Com­ing your way soon: a gen­tle slap or a punch in the face

The Irish Times - - Opinion & Analysis - Cliff Tay­lor

We are in a re­ces­sion, all right, but noth­ing like we have ever seen be­fore. Leo Varad­kar was right when he said dur­ing the week that this would be the di­vi­sive down­turn. We are heading into a two-tier re­ces­sion , with one part of the economy get­ting a gen­tle slap and the other be­ing punched in the face. Younger, less-ed­u­cated peo­ple in lower-paid jobs are ex­posed, while many older, bet­ter-paid folk are pro­tected. Dublin, with its di­ver­sity of em­ploy­ment, will have some pro­tec­tion, but many parts of ru­ral Ire­land, par­tic­u­larly ar­eas re­liant on tourism, will have lit­tle.

Per­haps the spark of hope in this is that the tax rev­enues – and the ac­tiv­ity – cre­ated by the parts of the economy that con­tinue to do okay can help to sup­port the worst-hit sec­tors. The lat­est eco­nomic data sug­gests that as the most ex­posed parts of the economy – such as hos­pi­tal­ity, tourism and en­ter­tain­ment – strug­gle, many other sec­tors con­tinue to trun­dle on. A CSO sur­vey shows that seven out of 10 peo­ple re­port no im­pact on their earn­ings. Em­ploy­ment in the 10 biggest multi­na­tional tax­pay­ers rose by 11 per cent in both April and May, ac­cord­ing to Rev­enue data.

The cre­ation of these bet­ter-paid new jobs sup­ports in­come tax, which is im­por­tant. But we face a com­ing wave of job losses among lower-paid peo­ple who make up much of the work­force in the three most ex­posed sec­tors. Work by the ESRI has shown that this group tends to be younger and less es­tab­lished in work, to have lim­ited fi­nan­cial re­sources and less ed­u­ca­tion. Many have mi­grated to

Ire­land. Most are renting their ac­com­mo­da­tion. Here we have the two-tier threat of this most un­usual of re­ces­sions. Many bet­ter-off peo­ple con­tinue to do fine – the pub­lic sec­tor is even in line for a wage rise – the big multi­na­tion­als do their thing and the pro­fes­sional classes con­tinue on, as they al­ways seem to do. Mean­while, a sig­nif­i­cant group of gen­er­ally lower-paid peo­ple are at im­mi­nent risk of los­ing their jobs.

Trou­ble

We can’t gen­er­alise too much. Re­ces­sions hit across the board and this one will have par­tic­u­lar im­pacts in a range of sec­tors be­yond the ob­vi­ous. The ed­u­ca­tion and pub­lic trans­port sec­tors are in trou­ble and univer­sity fi­nances have been up­ended. And the gen­eral trend in con­sumer and busi­ness con­fi­dence – which could yet cause much wider eco­nomic dam­age – is now cru­cially re­liant on the path of the virus.

But for now the in­dus­tries where there is di­rect con­tact with con­sumers are in the front line and these tend to have younger em­ploy­ees. There are some 96,000 un­der-25s on the Pan­demic Un­em­ploy­ment Pay­ment and in­clud­ing these the un­em­ploy­ment rate among 15-24-year-olds is about 45 per cent. While most in this age group are in ed­u­ca­tion, this is still a strik­ing fig­ure.

The Na­tional Youth Coun­cil pointed out this week that the 125-page pro­gramme for gov­ern­ment con­tained no men­tion of spe­cific mea­sures to tackle youth un­em­ploy­ment, be­yond a few gen­eral com­mit­ments to new train­ing and

‘‘

We are heading into a two-tier re­ces­sion. Younger, less-ed­u­cated peo­ple in lower paid jobs are ex­posed, while many older, bet­ter-paid folk are pro­tected

reskilling pro­grammes.

The two-tier na­ture of the re­ces­sion re­lates not only to age but also to ge­og­ra­phy. Dublin and the other cities have plenty of jobs at risk, of course, but as a pro­por­tion of the work­force, ru­ral Ire­land is much more ex­posed. New re­search by Cen­tral Bank econ­o­mist Rea­monn Ly­don, pub­lished with its quar­terly bul­letin last week, showed the re­gional na­ture of the jobs hit.

In mid-June, about 60 per cent of the work­force of coun­ties such as Done­gal, Kerry, Louth, Car­low and Wex­ford were re­liant on State job sup­ports – the pan­demic pay­ment, the wage sub­sidy or the Live

Reg­is­ter. In Dublin, Cork and Kilkenny the fig­ure was just above 40 per cent. Ru­ral coun­tries are those with by far the biggest num­ber of un­em­ployed peo­ple in pro­por­tion to list­ings of jobs cur­rently avail­able.

When you see ru­ral coun­ties pop up as the most ex­posed, it gives some per­spec­tive to the row over min­is­te­rial ap­point­ments. Nerves are on edge, and Brexit adds an­other threat to ru­ral Ire­land. Pol­i­tics is al­ways lo­cal, but now more than ever there will be big de­ci­sions to be made about how sup­port is paid out. Many mea­sures will be na­tional – pos­si­ble VAT re­lief, for ex­am­ple – but the July stim­u­lus and what fol­lows will also try to boost lo­cal in­vest­ment. And let’s not pre­tend that this won’t be in­flu­enced by who is sit­ting around the top ta­ble.

Younger peo­ple need their sup­port­ers in the de­bates to come, too. It is all about per­spec­tive and pri­or­i­ties. Jobs must be sup­ported where at all pos­si­ble. But many will be lost and sig­nif­i­cant sup­ports and in­vest­ment in train­ing, place­ment and in­tern­ships will be es­sen­tial, as well as imag­i­na­tive ideas to di­rect and reskill peo­ple for ar­eas where new jobs are avail­able.

Few would ar­gue with this, I ex­pect. But en­ter­ing a pe­riod when we can’t af­ford ev­ery­thing, pri­or­i­ties are key. And this is where the rows will come. It would be nice, for ex­am­ple, to al­low ev­ery­one to re­tire at 66, but it would cost a few hun­dred mil­lion a year com­pared with the plan to al­low the State re­tire­ment age to grad­u­ally rise. And the fig­ures show that the older age groups are least af­fected by the eco­nomic hit of the pan­demic. Mean­while, de­mands for ex­tra spend­ing are flood­ing in and will come to a mul­ti­ple of the amount likely to be avail­able.

In the shake-out to come, the two hard­est-hit groups – younger work­ers and those in ru­ral Ire­land – must be at the front of the queue. Even be­fore this hit, both felt left be­hind by the boom, while oth­ers made hay. If this gap widens fur­ther, the fore­casts of a di­vi­sive po­lit­i­cal fu­ture will turn into re­al­ity.

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