Jobless rate decline ‘will not match level of growth’
Unemployment may not fall as rapidly in the coming years as implied by the huge growth numbers in the economy, according to the Economic and Social Research Institute.
The think-tank yesterday forecast very large growth rates and projected that the economy in terms of gross domestic product will jump 4.4% this year and continue to grow strongly next year, by 3.8%.
However, the unemployment rate, currently at 9.8%, may likely fall less steeply, to 8.4% in 2016, the ESRI said.
It says the so-called participation rate in the economy has not yet picked up as quickly as suggested by the large rates of growth in the economy. That suggests there may be an available pool of labour that will get hired as the economy continues to expand, but nonetheless not reduce the jobless rate.
The ESRI estimates the median unemployment rate between 1960 and 2014 is as high as 7.5%, which may suggest that the unemployment will not fall as rapidly as many would expect.
Other reasons such as returning emigrants who left seeking work abroad during the crash may also lead to unemployment not falling rapidly. The ESRI still sees links between employment and unemployment rates in Ireland and the UK.
Despite weaker-than- expected growth in the UK and the US in the early part of the year, the ESRI believes Irish exporters will benefit from the weakening of the euro. It warns however that growth in the eurozone “still has a long way to go.”
CSO figures published last week showed the number of people on Government-funded ‘activation’ training courses had risen to 88,398,
The programmes are primarily targeted at helping people who have been unemployed for over a year and to assist lone parents to sharpen their skills to find a job, but do not count in the official Live Register figures.
The Irish Examiner has reported the number on the programmes has soared by about 31,500 since the eve of the crash in early 2007 and at over 85,000 are now the equivalent to the population of Galway or Derry City.
Some analysts believe the numbers on the programmes mean there exists an additional large pool of people who are seeking work.
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