OECD says Ireland’s short-term labour market outlook remains grim

Despite signs that the recession is slowing in Ireland as well as in many other countries, the short-term labour market outlook remains grim according to the OECD. In its Employment Outlook 2009, published on September 16, 2009, it states that latest OECD projections indicate a further decline in economic activity in Ireland in 2009, with a muted recovery surfacing only in 2010.

From December 2007 to July 2009, 166 000 individuals joined the ranks of the unemployed and the unemployment rate rose by 7.8 percentage points to reach 12.5%, the second-highest level in the OECD after Spain and the highest percentage increase in the unemployment rate witnessed during the current crisis.
The report goes on to state that past experience has shown that job creation lags output growth early in a recovery because employers still face a lot of uncertainty about their business prospects and many of their existing employees would like to work more hours.

Indeed, the OECD Employment Outlook 2009 indicates that the unemployment rate is likely to rise further in coming months, and could approach 15% in Ireland by the end of 2010 if the recovery fails to gain momentum.
Ireland has been hit harder by the jobs crisis than most other OECD countries according to the report. The collapse of the housing price bubble, compounded by the global financial crisis and economic slowdown, quickly translated into sharp job losses and increases in unemployment.
The OECD argues that to avoid a return to the high and persistent unemployment of the 1980 and early 1990s, a key priority for Ireland should be to provide effective employment services to a rapidly rising pool of jobseekers and to ensure that the most vulnerable of them do not lose contact with the labour market and drift into inactivity.
According to the OECD “it will be important now to re-invigorate past efforts to develop effective back-to-work policies in order to prevent the large hike in unemployment from casting a long shadow over the future.”

Commenting on current Government policy the OECD stated: “the increase in funding available for active labour market policies has been modest compared with the massive rise in unemployment. This has implied a sharp reduction in the resources available per job-seeker to help them find their way back into employment. This raises the question whether re-employment assistance to jobseekers is adequate to prevent the sharp recession from turning into a long-term unemployment crisis.”
Social Justice Ireland has consistently argued that the Irish Government needs to be much more pro-active in addressing the plight of those who have become unemployed recently and of those who are already long-term unemployed. Having failed to adjust to the changing world of work to ensure that meaningful work was available for all who seek it, Government is now failing to address the rapidly rising level of unemployment on the scale that is urgently required.

OECD Employment Outlook can be downloaded below