Hard lessons on scarce jobs RICH TEST DO NOT DELETE
Subtitle "BREAKS COMMENTS"
Collecting unemployment benefits in Dublin
The speed at which jobs are being lost here is scary. The figures for March show that the number of people signing on for unemployment benefit was 88 percent more than in the same month last year.
A turnaround on that scale is unprecedented here. One economist said that the reason was the shakeout in construction, which at its peak accounted for over a quarter of a million jobs, an extraordinary level in a country with a workforce of around two million. Unlike the manufacturing industry, construction is a sector where jobs can be cut very quickly and that has been happening with the collapse of the building boom.
That amount of spending power being taken out of the economy has a devastating knock-on effect, and lower demand now means that many small businesses in Ireland are suffering badly, with jobs being lost in retailing, hospitality (bars and restaurants) and all kinds of services.
Our unemployment rate has gone up from 4 percent just over a year ago to 11 percent today, and the pessimists are saying it will be 17 percent by the end of the year. Even the optimists are predicting it will be 15 percent by Christmas.
As the shakeout in construction bottoms out later this year, the rate of growth in unemployment should start to slow. But it's going to settle at a pretty high level for the next year or two, which is why I'm saying you will be seeing a lot more young Irish over there.
One of our big handicaps is that we can't do a stimulus package like is happening in the U.S. and the U.K. Why? Because we let state spending here get so far out of line that we need everything we can borrow just to keep going at the same level.
So while President Obama is throwing dollars at the problem to stimulate the U.S. economy, in Ireland we are taking money out of the system instead of putting it in. lt's not that we're stupid. We just don't have an alternative.
One factor more than any other will help us out of this mess, and that is a global recovery. Former Taoiseach (Prime Minister) Garret FitzGerald and other economists last week said that there could be a slow improvement in the Irish economy from 2011 onwards, assuming that there is a global pick-up next year. Our economy is so open and so dependent on exports that everything hinges on that.
One way or the other, the key to the future in Ireland is getting our costs -- wages and the price of goods and services -- down to a level that will make us competitive again, when a recovery starts. That readjustment is happening anyway in private industry, as companies big and small struggle to stay afloat and workers take pay cuts to hang on to their jobs.
But in the state sector it's a different story. Workers there, backed by powerful unions, are refusing to budge.
During the boom, the benchmarking system -- matching pay for public workers with pay for private workers -- pushed pay for state workers through the roof. But as far as the unions are concerned, what goes up must stay up. Private sector pay is falling, but state workers don't want to benchmark downwards.