Tuesday, 2 July 2013

Questions (207, 215)

Dara Calleary

Question:

207. Deputy Dara Calleary asked the Minister for Finance the level of economic growth that would be required to bring the unemployment rate below 10% by 2015; and if he will make a statement on the matter. [24407/13]

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Peadar Tóibín

Question:

215. Deputy Peadar Tóibín asked the Minister for Finance his response to the view that increases in growth rates will not deliver the scale of job creation required to reduce significantly the rates of unemployment. [24464/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 207 and 215 together.

Over the past few quarters, we have seen a number of relatively encouraging developments in the labour market. Data from the latest Quarterly National Household Survey show that employment on an annual basis increased by 1.1% in the first quarter of 2013, the second successive quarter of annual growth. In May, the standardised unemployment rate stood at 13.7%, substantially down from the peak rate of 15.1% in February of last year.

In line with these latest developments, my Department is forecasting modest employment growth in 2013, with employment expected to continue expanding thereafter. However, over the medium term increased labour supply is likely to result from the assumed economic recovery as participation rates pick-up and the pace of outward migration slows. In other words, while this pick-up in employment is expected to result in some decrease in the unemployment rate in the next few years, increasing labour supply will likely curtail, at least to some extent, the decline in the unemployment rate.

As outlined in the Irish Stability Programme – April 2013 Update, my Department expects the unemployment rate to average 12.8% in 2015. This is based on annual average GDP growth of 2.3%. However, I would stress that this unemployment projection takes account only of policies which are known. The impact of measures yet to be announced will be factored into the Department’s macroeconomic forecasts as and when the specifics of these measures become available. If the pace of economic growth is stronger than expected then unemployment could potentially fall more rapidly; however, as outlined above, labour supply might also increase at a faster pace.

Finally, I would like to emphasise that the Government remains committed to tackling the unacceptably high level of unemployment. Reflecting this, the Action Plan for Jobs 2013 set out over 333 actions to be undertaken in the coming year to support job creation and complement measures already undertaken in the Jobs Initiative and the Pathways to Work.