The long road ahead: what comes next for Ireland’s labour market?

Five months ago, Ireland came close to full employment. Things have taken a turn for the worse since then, so will we recover? Sean Pollock reports

AS news broke on Monday of Amazon’s latest “significant” investment in Ireland, the sighs of relief were almost audible across Government Buildings on Merrion Street.

With the IDA, Ireland’s agency for attracting foreign direct investment, recently warning of challenges in attracting fresh investment to the country during the pandemic, the welcome boost of 1,000 “highly-skilled” jobs from Amazon showed that Ireland could still attract the world’s most successful companies.

There was also more good news to come. Speaking on RTÉ’s Morning Ireland, Mike Beary, country manager for Amazon Web Services, confirmed the roles would not be confined to its new 170,000 square foot Dublin campus, or Cork. The latest positions would also include work-fromhome opportunities across the country; a regional sweetener to an already tasty investment.

Through this investment, Amazon will eventually count 5,000 employees in Ireland. With thousands of workers staring into an uncertain future, as talk of layoffs and redundancies intensify, perhaps the announcement offered a glimmer of hope — some light at the end of the Covid-19 tunnel.

However, with the latest figures from the CSO showing that unemployment adjusted for those receiving the Pandemic Unemployment Payment was sitting at 22.5pc in June, it will take a lot more Amazon-style job announcements to get Ireland’s labour market back to rude health.

Nearly half a year ago, in a pre-Covid world, economists in Ireland warned that the labour market was in danger of overheating. The country fast approached full employment — an unemployment figure of around 4pc where just about everyone who wants a job has one. What a difference five months makes.

With the not-so-distant memory of near full employment in mind, how bad has Covid-19 hit Ireland’s labour market? Will the deep wounds it has inflicted ever fully heal?

According to Jack Kennedy, an economist with Indeed, a global job website, the impact of Covid-19 had a “pretty swift” impact on its job postings data for Ireland. His recent figures though show we may have passed the worst of it.

“We saw similar trends across all of our markets,” he said. “[There was] a really sharp downturn from the middle of March. I think the trough was down about 57pc on last year’s levels by the start of June.

“Things have kind of stabilised in recent weeks; we have seen a little bit of an improvement. The data through to last Friday on Indeed job postings has improved to 47pc below last year. It’s still not great by any stretch of the imagination, but it looks to have bottomed out a bit. It’s moderately encouraging, things have stopped getting worse at least.”

Looking at how the labour market has been affected by the pandemic, Kennedy pointed to data from the Central Bank of Ireland (CBI) which highlights just how devastating the consequences of Covid-19 have been for the labour market.

According to CBI’s Q3 Quarterly Bulletin, by mid-June of this year, 1.1 million people, almost half of the labour force, were receiving some kind of income support from the State.

The pandemic has also been harsher on the labour markets of certain regions, according to Kennedy. At the lower end, around 44pc of the labour force in Kilkenny, Dublin and Cork were availing of income supports; this number jumps to around 60pc for Donegal, Kerry, Louth and Carlow.

Using Indeed’s data, Kennedy has also calculated the number of unemployed people per job posting across the country, and for each county.

Pre-Covid, the figure nationally was three unemployed people per job posting. By June, this rose to between seven and 33, with the top end of the range including all PUP support recipients as unemployed. Including PUP recipients, the Border region was hit worst with 105 unemployed people per job posting, while Dublin was least affected with 18.

“A lot of the impacts we have seen on a sector and regional level are due to the make-up of the industrial structure,” Kennedy said. “Particularly badly impacted places are generally those that have less remote working potential and a big exposure to the sectors where you have physical distancing restrictions.

“Anything with a mix of exposure to hospitality, retail or leisure sectors has been quite badly impacted. Some of the research looking at correlations between working from home potential and labour market impacts have sort of drawn those conclusions.”

With the dire impact of the pandemic on the labour market clear, Peter Cosgrove, a future of work expert, said that even as things calm down with Covid, the labour market’s pain will only become more visible.

“The predictions in Ireland are anything between 12pc and 25pc,” he said. “So let’s just say, taking an average, it is going to be 18pc unemployment. And that’s from less than a year ago where we pretty much had full employment, with unemployment around 5pc.

“So the real negative has still not happened yet, because we are still having the furloughing of workers, we still have the Government intervention, but when that stops, I think we are going to see a real car crash over the next six to nine months.”

Cosgrove said that the labour markets in sectors such as aviation and hospitality will feel the pinch as a result of Covid-19 more than others.

