The Labour Market to 2010:The Labour Market to 2010:New Issues?New Issues?

John Fitz GeraldJohn Fitz GeraldThe Economic and Social Research Institute, The Economic and Social Research Institute,

www.www.esri.ieesri.ie

IntroductionIntroduction

The Driving ForcesThe Driving Forces Economic BackgroundEconomic Background• The clockwork mouse runs downThe clockwork mouse runs down

External environmentExternal environment• US economic imbalancesUS economic imbalances• Globalisation is good for youGlobalisation is good for you• EnlargementEnlargement

Domestic forces for changeDomestic forces for change• Demographic ChangeDemographic Change

The Labour Force of the FutureThe Labour Force of the Future

Average Growth in GNPAverage Growth in GNP

0

1

2

3

4

5

6

7

8

9

%

Relative GNPRelative GNP

Ireland as a % of EU average in PPS

50

60

70

80

90

100

110

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

per head per person employed

Economic DependencyEconomic Dependency

Numbers not working / Numbers working

1

1.2

1.4

1.6

1.8

2

2.2

2.4

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

Ireland EU

External EnvironmentExternal Environment

US economic imbalancesUS economic imbalances• Budget and balance of paymentsBudget and balance of payments• How can they be “cured”?How can they be “cured”?• Implications for the dollarImplications for the dollar• Implications for FDIImplications for FDI

If dollar falls – implications for EUIf dollar falls – implications for EU

GlobalisationGlobalisation

EU integration key to successEU integration key to success• Access to marketsAccess to markets• Single MarketSingle Market

Future – Enlargement and world tradeFuture – Enlargement and world trade• Enlargement an opportunityEnlargement an opportunity

Exploiting the global opportunitiesExploiting the global opportunities• Demand for skilled labourDemand for skilled labour• Services sector – key to growthServices sector – key to growth• Shifting supply – flexibility the keyShifting supply – flexibility the key

Domestic FactorsDomestic Factors

Factors affecting labour supplyFactors affecting labour supply• FertilityFertility• ParticipationParticipation• MigrationMigration• EducationEducation

Labour Supply GrowthLabour Supply Growth

Contribution to Growth

-1-0.5

00.5

11.5

22.5

33.5

4

1990-95 1995-00 2000-05 2005-10 2010-15 2015-20

perc

enta

ge p

oint

s

Natural Increase Female Participation

Male Participation Migration

Birth RateBirth Rate

10

12

14

16

18

20

22

24

1960 1970 1980 1990 2000 2010

Population Structure, 2003Population Structure, 2003

0 100000 200000 300000 400000

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90-94

Age

Population Structure, 2013Population Structure, 2013

0 100000 200000 300000 400000

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

80-84

90-94

Age

Female Labour Force ParticipationFemale Labour Force Participation

0

10

20

30

40

50

60

70

80

90

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

%

1988 2002

Female Labour Force ParticipationFemale Labour Force Participation

0

10

20

30

40

50

60

70

80

90

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

%

Ireland, 2001 EU, 2000

The “Homing Pigeons”The “Homing Pigeons”

Huge Emigration in 1950sHuge Emigration in 1950s• Perception of a failed economyPerception of a failed economy• Leave, Never to ReturnLeave, Never to Return• Brain Drain in 1980sBrain Drain in 1980s

Today: “Homing Pigeons”Today: “Homing Pigeons”• Enhances productivityEnhances productivity• Increase productive potential of economyIncrease productive potential of economy• Good for Foreign Direct InvestmentGood for Foreign Direct Investment

Educational Attainment, 2002Educational Attainment, 2002

0%

25%

50%

75%

100%

20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Primary Junior Leaving Third

Participation in Education, 15-19Participation in Education, 15-19

60

65

70

75

80

85

90

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

% o

f P

opul

atio

n

Males Females

Supply of LabourSupply of Labour

400

600

800

1000

1200

1400

1600

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Tho

usan

ds

Unskilled Skilled

Returns to EducationReturns to Education

% premium on primary education only

0%

20%

40%

60%

80%

100%

Junior Leaving Diploma University

198719942000

Labour DemandLabour Demand

Foreign Direct InvestmentForeign Direct Investment CompetitivenessCompetitiveness

Skilled Labour SupplySkilled Labour Supply

WW

LL

WW11

DD11LL

SS11LL

LL11

SS22LL

LL22

DD22LL

Unskilled LabourUnskilled Labour

SS11LL

SS22LL

UU

LL22

DDLL

LL11

S=WS=W

LL

WW

DD22LL

WW22

Competitive Markets MatterCompetitive Markets Matter

Costs to consumersCosts to consumers Costs to businessCosts to business Competitiveness councilCompetitiveness council• Business as consumersBusiness as consumers

Labour market pass through of costsLabour market pass through of costs• Taxes – well knownTaxes – well known• Consumer prices also pass throughConsumer prices also pass through• Domestic services prices matterDomestic services prices matter

Labour Force 2014Labour Force 2014

A world where couples both workA world where couples both work OlderOlder• 30-34 age group dominates30-34 age group dominates• Affects work patternsAffects work patterns• Affects consumptionAffects consumption

Female labour force participationFemale labour force participation• High - related to educationHigh - related to education

ImmigrationImmigration• Brings skillsBrings skills

Skilled and Unskilled LabourSkilled and Unskilled Labour

Supply increasing rapidlySupply increasing rapidly Unskilled supply falling but demand?Unskilled supply falling but demand? Skilled labour: female proportion risingSkilled labour: female proportion rising Implications for employersImplications for employers• Need to attract and hold female labourNeed to attract and hold female labour• Needs of work force in their 30sNeeds of work force in their 30s

Proportion of skilled labour force who Proportion of skilled labour force who are parents of young children risingare parents of young children rising

Working PatternsWorking Patterns

Accommodating working couplesAccommodating working couples 30-34 Cohort the largest30-34 Cohort the largest• Age at first birth?Age at first birth?

Children bring change in lifestyleChildren bring change in lifestyle• Working pattern, pattern of consumptionWorking pattern, pattern of consumption

Cost of children?Cost of children?• Time out of workforce penalisedTime out of workforce penalised• Delay children?Delay children?

Reaching a modus vivendiReaching a modus vivendi

ImplicationsImplications

Flexible workingFlexible working• May enhance skilled labour supplyMay enhance skilled labour supply• ““Cost-effective” for parents?Cost-effective” for parents?

Potential problemsPotential problems• Penalty for time out of labour forcePenalty for time out of labour force• Does this reflect lower productivity or Does this reflect lower productivity or

prejudice?prejudice? Compulsory paternity leave?Compulsory paternity leave?