Patrick D. Harte
Question:50 Mr. Harte asked the Minister for Enterprise and Employment whether he expects improved growth in Ireland will have a significant effect on unemployment; and if he will make a statement on the matter.
Written Answers. - Impact of Economic Growth on Employment.
Growth in total demand, including growth in the volume of business done in our export markets, could sustain an appreciable improvement in the numbers at work. Recently FÁS/ESRI have made projections which indicate an increase of about 60,000 in the total numbers employed outside of agriculture by 1996 as compared with 1992 (based on the preliminary Labour Force Survey for 1992), assuming that certain conditions for demand and output growth, price stability and the consolidation of the public finances are met over the period.
The impact of an increase in the numbers at work on the level of unemployment is determined by the rate of increase in the total labour force. Participation rates, migration, etc. have a major bearing on the rate of increase in the labour force. The assumptions for growth in final demand have important implications for such factors. Consequently, although the rate of increase in the labour force cannot be estimated with complete confidence, our current expectation is for the natural rate of increase in the Labour Force to be in the region 23,000-25,000 p.a. for the rest of this decade.
It will take time for medium term structural reform being implemented by this Government to improve the competitive base of the Irish economy. Among the problems that have undermined the sustainability of employment in business here have been high costs, relative to those faced by competitors, particularly in sheltered sectors like posts, telecommunications, ports, transport, domestic services and the incidence of tax. These restraints on competitiveness are in the need of, and are receiving, priority attention. Government policy is directed at achieving improved price competitiveness through programmes of structural reform, investments in upgrading the competitive capacity and performance of the economy and the achievement of moderate rates of pay increase throughout the economy.
The criterion for success must be how we can increase the numbers at work. Our performance in the manufacturing industry sector in that regard has been good compared to most other OECD countries particularly since 1987. Between 1988 and 1991 the numbers at work in manufacturing in this country increased by 6.4 per cent. That was better than the performance of Austria, Denmark, Finland, France, Italy, Norway, Spain, Sweden, UK and USA. In a situation where it is easy to be pessimistic or to under-value achievement, we must keep in mind our undoubted capacity to increase the numbers in employment in broad sectors of business, such as manufacturing, as demonstrated by that comparison. The fact that the total numbers at work in services activities increased by 56,000 between the Labour Force Surveys of 1986 and 1992 also testifies to that.
In addition, figures available for OECD countries up to the middle of 1992 indicate that whereas in the UK, Canada, Australia, Finland, Norway, Sweden and Switzerland total employment fell, as compared with the second quarter of 1991, in Ireland, by contrast, the numbers at work remained stable over the same period. We have, therefore, a situation that is better comparatively than many other developed countries, but clearly one that we are intent on improving.