Spinning Our Way To Prosperity. The Recession Diaries – June 28th

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Adrian Weckler is doing what journalists should be doing – investigating stories rather than report press releases. We have, of late, been subjected to an avalanche of job-creation announcements. Take one example: Weedle, a Dublin-based company that marries recruitment with social marketing; Minister Batt announced 50 new jobs from this company.

‘The company, which already employs 19 people, will create the 50 jobs in the development of next generation web applications over the next three years.’

Adrian decided to look behind the Departmental press release and found a bit of spin.

‘There are no guaranteed 50 jobs at Weedle. Instead, there is an aspiration to grow the company over the next three years. If that happens – and we all hope it does – there may be extra jobs. In a best-case scenario, with the company roaring ahead, there could even be as many as 31 new jobs (the company is including the 19 existing jobs as part of its ‘50 jobs’ aspiration).’

The fault here does not lie with the company (they are, after all, going about the business of creating new business) but with the spin put out by the Government, where ’50 new jobs’ is actually 31 and only if everything goes right.

This begs broader questions – not just of spin but of the employment projections the Government is using. They have projected net new job creation to be 1 percent, or approximately 20,000 net new jobs, in 2011, rising to 2.3 percent, or over 40,000, in 2012 and in each of the two following years. That’s 140,000 net new jobs over the next four years. Of course, that means a much higher gross job creation rate as these are net figures, taking into account job losses.

How realistic is this? If we look at the employment creation record since 2000, we might choose to be sceptical.

Between December 2000 and December 2007, the Irish economy created 431,000 jobs. That’s 61,000 jobs (including self-employment) per year, or a growth rate of 3.7 percent annually. That’s a healthy growth rate. But the picture looks less rosy when we start breaking down that rate. In this period:

  • Nearly 30 percent was created in the construction sector
  • Over 16 percent was in the public sector

Close to half of all jobs came from two sectors. When these are excluded, we find that the annual job creation rate was substantially reduced – to less than 34,000. However, this only tells part of the story.

  • Outside the construction sector, there was substantial job creation still dependent on the property boom: surveyors, architects, real estate agents, mortgage brokers – and associated clerical positions; building suppliers, transport, and other business services.
  • Then there were the jobs created because of the increased consumer spending arising from the property boom/public sector employment; retail for example.
  • And let’s not forget the jobs that were created by Government consumption – purchases of goods and services from the private sector.

It’s hard to break this down but thousands of extra jobs were dependent on conditions that will not return.

  • The Government intends to reduce public sector employment by anything between 10,000 and 15,000 up to 2015. Instead of jobs growth, there will be jobs retrenchment.
  • Nor should we expect substantial growth in the construction sector – not only because housing starts will remain sluggish, but because the Government intends to cut capital spending in real terms up to 2014. According to the FAS/ESRI employment projections, construction will have 63,000 fewer jobs in 2015 than it had in 2008.
  • In addition, the Government intends to cut its consumption by ½ percent each year up to 2014 – meaning fewer jobs in private sector companies that previously benefited from such consumption.

When we consider different sectors, we see either losses or flat-lining. Again, according to the FAS/ESRI projections, there will be lower employment in the agriculture (30,000 less in 2015 than in 2008) and traditional manufacturing sectors (40,000 less).

The Ernst & Young/Oxford Economics survey projected that we wouldn’t return to pre-recession job levels until 2022. Even on the Government’s own highly optimistic projections, we won’t return to pre-recession levels until 2017 but those numbers look ever more problematic when the details are examined.

So the question arises – where will the jobs come from? Unfortunately, we are getting no answers – not ones that will satisfy the needs of all those people who will need to find jobs: school and university leavers, the unemployed, those currently under-employed and marginally attached to the workforce and the thousands who have been forced into non-participation for lack of work opportunities.

Instead, the Government actually wants us to believe that employment creation will be higher in the next few years than it was in the earlier part of the decade when money was cheap and we actually suffered from labour shortages.

All we are getting is spin – aspirations and numbers that don’t add up. We don’t deserve this.

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One Response

  1. Pope Epopt

    June 29, 2010 8:58 am

    Irish Nationwide Building Society is posting flyers (presumably to every member of what was once a mutual society) saying ‘it’s open for business’. No-one in their right mind would want a mortgage with them and I doubt that they really want any more mortgage business. It’s all expensive spin.

    Someone in government, FAS, EI or whoever has the job of making sure that an announcement of of ‘up to (choose your figure) jobs will be created in (whichever constituencies turn it is this time) by (choose some date after the fall of this government)’.

    Spin and lies, most of it, but most journalists just quote the press releases verbatim.

    There’s no particular reason now for inward investment in Ireland apart from the criminally low tax on declared profits and the permissive rules on the declaration of those profits.

    The only way jobs will be created are by direct stimulus by government spending. See Michael Taft’s proposals in TASC.