Quarterly Bulletin Q3 2013

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22 The Domestic Economy Quarterly Bulletin 03 / July 13 Box C: Focus on Long-Term Unemployment By Thomas Conefrey Figure C2 shows a breakdown of male long-term unemployment by age group. As shown in the graph, the rise in male long-term unemployment has been concentrated among those in the younger 25-44 age group. Males in this age group account for close to 40 per cent of all those long-term unemployed. More recent labour market data have been encouraging, showing a decline in long-term unemployment among males (Figure 1). The overall long-term unemployment rate declined from 9.5 per cent in Q1 2012 to 8.4 per cent in Q1 2013. The data in Figure C2 indicate that this reduction has been mostly accounted for by males in the younger age cohorts. Data from the Quarterly National Household Survey (QNHS) indicate that the majority of the fall in the labour force over recent quarters has been due to a decline in the size of the working age population. This negative demographic effect, consistent with outward migration, is concentrated almost exclusively among the 20-24 and 25-34 age groups. As a result, the decline in long-term unemployment over recent quarters, which has also been largest among these age cohorts, may reflect in part net outward migration as well as other factors. The evidence indicates that the problem of long-term unemployment is particularly severe for males in the younger age cohorts of the population. The implementation of targeted activation measures, such as job search assistance, will be essential to avoid the risk of prolonged detachment from the workforce among individuals in this group. Box C Fig 2: Male long-term unemployment by age group, thousands 35 Thousands 30 25 20 15 10 5 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2006 2007 2008 2009 2010 2011 2012 ‘13 15 - 24 years 25 - 44 years Source: CSO QNHS and own calculations 45 years and over Pay The Annual National Accounts for 2012 show that compensation per employee recorded a small rise of 0.8 per cent last year. A similar picture emerges from the CSO’s Earnings, Hours and Employment Costs Survey (EHECS) which suggest that economy-wide average weekly earnings recorded a slight increase of 0.5 per cent compared to 2011. A continuation of this trend of subdued growth in earnings was evident during the first three months of 2013, with overall weekly earnings flat in Q1 compared to the same quarter of 2012. This reflected a combination of an increase in hours worked and a decline in the hourly rate of pay. While the large decline in national output and the rise in unemployment during the crisis might have suggested downward pressure on wage rates, the data show that overall
The Domestic Economy Quarterly Bulletin 03 / July 13 23 Table 7: Inflation Measures – Annual Averages, Per Cent Measure HICP HICP Services a Goods a CPI excluding Energy 2010 -1.6 -2.7 -0.7 -2.4 -1.0 2011 1.1 0.0 0.8 1.5 2.6 2012 2.0 0.9 1.9 2.0 1.7 2013 f 0.8 0.9 1.6 0.0 0.9 2014 f 1.1 1.4 1.7 0.4 1.0 a Goods and services inflation refers to the HICP goods and services components. economy-wide earnings have been broadly stable since 2008. Private sector hourly pay has been flat since 2009 and increased in Q1 2013. Public sector hourly earnings declined by 3.7 per cent in 2010 (excluding the impact of the pension levy), but registered marginal increases in both 2011 and 2012. Turning to the outturn for Q1 2013, although overall economy-wide weekly earnings were flat in the first quarter, this masks differences in wage movements in the public and private sector. Hourly pay rose by 1.5 per cent in the private sector while hours worked declined by 1 per cent. In the public sector, both hourly earnings and hours worked declined by 0.5 per cent. At a sectoral level, average hourly earnings rose in six of the thirteen economic sectors annually in the first quarter of 2013, with the largest percentage increases recorded in the administrative and support services sector and transportation and storage. The largest annual decline in hourly earnings was recorded in the professional, scientific and technical sector. Overall average hourly earnings in Q1 2013 remained 0.6 per cent below their level recorded four years earlier. Looking ahead, pay pressures in the economy are expected to remain muted over the period of the forecast. The unemployment rate is projected to stay above 13 per cent and domestic demand is set to recover only gradually. Meanwhile, in the context of the ongoing efforts to reduce the budget deficit, there is unlikely to be significant upward movement in public sector pay. Overall economy-wide compensation per employee is expected to remain close to or below the rate of inflation over the forecast horizon. Annual growth in economy-wide compensation per employee should average 1.5 per cent in 2013 and 1.2 per cent in 2014. Improved labour market conditions should support marginally stronger wage growth in the private sector next year. Inflation In 2012, the annual rate of inflation in Ireland as measured by the HICP averaged 2 per cent. The energy component was the main driver of inflation, as it contributed to 1.1 per cent of the overall HICP inflation rate. In absolute terms, the HICP energy component increased by 9.4 per cent in 2012, as the increase in oil prices in dollar terms was reinforced by the weakening of the euro vis-à-vis the US dollar. For the year to date, oil prices in euro terms have decreased and are not expected to increase in the coming months given the weak economic environment. As a result, the contribution of imported energy price inflation in 2013 is expected to be marginal. These aforementioned factors are also driving down HICP goods inflation, which is expected to be flat this year and average 0.4 per cent in 2014. Services inflation, which represents a reasonable proxy for domestically generated inflation, should remain fairly stable relative to last year reflecting weak domestic demand. It is anticipated to average 1.6 per cent in 2013 and 1.7 per cent in 2014. These factors have motivated a downward revision to the inflation forecast, with HICP
Page 1: JULY 13 Q3 Central Bank Quarterly B
Page 5 and 6: Contents Section 1 Forecast Summary
Page 7 and 8: Section 1 Quarterly Bulletin 03 / J
Page 9 and 10: 7 Comment Annual National Accounts
Page 11 and 12: 9 The Domestic Economy Overview n A
Page 13 and 14: The Domestic Economy Quarterly Bull
Page 23: The Domestic Economy Quarterly Bull
Page 33 and 34: 31 An Timpeallacht Gheilleagrach Le
Page 35 and 36: 33 Financing Developments in the Ir
Page 37 and 38: Financing Developments in the Irish
Page 55 and 56: 53 Developments in the Internationa
Page 57 and 58: Developments in the International a
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EU-IMF Financial Assistance Program
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EU-IMF Financial Assistance Program
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77 Developments in EU Financial Ser
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Developments in EU Financial Servic
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Developments in EU Financial Servic
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Section 2 Quarterly Bulletin 03 / J
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Analysis of Recent Monetary Operati
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Section 3 Quarterly Bulletin 03 / J
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Statistical Appendix Quarterly Bull
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Quarterly Bulletin Q3 2013

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