WITH UNEMPLOYMENT expected to top 500,000 by the end of this year, Ireland is facing an enormous social as well as economic crisis, which has caught the Government, its agencies and planners completely on the hop.
We've been here before, most recently in the late 1980s and early 1990s when unemployment rates rose to 16 per cent. This time, things are different.
For a start, the scale of the problem is unprecedented. The doubling of Ireland's workforce since that time to over two million at the height of our boom means the volume of displacement is far greater. Moreover, the speed of the decline has also meant economic policy-makers have not had time to adjust to the new scenario.
In the 1980s, various safety valves also existed to take pressure off the system. With other economies performing better, emigration was an obvious alternative for both the unskilled and professionals, many of whom had the option of returning when our economy improved.
For a time, the public service was also able to absorb a greater number of candidates, taking up some of the slack from the private sector, although a public-sector recruitment embargo was eventually introduced.
Today, there is a general acceptance that the public sector is overmanned and the thrust of Government policy is to reduce headcount here over the coming years, through hire freezes and incentivised early-retirement packages.
The high rates of personal income tax prevailing in the 1980s also meant that, for some groups, the gap between social welfare benefits and take-home pay was not as severe as it is today. Levels of personal indebtedness were also lower. Mortgages were generally small and credit-card debt was minimal. Unemployment, while never pleasant, was survivable, for many.
One of the responses of Government at the time was to encourage community-based employment schemes. While there is general acceptance that these schemes did good work locally - and some have survived to this day in one form or another - their ability to create long-term economic value and to help participants find long-term sustainable employment is less clear.
Philip O'Connell of the Economic & Social Research Institute, who has undertaken a study of responses to unemployment in previous downturns, suggests that programmes should be closely connected to the existing labour market, rather than trying to find new solutions. The emphasis should be on up-skilling those at the bottom who are in danger of falling into long-term unemployment. "There will be enormous social consequences if we don't intervene at this level. We need to ensure that we don't get back to high levels of inter-generational unemployment," he warns.
The lessons from the past suggest prevention strategies are better than cures and active intervention is needed to prevent numbers rising. "The particular difficulties of poorly educated young labour-market entrants indicates the urgent need to reduce early school-leaving to prevent the most disadvantaged becoming long-term unemployed," he advises.
O'Connell says despite talk of middle-class unemployment, there is no hard evidence yet that the numbers in Ireland are significant in the overall scale of the problem. This may be of little consolation to recently unemployed architects or estate agents but O'Connell suggest that people in these categories have more options open to them than those who may have left school early to join Ireland's booming construction industry.
"There is an element of trading down in a recession so people will accept jobs that they wouldn't in more buoyant times. That creates a squeeze at the bottom," he says.
He adds: research from the Department of Social and Family Affairs backs up the belief that it is unskilled or semi-skilled people in construction, retail and general operative positions who have been most exposed by the downturn. "In construction, for example, you have a lot of unskilled younger people who need to be trained if they are to rejoin the workforce," he says.
This is a not a new phenomenon. A need for reskilling of redundant and unemployed workers to grasp the intricacies of new technology and the resulting new procedures was identified at various points in the history of all developed economies, says UK charted psychologist and author of Counselling in Careers Guidance Migel Javasinghe. An early example, he says, was the retraining of steam locomotive engine drivers to drive diesel-powered trains.
Pioneering work was undertaken at the Industrial Training Research Unit (IRTU), Cambridge, by Drs Meredith and Eunice Belbin, he says. The Trainability Test is a tool developed by psychologists at ITRU to assess the suitability of individuals for re-skilling in a particular trade.
Psychologists carry out assessments using a range of ability, aptitude and personality tests, scales or instruments to help individuals identify their strengths and select appropriate areas for retraining or re-skilling. "Motivating the unemployed to seek such interventions by state funding would be a help," he says.
