Ireland’s unemployment rate fell to 12.1 per cent in the last three months of 2013. The number of people in work continued to rise, in another indication of the country’s economic turnround after its exit from an international bailout.
But in a sign of government concern that some parts of the domestic economy were being left behind despite the better economic mood, Dublin is to consider measures to revive the building industry, which has virtually collapsed in the past five years.
The unemployment rate has been falling slowly, but steadily, since the beginning of 2012, when it stood at more than 15 per cent as the economy sagged following Ireland’s banking crisis. Enda Kenny, the prime minister, said the economy was creating 1,200 jobs a week, two-thirds of them in companies under five years old.
The last three months of 2013 were the sixth quarter in a row when Ireland’s unemployment rate fell. Dermot O’Leary, an economist at Dublin brokerage Goodbody, said the rate was “now bang in line with the euro area, having had a rate that was five percentage points higher just three years ago”.
However, the headline rate obscures more worrying trends. The government insisted on Thursday that Ireland enjoyed the highest rate of employment growth in the EU but it acknowledged that the country had the second highest rate of unemployed households in the OECD, the Paris-based group that aims to promote sustainable growth.
The shrinking of the building industry is one factor. Richard Bruton, the employment minister, said the sector had gone from accounting for roughly 17 per cent of Irish gross domestic product in 2006 to 5 per cent now. Some two-thirds of the industry workforce from the peak years, or about 100,000 people, were now unemployed.
The downturn in the industry’s fortunes is stark. A few years ago, Irish property developers were building 80,000 to 100,000 homes a year, where about 25,000 were needed. Now the number is 6,000 a year, although the need is 25,000 to 30,000.
“Our unemployment problem is different to that in the EU because of this huge displacement in the construction industry,” Mr Bruton said in an interview with the Financial Times.
A special cabinet meeting earlier on Thursday agreed to consider measures that would enable developers to get easier access to finance for residential and premium office developments.
The government also announced more resources for two state agencies – Enterprise Ireland, which supports Irish companies in export markets and the Industrial Development Authority, which attracts foreign direct investment to Ireland. It also announced steps, including support for research and development, to help indigenous manufacturing industry, which Mr Bruton said had been “neglected.
Despite the rise in employment, analysts said there was little wage pressure on Irish companies, although five years of recession and tax rises have hit pay packets. Mr Kenny warned that “we have to be very careful about not doing anything that would add to the cost of creating the jobs that we need”.
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