Women and young workers drive ‘remarkable’ labour rebound

Women aged over 35 and workers aged under 25 made a “disproportionate” contribution to the Irish labour market’s “remarkable recovery” last year as the impact of the pandemic began to wane.

In an economic letter, published on Friday, Central Bank researchers note that in the final three months of 2021 some 2.6 million people were in employment in the Republic, a record and 165,500 or 6.7 per cent more than at the end of pre-pandemic 2019.

Occurring as it did without a notable increase in the number of migrant workers in the State, this “strong employment growth” was predominately driven by a surge in the domestic labour force, report authors Laura Boyd, Stephen Byrne, Enda Keenan, Tara McIndoe-Calder highlighted.

Within the 6.7 per cent growth between 2019 and 2021, the biggest “contributors were people aged 15-24, who accounted for just under 30 per cent and women aged between 35 and 59, who contributed just under one-third of the increase”, the study showed.

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Of a total of 97,100 people who transitioned from inactivity into the labour force during the pandemic recovery period at the end of 2021, 61 per cent were aged under 25 years, the report notes.

Most of them were employed in “contact-intensive” sectors such as retail and hospitality, both of which have a high incidence of low pay and suffered large employment declines during the pandemic due to the impact of public health restrictions. More than half of these young workers were still in third-level education.

The same was true for new entrants to the labour force who were women over the age of 35. The recovery of contact-intensive sectors and the economy more broadly was the decisive factor in their contribution to the rebound

However, the data suggests that women were also taking up more skilled roles than they were pre-pandemic. Increases in employment in some of the fastest-growing sectors of the economy – including IT, professional, scientific and technical sectors – “were comparatively larger for women”, according to the report. The surge “does not appear to be explained by growth in sectors of the economy that have traditionally employed a greater proportion of women”, such as retail.

Rather than this being the result of any “structural” changes within the Irish labour market, such as the increase in home working during the pandemic, the data suggests that the increase in women workers relates to Ireland’s improving economic fortunes last year coupled with longer-run trends.

“Our research suggests that there is no strong evidence to date that changes during the pandemic, like a move to hybrid or fully remote working, were the dominant factors supporting the recovery in employment over recent quarters,” said Central Bank research economist and report author Ms McIndoe-Calder.

“Instead the participation expansion related largely to under-25s and women over the age of 35, who tend to respond strongly to how rapidly the economy is growing. Women over 35 had seen increases in their labour force participation for underlying societal and structural reasons (this is synonymous with increased educational and occupational skill-level attainment for women) that predate the pandemic and is expected to continue for some time to come.”

However, Ms McIndoe-Calder said that “some further action” will likely be required to bring Ireland’s participation rate for women closer to the best performing economies in Europe. At 74 per cent the Irish rate is still behind countries such as the Netherlands at 83.7 per cent and Estonia 79.1 per cent, the report highlights.