Tuesday, 30 June 2009

Class and Employment Decline

Sean O Riain: It is worth taking a closer look at the Quarterly National Household Survey results from last week. The difference between the public and private sectors has attracted some comment but there is much more going on here. In particular, the major trend that stands out is the disastrous collapse in working class employment with growing differences between the position of those with third level education and those without. The need for serious commitments in enterprise and employment policy, education and training policy, and housing/ mortgage support is clear.

The table here gives the full results for employment changes by sector, rather than the aggregated version in Colm McCarthy’s post at irisheconomy.ie (full details from CSO are in the report and tables).

What do we see?

First, almost as an aside at this stage, a useful reminder of the progress of the crisis. Long-standing problems in manufacturing, the bubble bursts in construction and then collapsing demand. It is worth remembering that it was lax regulation, financialisation of the economy, a construction bubble and subsequent collapsing demand that generated this crisis.

Second, some interesting findings within the private sector. Information and communication increased over the last quarter and over the past year transportation/logistics, information and communication, and finance etc remained stable. The collapse is first in industry/ construction, then in hotels and retail, and most recently in services to firms (prof/tech and admin/ support services – which includes temporary employment agencies).

While we can expect retail and producer services to recover if and when economic activity is restored, we can’t expect construction and industry to return at the levels they were at previously. Our ‘informational’ sectors show some degree of resilience and will loom larger than ever in any economic recovery.

How does this translate into labour force change? While employment for those with third level education has remained stable over the past year, the collapse for all others has been in the range of 10 to 20%. Unemployment has increased for those with third level education but employment has largely held up.

Click here (and scroll down) for Table 2, showing the numbers employed by level of education.

This is not just a matter of those with higher education competing for jobs they would not have previously been interested in (although there is some of that here). It is also due to the pattern of occupational change (Table 2). Professional employment has begun to drop sharply in the first quarter of this year but the declines are still smaller than in craft, sales, operative and other (generally relatively low-skilled) occupations. The drop in managerial employment is most likely largely due to small businesses going to the wall (these businesses partly accounting for Ireland’s high comparative proportion of such managerial employment), although it may be that larger businesses are laying off large numbers of managers.

Click here (and scroll down) for Table 3, showing employment by occupation.

The class divide in the impact of the recession stands out. While the pain is being felt all around, the sectoral, occupational and educational data points to both the particularly disastrous short-term and long-term effects of the recession on those in manual and service occupations. Given what appear to be high rates of intra-class marriage in Ireland (Brendan Halpin and have an interesting article on this using data from the mid-90s), the worst effects of the recession are likely concentrated in particular classes and households. If we add in the heavy impact of recent unemployment in the 25-34 and 35-44 age group then the implications for housing and household solvency are very serious, as noted on this site previously.

The effects of the recession are tied up with structural changes in the economy. Any recovery is likely to happen in different sectors than in those currently facing the greatest decline – although construction and industry face the greatest decline, it is informational and service sectors that will be the basis of future growth. So we need policies that will tackle both the recession’s impacts and the need for structural change. These will involve at a minimum a serious enterprise and employment policy to promote sectoral recovery and educational and training policy to invest in the skills and knowledge of those worst affected by the recession and put them in a position to benefit from the recovery.


Aidan said...

This is an excellent post. At the recent ESRI conference on labour markets in recession, the class dimension to unemployment became obvious when the statistics on those losing their jobs was unveiled. As is well known at this stage, 1-5 male workers during the housing bubble were employed in construction. A lot of these workers though, contrary to popular commentary, are skilled employees. I agree that in the long run it is important that we concentrate on retraining and reskilling for a sustainable export led economy. But, I also think it is important to discuss how we facilitate demand for these existing skilled workers (i.e. carpenters, electrians, brick layers). Labour intensive activity aimed at school building, and road construction are the two that seem to be circulated in the public domain. But, as we are facing a serious job crisis it is great to see detailed analysis like this to balance the equally important concetration on the crisis in our public finances.

OP said...

Of course, some would have you belive that 'we're all middle class now'! What you draw attention to is what the false dualism of public v private spheres is designed to mask.

Slí Eile said...

Another fact given little attention is the way in which the collapse in GDP/GNP in Q1 of 2009 over Q1 of 2008 is largely explained by the collapse in Construction. Other industry is bearing up not at all as bad (see Gross Value Added in Table 4 and 2 of latest National Accounts release). Exports are not affected as much as other sources of final demand.


Damian said...

A nice piece of analysis - but there are still many unanswered questions. One that stands out is the seeming resiliance of employment in finance, insurance and real estate - at least relative to other sectors of the economy.

These trends are certainly at odds with global trends (look at City of London) and is worrying given the sectors role in the crisis. We need to be very carefully that we are not subsidising jobs in a sector that is still excessively leveraged compared to its international peers - particuarly if this is comming at the expence of jobs in other sectors, and indeed the type of job support schemes that other countries are undertaking.