Quarterly jobs figures are usually one of the best ways of taking the pulse of the economy. While the latest figures have been complicated hugely by the impact of Covid-19, they are quite simply extraordinary and do give a clear indication of how jobs are being hit, who is being affected – and what may happen next. In a simply unprecedented situation, much remains unclear. But here is what we know so far.
1. If you want to look at just one figure ...
The jobs figures are hard to interpret. This is not the fault of the Central Statistics Office, which has to follow international conventions. So somebody on the Pandemic Unemployment Payment is still classified as employed if they expect to return to work in the next quarter. The CSO has had to improvise, publishing a set of figures in line with the international rules and another trying to take account of the Covid-19 impact.
One figure stands out through the fog – and it is not one we are used to looking at. The number of hours worked in the second quarter was 59.2 million, down 22 per cent from the 76 million average for the same period in 2019. This is perhaps the clearest indication of the impact on work as large parts of the economy closed and is striking evidence of the impact of the pandemic.
The fall in GDP will be a lot smaller. As Simon Barry chief economist in the Republic for Ulster Bank points out: "The fact that the shock was concentrated in some low productivity sectors including hospitality means that the hit to overall economy-wide output may not be quite as pronounced as that to hours." Still, the fact that the shutdown was longer and more widespread here than in many other economies means the initial hit was greater than in many other EU economies – somewhat akin to the UK in terms of hours.
2. What about the numbers at work?
Usually the number of people at work is one of the most useful real-time indicators. Now, because of Covid-19 and large numbers on the PUP, finding an accurate measure is difficult as the top-line official figures do not pick up the extent of the hit to jobs.
The figures before any Covid adjustment still show a big drop in job numbers. The total number of people at work fell by 6 per cent, or 150,000, from the first quarter, to leave the total at 2.22 million. As Barry points out: “That is the worst single quarter for officially measured jobs growth in over 20 years of available figures. In comparison, the worst quarter of the Global Financial Crisis saw a quarterly drop of 3.8 per cent.”
The official top-line figure is important, as it reflects jobs actually confirmed to be lost. However we know that many hundreds of thousands more are under threat, as people are on the PUP, for example, and may or may not return to employment.
To try to get a handle on this, the CSO says that more than 550,000 people on average during the quarter were “away from work”, in other words, not in their employment. This Covid factor reduces its estimate of the numbers at work at the end of June to 1.784 million – it says this should be seen as a “lower” estimate, in other words taking a pessimistic view. It says this rose to 1.947 million by the end of July as more of the economy reopened and it will have increased somewhat since then.
The unemployment rate was 23.1 per cent at the end of June, falling to 16.7 per cent at the end of July, when adjusted for the Covid-19 numbers, There is uncertainty too about this figure too and some economists say the real “running” rate now is lower.
3. Who has been hit?
This week’s release puts some numbers against earlier expectations of who would be hit. First it confirms that accommodation and food is in the frontline, with a 30 per cent drop in employment in the sector over the year and many more effectively furloughed on the PUP.
Second, it breaks down the figures on the 370,000 plus people who have moved off the PUP. On average just under 63 per cent have gone off the scheme and back to work, but the figure is lower for the under -25s, at less than 58 per cent, and for the over-60s, at 55.6 per cent. So younger and older people are in the employment firing line in that they are more likely to remain on the PUP.
Again, this reflects in part problems in sectors such as accommodation, leisure and entertainment which have a higher proportion of younger employees (see graphic). The slower return of older people may reflect health concerns for some.
Looking at the top-line employment figures before the Covid adjustment – jobs which we know are gone – the annual fall for women (3.9 per cent) was greater than for men (2.9 per cent). Females make up more of the workforce in accommodation and hospitality.
There was also a massive annual fall of 57,800 or 12.5 per cent, in part-time jobs compared to a small 1.1 per cent fall in full-time employment. It appears many part-time jobs were ended – they would be typical in some of the worst-hit sectors such as accommodation and entertainment, Employers, meanwhile, are trying to hold on to full-time staff, many availing of the wage subsidy scheme and others hoping to take people back off PUP.
One of the key things to watch in the months ahead is how this trend in full-time jobs develops, but more confirmed losses are inevitable.
4. What next?
A recent slowdown in the numbers coming off the PUP does raise concerns that the unemployment rate will remain high coming into the autumn.The restructuring of the wage subsidy scheme and its extension to next April will keep many people in work – but as the level of support is a bit lower it will also mean some are lost. If local or national lockdowns continue, or parts of the economy, such as wet pubs and clubs, remain shut, then more companies will just close as well.
Politically, one of the striking figures in the CSO survey is that just 8 per cent of those laid off in quarter two and who are now on the PUP do not expect to return to their previous employment. This compares to an even lower 5 per cent in an earlier survey. It seems to me that it is inevitable that many will be disappointed when they are not re-employed in their old jobs.
Finally, we should note that some sectors continue to grow, with six out of 14 sectors employing more people over the last year, including the financial sector. Also, the construction sector seems to have reopened reasonably successfully, with 78 per cent of workers who had been on the PUP now re-employed. For now, the mood is cautious and downbeat as virus numbers rise. September and October will be difficult months as the toll of job losses becomes clearer, but beyond that who knows?