However, it is not only sectors that face huge challenges. Cosgrove believes that the rise of technology could make many roles redundant not just in one sector, but across the whole labour market.

“So, my worry for this is companies have now proven that technology can work for remote working,” Cosgrove said. “It’s not perfect yet, but the next question we’re going to start asking is — what else can we use technology for?

“Many people who might have worked in the kind of back-office jobs in finance or payroll may find that technology from now on always does that job, and that job won’t exist anymore.”

Despite his fears over the short term, Cosgrove does believe that, in the long term, Ireland will once again hit levels close to full employment. But, before then, there will need to be massive changes in the way we view our careers.

“We need to spend a lot more time telling people, even supporting people actually to reskill because whether you’re 20 or 50, you’re going to be still working for the next 15 to 20 years,” he said.

“That’s one of the biggest things we need to focus on, making sure people don’t think learning is something you just do in college, it’s something you do throughout your whole life.”

Cosgrove also warned that the rise of working from home has opened up new possibilities for the multinationals Ireland would typically attract, such as Amazon, as to how they employ workers here. He said this could have implications for the labour market’s recovery.

“For an employee right now, you can’t just rely on the job market coming back, you have to look at building new skills,” he reiterated. “Amazon announced they are going to hire 1,000 new jobs. But if you just look at the Covid world now — everybody’s working from home. Why couldn’t 999 of those jobs be based outside of Ireland? If somebody can speak English and they can work in Spain, which has over 30pc unemployment, and they’ll do the job for half the price than someone based in Ireland.

“We need to be aware that we’re now competing globally for talent. So it’s a really positive thing for employers. They will have this global marketplace because they have suddenly proved that everybody doesn’t need to live and work one hour from the office.

“[Employees are] now competing in a much bigger market because most people could always argue that if you lived in Athlone, your competitors all lived within an hour of Athlone for that same job,” he added. “Now, you could argue you can live anywhere.”

Andrew Lynch, founder and chief executive of recruitment firm Mason Alexander, also recognised that the growth of working from home meant that businesses could now effectively hire from anywhere. However, his view was this opened the opportunity for the labour market to become more flexible, with the potential for the regions to benefit more.

“Ireland has a diverse talent pool, a great economy and it’s a great place to live,” he said. “Obviously the pandemic has been awful, but it is going to create a lot of opportunities to have companies set up all over Ireland and employ all over Ireland.

“It is going to ramp that up. The Amazon thing, it is great to see it, but it is only the start of what is coming down the line.”

Lynch said he had been told of an example of the benefits of the move to new forms of working at co-working space Ludgate Hub, in Skibbereen, Co Cork.

He said he knew of an exciting heavily-backed Irish company that had set up space there and had attracted a young employee who was destined to move to Dublin to work with a big tech firm — until the pandemic hit.

“Now, he is working with one of the most promising Irish tech companies near Skibbereen, near his home, and he is going to have a better quality of life. He may move to Dublin or London one day, but suddenly, he has the option [to remain in Skibbereen].

“It can enable any company, no matter what size or location, to compete with the biggest companies in the world at some point,” he added.

On the labour market and how Covid has hit it, Lynch said his own experience with Mason Alexander, which offers recruitment services across various sectors, has given him a feel for what is happening on the ground with Ireland’s labour market.

Pre-Covid, Lynch said Mason Alexander was in a “big growth phase”.

He had plans to acquire another business outside of recruitment in Ireland, had opened a new office in Germany and was eyeing up a potential move into the US market. Once Covid hit, he decided to back away from some of those moves and shore up business at home.

Fortunately for Lynch, the plan worked. “Some parts of the business have been better than ever,” he said. “Our technology division has just been booming. Our financial services division has had its best-ever quarter.

“On the flip side of that, things like legal, sales and marketing and accounting and finance have been hit really badly. We are lucky in the sense that if we were just doing accounting and finance, we would have hurt. Luckily, we are well spread across a few different sectors. That has carried us and got us through.”

With Lynch now feeling like Mason Alexander has fended off the worst of what the pandemic could throw at it, he is focusing on making the business better and adopting flexible working.

Despite the onslaught of negativity that has hit the labour market, Lynch, as well as Cosgrove and Kennedy, believe that Ireland’s labour market will eventually make a full recovery — provided companies and workers embrace technology.

“We have a much better-educated workforce,” said Lynch. “I think the [labour market] will recover, it will get back to full employment, but when that is, I don’t know.

“It will happen sooner than we expect,” he added. “What will happen though, is it won’t be in the same shape or make-up of what we have just come from.”