Government policy appears to recognise this at least with plans to try to get 50,000 young people currently on the live register to improve their skills and qualifications. Last month the Department of Social and Family Affairs wrote to all 18- to 25-year-olds on jobseeker's allowance encouraging them to look at training options through Fás and VECs, for example.
Adjustments are also being made to schemes such as the Back to Education allowance to shorten the time spent on the live register from 12 months to nine months.
But some believe more radical steps need to be taken to hold back the tide.
Ibec's Finola McDonnell says initiatives need to be taken to protect existing employment and that on a cost-benefit analysis alone the Government should be intervening to protect jobs.
One specific area where it could act is to provide relief from employers' PRSI for a short-term period of perhaps a year. "Under-pressure employers are looking to redundancy as a 'get out of jail' card and we need to provide them with some incentive to retain jobs. The Government will end up picking up the tab in social welfare in any case so it makes sense."
Another issue that needs to be addressed is greater flexibility between social welfare and employment, she says. Existing social welfare structures, while well intended, are not aligned with the need for seasonal or scalable employment structures, something that affects sectors such as hotels and restaurants where there are spikes and troughs in demand for labour.
McDonnell met recently with a group of 30 Irish chief executives. The number one issue for the group was unemployment and she says she found a genuine concern for the effects of this on Irish society as well as the economy and a desire to do something about it. "There was a huge sense of responsibility expressed that we don't create a lost generation," she says.
One specific suggestion that came from the meeting was the idea of a major national graduate internship programme where employers and government would share the cost of employing graduates through the recession. This would not displace existing employment but would seek to harness the skills and energy of recent graduates.
"The idea is that we could provide around 30,000 internships to make sure that we don't lose a generation of graduates. Evidence suggests that the initial year or two after graduation is crucial in development of people's capabilities and we need to ensure that graduates are employed purposefully," she says.
In some cases graduates would go on to take Master's degrees after the internship but their employment prospects would be enhanced in any case through the experience, she suggests.
The important role of education is the common denominator amongst all experts looking at the problem. For those who can afford to do it, taking time out of the employment market to enhance skills is seen as a good option during the downturn and admissions offices of third-level institutions are reporting a boom in applications from mature students.
"The return on investment in education is very high both on a personal level and for the economy," notes Prof Frank Roche of UCD's Smurfit School. Those who are fortunate to have access to it will survive this recession best, he notes, but he is concerned about talk of a rump of unskilled individuals who society will leave behind. "That's something that I have an enormous problem with. We must ensure that we do everything to ensure that people are allowed to make a contribution."
Roche says that one worrying aspect of the current recession is the lack of stimulus policies, in contrast to the initiatives being taken in many other countries. This may have a negative psychological effect on people, he suggests, leading to a spiral of despondency.
While it may not be in vogue as a central policy instrument now, Roche says community-based initiatives have their place in the schemes of responses, along with market-focused training schemes. He points to the good work of local employment partnership schemes in areas of concentrated unemployment and of more general community-based responses.
"In the 1980s, you had a bootstrapping approach where communities in places like Kiltimagh and Killala decided that they needed to do something themselves so they harnessed local energy and whatever resources they had to stimulate their local economies. I think we are seeing a return to that."
As well as addressing unemployment, there needs to be a focus on upskilling management levels in firms to compete better in international markets, he says. Higher productivity, better competitiveness and an export-driven approach will play their part in developing firms, which will feed into employment.
A recent Fás report, Jobs in Downturn, examined some of the areas where job opportunities might lie. It identified life sciences, ICT and the environmental energy and services sector as three likely sources of employment.
It suggest that new overseas ICT investment into Ireland will be primarily around online services provision, technical support, software engineering, and web-hosting.
The life sciences sector is seen as a relatively recession-proof area that is expanding and one where Ireland already has a significant base, while the green economy is also growing globally.
In the absence of Government stimulation, perhaps our best hope lies in positioning ourselves for increased demand from abroad, both in the form of direct foreign investment and selling our goods and services in recovering international markets. It's back to the 1980s, in more ways than one.
