Over the past week there has been remarkable evidence of the resilience of the Irish jobs market. The latest official figures from the Central Statistics Office showed the unemployment rate falling to 4.3 per cent in December. Meanwhile, the number of people in work rose again in November, having appeared to stall for a few months after the summer. The conclusion must be that demand for labour in many sectors remains strong, despite the slowing economy and problems in the tech sector. The next year may be more challenging for the jobs market, but it heads into 2023 in a surprisingly strong position.
The experience of strong demand for labour and shortages in many sectors after the Covid lockdowns is not unique to Ireland, of course. In hindsight it is clear that the lockdowns and their knock-on impact have taken time to work through – and that the impact on overall employment was much less than feared.
In Ireland and internationally Government supports played an important role in safeguarding employment and allowing many businesses to weather the storm. Unfortunately, with the added pressure of the cost-of-living crisis, liquidations may now pick up. But for now unemployment remains low, and many businesses are still facing a scramble to find employees.
While these figures are encouraging, it would be unwise to take a strong jobs market for granted. In particular, the Government needs to deliver the supports promised to businesses to deal with soaring energy bills, with some signs that these are slow to roll out. Just as households – particularly lower-income ones – need help, so we saw during Covid that properly directed, albeit temporary, supports can make a big difference to businesses, particularly now to energy-hungry sectors which are worst hit.
There are some encouraging signs from the wholesale gas market – and if sustained these may start to take some pressure off energy bills as the year goes on. But for now many businesses remain under severe pressure, and in turn this will threaten employment.
Longer-term issues also need to be addressed – notably the housing crisis, which as well as its huge social cost is threatening investment and the need to develop secure sources of green energy.
Buffeted by one crisis after another, the Government has been drawn to shorter-term issues. But the strength of the jobs market in recent years reflects a number of correct decisions made in the past on industrial policy and competitiveness. There is a risk now of letting some key advantages slip. Ireland is now a high-cost economy and needs to offer a clear strategic picture for the future, particularly in relation to key infrastructural deficits.