Unemployment and Job Creation in Ireland: Prospects & Pitfalls | Collins McNicholas

Unemployment and Job Creation in Ireland: Prospects & Pitfalls

The Unemployment Rate

The unemployment rate in Ireland currently stands at 12%, according to CSO figures for the first quarter of this year. This is a drop of 1.6% from the same period last year, and 3.1% down from the peak of 15.1% reached in February 2012. The unemployment rate has dropped steadily over the last two years thanks to an ambitious jobs growth strategy from the government and a slow, but consistent, improvement in the global economy. The recovery has been export led, with domestic demand still an issue that needs to be resolved. The recovery in job growth has also been concentrated in certain sectors, which have seen considerable job creation, while other sectors of the economy continue to languish behind. This lopsided recovery could partly explain the recent flattening out in the unemployment figures, as job creation has lost some momentum in recent months. The CSO released its revised figures for Q1 of 2014 which showed that employment growth was a meagre 0.1%, with 1,700 new jobs created. This compares with 16,300 jobs created in Q4 of 2013. Unemployment did fall from 12.2% to 12% in Q1, but this was less than the estimated 11.8% that was expected. It is crucial that the economy regains the momentum it showed throughout 2013 if we are to continue on our path to recovery.

Job Creation

The Government’s ‘Action Plan for Jobs’ has been the cornerstone of their job creation strategy. It crosses multiple state institutions and government departments, as well as educational institutions and industry groups. Efforts have rightly focused on the ‘smart’ economy, which has seen the strongest growth. The ICT and life science sectors have been the strongest sectors in the economy in recent years. Significantly, a large portion of these jobs are seeking highly skilled and highly educated professionals. These well-paying jobs provide a greater knock-on effect to the rest of the economy. There have been a number of notable job announcements in these sectors in recent months: Ericsson announced the creation of 120 jobs in its Dublin and Athlone sites, SAP will recruit 260 people to fill new positions in their Galway and Dublin facilities, Alexion Pharmaceuticals is set to hire 200 staff in Dublin, and Workday will create 200 additional positions on its staff over the next three years. Jazz Pharmaceuticals is establishing its 1st site in Ireland in Athlone, where it will generate 50 high-skilled, full-time jobs upon completing the construction of its manufacturing plant in 2016. Abbvie, in Sligo, has also announced an €85 million investment in its facility to upgrade its biopharmaceutical manufacturing capabilities.

Demand for Skills

Certain skills are in increasingly high demand. Within the technology sector senior software applications developers, particularly in Java and .NET, are in great demand, as well as network and security experts, system administrators, web developers, business analysts, and IT project managers. People with a combination of ICT and business and language skills, are also in demand. Within the pharmaceutical, biotechnology and medical device industries there is strong demand for core science and engineering skills. The government has taken a number of important steps, in conjunction with third level institutes and private industry, to ensure that there is a sufficient supply of skilled labour in these critical sectors in the medium and long term. There has been an important, and necessary increase in the number of students taking STEM related qualifications, and the majority of these graduates will find employment in industry upon graduation.

Training Programmes

There have been a number of training programmes aimed at meeting the shortfall in supply of certain technical skills. The government sponsored Springboard programme provides free training to the unemployed through 3rd level institutions. It focuses primarily on ICT skills and certain pharmaceutical and medical device manufacturing skills.  The 2014 Springboard programme will provide 6,100 free, higher education places for jobseekers. Although the programme has proved quite successful, and should be applauded for its achievements, the focus on high-tech industries and business and financial services means the number of people that are eligible for training, and capable of completing the courses, are somewhat limited. There remains a section of the unemployed population that is being overlooked. Individuals without any background in these sectors, or who are unable to pursue careers in the sectors, are left behind. More needs to be done to include these individuals, who are often young, long-term unemployed, and frequently ex-construction industry workers. The government should broaden the scope of its retraining programmes to incorporate these people.

The National Institute for Bioprocessing Research and training (NIBRT) is an important facility for training people for careers in the pharma and biopharma industry. They run a number of programmes for jobseekers through Springboard, as well as providing customised courses for companies. It has proved to be an attractive draw for companies establishing operations in Ireland. IT Sligo is another example of an institution that offers an innovative approach to training and education. They also provide customised courses that match the needs of employers while also providing students with tangible skills to build their CV. IT Sligo also delivers their courses in an innovative way, taking advantage of technology to provide training through online and distance learning methods, as well as through onsite training.

JobBridge & Youth Unemployment

There has been a slight decline in the long-term unemployment rate from 45.9% to 44.6% in the 12 months to April. The longer an individual is out of work the more difficult it is for them to find employment. Such a large number of long-term unemployed is a serious problem that must be addressed. The unemployment rate is 29% for people under 25, which is above the EU average of 23%. Without enough work experience it will be difficult for these people to find employment. The JobBridge internship programme has attempted to bridge this experience gap. Although not targeted exclusively at under 25s it has provided them with the opportunity to gain experience. There remain problems with the programme, particularly in relation to the quality of the work experience and the level of job offers resulting from completion of an internship, but it has given a large number of unemployed people the opportunity to learn new skills and add a job reference to their CV. We feel that JobBridge needs to be policed better to ensure that there is a commitment from employers to provide a mandatory training element in their internships. This will ensure that interns gain meaningful experience that adds to their skill set in a way that will make them more employable in the future.

European Comparison

Despite the improvement in Ireland’s economy over the last two years there is still a considerable way to go before the country can consider itself fully removed from the crisis. Ireland has the 5th highest unemployment rate in the OECD and is well above the EU average of 10.5% (March 2014). There is a wide range in unemployment numbers across Europe, with Austria and Germany enjoying low rates of about 5%, while Spain has the highest rate with 25.6%. The UK and the US have comparably low unemployment rates of 7% and 6.7%. This comparison shows that despite the progress made by the Irish economy there remains a long way to go to catch up with our European contemporaries.

Conclusion

The government has implemented a number of positive reforms to stimulate job creation but its efforts remain too narrowly focused, concentrating on those sectors of the economy with the most potential for growth and ignoring the more challenging sectors of the economy. Without stimulating domestic demand and creating employment through indigenous companies the economy will remain on an unstable footing, relying too heavily on a few sectors of the economy to prop up the rest. Youth unemployment and long-term unemployment are the most pressing problems facing the Irish economy, and will continue to be so without further government action.

Niall Murray, GM Collins McNicholasNiall Murray

General Manager, Collins McNicholas Recruitment & HR Services Group

Email: niall.murray@collinsmcnicholas.ie