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