Irish labour market data published yesterday encompasses the employment shock brought about by COVID-19 and the lockdown.
Goodbody Stockbrokers have warned that given the forced nature of the temporary shutdown, it is proving difficult for statisticians to accurately capture the number of employed and unemployed using traditional methods.
As such, the CSO has included COVID-adjusted and COVID-unadjusted data, resulting in an extremely large range for employment and unemployment. Goodbody say it will take some time before the true state of the labour market is known.
On the internationally recognised ILO basis, employment fell by 3.4% year on year (yoy) in second quarter, but this is far from the full story. People can be classed as employed even if they have not worked in the reference period if they expect to return to work.
In capturing the full economic impact, “hours worked” is a more useful metric; in second quarter, the total number of hours worked fell by 22% yoy in the second quarter. The UK has seen a similar drop in the number of hours worked in the year to June (-20%), whereas the fall in the US has been smaller (-8% yoy), reflecting the different extents of lockdowns in those countries.
The unemployment rate stood at 4.9% in the second quarter, rising to 5.5% in preliminary estimates for July. Including those on the Pandemic Unemployment Payment (PUP), the unemployment rate rises to 16.7% in July, having peaked at 29% in April. The true rate lies somewhere in between.
International labour market comparisons are complicated by data issues and different policy approaches by governments. The UK unemployment rate currently stands at 3.9%, but it has seen a much greater take-up of its wage subsidy (furlough scheme). Including those in furlough, the UK rate stands at c.26%, relative to 29% in Ireland.
According to Goodbody Stockbrokers, "Ireland’s wage support scheme changes next month, with a reduction in the wage support being implemented. Changes are also being made in the UK. The reaction of employers to these changes will need to be closely watched, but it seems inevitable that some jobs will be lost as this occurs."