Vol. 467 No. 5
1 Mr. B. Ahern asked the Taoiseach if he accepts the view expressed by a number of economists and in the EU Commission report on the Irish economy, that the labour force survey some-what exaggerates the level of employment and underestimates the level of unemployment. [13420/96]
I take it the report referred to by the Deputy is the European Commission's report on "The Economic and Financial Situation in Ireland in the Transition to European Monetary Union".
In the section on "Unemployment Trends", the report notes that, in all EU member states, certain groups such as discouraged workers and involuntary part-time workers are not counted as unemployed. It suggests that the unemployment statistics do not, on their own, show the full scale of the challenge posed by unemployment. However, the report states that this is a feature of the statistics of all member states and is in no way peculiar to Ireland.
The definitions of employment and unemployment are complex, affected in recent years by changes in the labour market. These changes include technical and social progress; greater participation by women in the workplace; more part-time and casual work; and a highly developed social welfare system. Questions such as underemployment of part-time workers, discouragement and potential supply of labour are also important to a complete evaluation of the labour market.
The labour force survey reports, in addition to giving the standard measures of employment and unemployment, provide a considerable amount of detail on these additional categories of persons.
I am aware of just one recently published article by an Irish economist, which claims the labour force survey overstates the level of employment and correspondingly understates the number unemployed. In the article, the author assumes it was a simple matter for persons to misclassify themselves as employed. I do not agree with this assumption, since it would involve erroneous reporting in the whole range of questions dealing with employment. The Central Statistics Office has contacted the economist in question to inform him of this issue.
I put it to the Minister of State that neither Alan McQuaid of Bloxham Stockbrokers nor the EU Commission agree with the CSO's contention that the labour force survey is the only objective measure of employment and unemployment. I am sure the Minister of State is aware that the EU Commission in its report on The Economic and Financial Situation in Ireland in the Transition to European Monetary Union is of the view that the underlying extent of unemployment is not adequately measured by the official unemployment statistics. Is the Minister of State happy as we move forward to use figures based on labour force surveys, based on what the EU Commission and Bloxham Stockbrokers have said recently? They are asking whether this is the correct barometer to use for planning and in respect of unemployment figures.
In response to the EU report I do not accept that the figures give a misleading impression or are inaccurate. The comments in the EU report on the ILO classification apply equally to all member states, so it does not reflect particularly on Ireland. The groups highlighted — part-time under employed workers and discouraged workers — are relatively small in the context of the overall labour force. As employment and unemployment is a complicated issue a variety of figures need to be looked at for the various groupings within and outside the labour force. The necessary figures are those given by the labour force survey.
We do not intend to move away from the internationally recognised standards for compiling employment figures. However, the CSO is examining the most efficient and effective way in which quarterly multi-purpose house-hold survey might be introduced in mid-1997. Plans have been prepared for the necessary development work to be carried out and the CSO is attempting to minimise the additional resources required and to dovetail the new quarterly survey with other EU statistical requirements.
Regarding the argument put forward about the validity of the assertions by Mr. McQuaid, the reference to the views of the economist in question is not accepted by the Government or the Central Statistics Office. The article repeats verbatim the points made in the CSO press statement about the gap between the live register and the labour force survey statistics. In the article Mr. McQuaid also argues strongly in favour of a quarterly labour force survey and we agree with that. However, Mr. McQuaid also advances a rather weak argument suggesting that the labour force survey over estimates the true level of employment in the economy. He bases this on an assumption that in the survey "there could well be situations where individuals want to maintain a level of self esteem and claim to have a job when, in fact, they do not". This he says would seem to apply to men mainly over the age of 45. The CSO considers this line of argument to be simplistic and without foundation.
An official of the CSO telephoned Mr. McQuaid early last week about the article in question and pointed out that to misrepresent their situation in the manner suggested by Mr. McQuaid, respondents would have to give incorrect replies not only to the question about their usual employment but to several other questions about the nature of their employment. One is not simply talking about one question as to whether one is employed or unemployed. There would be misrepresentation across a range of questions relating to the supposed employment if somebody made a misdeclaration. During the telephone conversation with the CSO official, Mr. McQuaid did not dispute the CSOs point view on this matter. Mr. McQuaid went on to say: "At a guess I would say that the real level of unemployment in the economy is somewhere between 225,000 and 240,000". These figures are literally taken from thin air. There is nothing to support them. They depend on Mr. McQuaid's argument about employment being over stated and the figures are not based on any official survey or any administrative data.
I thank the Minister of State for giving me so much detail including that of telephone calls. I am not privy to the phone calls but I am privy to the document by Alan McQuaid of Bloxham Stockbrokers. He claims the discrepancy between the labour force survey and the live register is high. The Minister of State attempted to give the CSO answer to Mr. McQuaid's contention that the labour force survey overestimates the level of employment and underestimates the level of unemployment. Irrespective of whether he is correct, he analyses the matter in a fair manner. If the CSO believes he is wrong, it should publish a document outlining its arguments on the matter. He believes the level of unemployment lies somewhere between the two figures.
For many years labour force surveys have recorded far more people in employment than the official State statistics. We cannot have it both ways. The CSO believes that the black economy does not operate here. The Minister of State claims the labour force surveys are correct. If that is the case why are they not recorded in official statistics? In my experience, people are usually not willing to give accurate information about their employment status unless they know it is not a social welfare or tax official carrying out the survey. If the black economy does not operate here, the labour force figures should be similar to official statistics — there should certainly not be such a major difference between them. If Mr. McQuaid of Bloxham Stockbrokers is wrong, the CSO is obliged to release figures and state its side of the argument. In the absence of detailed figures, will the Minister of State accept that this Government, more than any other in recent years, has tried to use the labour force survey to put a favourable gloss on the continuing high level of unemployment which has deteriorated since the Government took office?
We are deviating from Question Time and proceeding by way of argument and debate, which is not in order at this time.
I did not start it.
Let us get back to relevant brief questions.
I did not say the black economy does not operate here. I gave specific details of direct and indirect gauges and measurements last week. I stated that the number operating in the black economy was not as high as people assumed, but I did not deny that one does not exist. I indicated there has always been some difficulty in accurately gauging the level at which it operates, but the indications are that it is relatively low.
In regard to the validity of the unemployment figures, I stated on many occasions that the labour force survey has been accepted as the internationally recognised accurate gauge of unemployment and employment figures. That scientific survey gauges employment and unemployment across a range of activities and, from the point of view of synchronising with our EU partners, it is the accepted gauge. To remove any possible distortions or anomalies and to erase doubts about its validity, we are committed to introducing a quarterly labour force survey and all the necessary administrative procedures are being put in place to do so. I indicated in my reply that we are moving in that direction. The CSO is refining its activities and we hope to have the machinery in place to carry out an accurate quarterly labour force survey as and from the first quarter of next year.
