Monday, 12 January 2009

Spectre Of Gloom Looms In Ireland As Recession Hits...

Spectre of gloom looms for those who keep their jobs as well as those laid off...

GOING, GOING gone. Once these three words were the oft-repeated mantra of Ireland's busy auctioneers; now they form a gloomy synopsis of the state of the Irish jobs market.

With no homes going under the hammer, the axe fell on jobs in the construction sector over the course of 2008. A decisive coinciding blow from the global economic crisis saw the reverberations spread through all sectors of the economy.

Jobs are now being lost at such a fast rate that an Opposition leader (Labour Party's Eamon Gilmore) can call the soaring unemployment rate a "national crisis" and it doesn't sound like political hyperbole.

Having started the year below 5 per cent, the estimated unemployment rate in November was 7.8 per cent. Economists now forecast that the rate will jump to double digits by the end of 2009.

Almost 100,000 people joined the Live Register of unemployment benefit claimants in the first 11 months of 2008. The speed and scale by which the dole queues have lengthened is by any standard alarming: November's monthly rise in claimants was the highest ever in absolute terms and the largest spike as a percentage of the workforce since January 1975.

The Department of Enterprise, Trade and Employment's figures show a 57 per cent annual increase in official redundancies, with both the services and manufacturing sectors shedding jobs at an ominous pace.

In terms of crude numbers, the Government's oft-talked about attempt to establish a "knowledge economy" isn't enough to counter the slump in traditional bread-and-butter industries. IDA Ireland's job creation announcements in 2008 come to a total of around 5,300 jobs. "High level" - or "high value-added" - though many of those positions may be, they fall somewhat short of the 37,300 notified redundancies recorded in the first 11 months of 2008.

In 2009, the miserable consequences of such job losses will continue to be felt both in terms of the wider economy and in the local communities that depend on a small handful of big employers for the bulk of their employment.

The commuter counties have been particularly badly affected by the collapse of the housing market: in Kildare, Meath and Wicklow the increase in the number of people signing on is running at more than 80 per cent. In six towns in Ireland, the number of people claiming unemployment benefits has doubled: Ballybofey in Co Donegal, Westport in Co Mayo, Maynooth in Co Kildare, Kells in Co Meath, Cahir in Co Tipperary and Newmarket in Co Cork.

The biggest job-cut announcement of the year came courtesy of insurance company Hibernian, which said it was transferring 580 jobs over a three-year period to Bangalore, India. Despite that move, Ireland is judged to have a reasonable chance of clinging on to its financial services industry in the long term.

But in the short term, the sector is capitulating to the credit crunch: GE Money, Citco, Inter Group Insurance Services and stockbrokers Davy were among the financial services firms to let staff go in 2008.

Going into 2009, the spectre of mass layoffs hangs heavily over the main Irish banks and IFSC operations with global redundancy programmes.

Outside the financial services sector, victims of the property boom's busting include Howley Civil Engineering (250 job losses), McInerney (225 job losses) and Wolseley Ireland (150 job losses).

Retail jobs are also looking especially vulnerable. The malaise started with the furniture retailers, which last year gave hotel conference rooms an unsustainable new trade in creditors' meetings.

Now with the numbers of people in employment shrinking and those who are hanging on to their jobs adopting more cautious spending habits, retail sales have already plummeted 7.4 per cent in the year to October.

Even if, as one retail industry representative claimed, Christmas proved "almost more important than recession" and shoppers made a last minute dash for the tills, the chances are that those tills will have been north of the Border: a weak sterling, a British cut in VAT rates and increased budget-consciousness all conspired to drive Irish consumers up the N1. Once the tinsel is taken down, there will, as one economist put it, be a retail "shake-out".

The extreme currency movements in sterling in December also mean that exporters, many of whom were already suffering from a slide in the dollar, will be forced to have a staff clearout in the weeks ahead. Tourism is another industry under pressure, partly due to the currency deterrent for UK and US travellers and partly due to lower levels of discretionary income among both overseas and domestic tourists.

With new car sales down 55 per cent annually, it's not a good time to be tangled up in the motors business, while the plunge in advertising revenues means the media sector is also feeling the pinch.

Cashflow constraints are compounding the dips in demand for small firms: according to a survey by business group Isme, half of small and medium enterprises (SMEs) expect to lay off staff in 2009, with only 14 per cent expecting to take on staff.

While some job losses may be cyclical - that is, a reflex response to recession - many of the lost jobs won't return.

After announcing 490 redundancies in late 2007, Waterford Crystal said in October 2008 that it wants to reduce its workforce by another 280 people as it plans to outsource production to lower cost eastern Europe.

Dell is shifting production from Limerick to the Polish city of Lodz at the cost of up to 2,000 jobs, while the Tullamore business of Boston Scientific (240 job losses) is going back to the US.

With some of the largest job loss announcements, simple technological efficiencies were at play: medical devices firm Abbott (500 job losses), biscuit maker Jacob Fruitfield (220 job losses) and Guinness brewers Diageo (250 job losses) have all found ways to streamline production.

These technological advances won't be unwound, while, for better or worse, the housing market may never again inflate to such a large bubble.

Those who keep their jobs during this recession face the prospect of pay cuts, grimmer working conditions and more casual terms of employment: in other words, longer hours for less money, even more rubbish pensions and precious little job security.

Those who lose their livelihoods will face a highly competitive scramble for the few vacancies that do pop up. Welcome to the recession.

Report by LAURA SLATTERY - Irish Times.

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