In the four years to the beginning of 2012, Ireland suffered the worst employment shock any developed economy had ever suffered in living memory. By the time the shakeout of the labour market ended, there were more than a third of a million fewer jobs in the Irish economy than before the crash.

But since the middle of last year things have very clearly improved. Four consecutive quarters of jobs growth have been registered. Over the year from the time the bottom was hit in the second quarter of 2012, employment in the economy grew by almost 2 per cent.

That is not only a strong rate of increase by long-term historical standards (in more than three decades to the late 1980s there was no growth at all in the numbers at work in the Irish economy), it has been among the strongest anywhere in the developed world. Even in the US, where the recovery has shown signs of strengthening, employment in the year to the second quarter grew by just over half the Irish rate.

Momentum maintained
Although there are as yet no figures on the numbers at work into the second half of the year, a continued gradual reduction in the estimated unemployment rate in July and August suggests that momentum in the labour market has been maintained.

Given that employment is probably the single most important economic indicator in showing what is going on in the economy, the strong growth in the numbers at work is enormously positive. The figures are, by a distance, the most encouraging sign that the sort of recovery which would make a real difference to people’s lives is under way. That this has happened at all is something of a miracle given the domestic headwinds facing the economy and the downturn in demand in most export markets over the period.

But if there is more than a little to celebrate in the recent performance of the Irish labour market, there is cause for despair at what is happening in the jobs markets of fellow euro zone peripherals – Greece, Portugal and Spain.

The chart illustrates the sheer enormity of what is going on. It takes as a starting point the first quarter of 2008. By rebasing the jobs numbers in each economy to 100 for that quarter, and following the changes since, the comparative employment trends can be seen clearly.

In early 2012, Ireland lost the dubious distinction of having the worst-on-record collapse in employment when Greece and Spain crashed through the record set here. As of the first quarter of this year, the freefall in employment was still going on.

In Greece, more than a fifth of employment has evaporated over the past five years. In Spain, it is not far off that amount. Portugal, though not quite as grim, has suffered a decline in the numbers at work of almost 15 per cent.

Freefall scenario
Separate, more timely monthly figures on rates of unemployment give reason to hope that the freefall in both Iberian economies might be bottoming out, but a return to jobs growth is likely to be some way off even in the best-case scenario.

This raises the questions as to whether a social and/or political breaking point may be close at hand, particularly as these three countries have much smaller social welfare systems than in Ireland.

Among the truly remarkable aspects of the past half decade of economic crisis has been the limited political effects in Europe. Apart from a strong anti-incumbency bias in elections, extremist parties in most countries have gained little. That, thus far at least, has been as true in Iberia as it has been in Ireland.

But Greece is different. Opinion polls show that after New Democracy, the governing conservative party, the hard-leftists of Syriza are a close second. They have the support of one quarter of the electorate. Consistently in third place is the even more extreme New Dawn party. It is blatantly fascist and is supported by more than one eighth of the electorate.

That almost 40 per cent of Greeks support such parties suggests the Aegean nation may be near breaking point.