A generation will be lost if Govt fails to stem unemployment

Back in the late 1980s, Ireland also faced the twin scourges of high unemployment and rising debt levels. As unemployment crept higher to over 18.5 per cent, hopelessness took root. An agreement of sorts across the political parties was agreed. Then, the Celtic Tiger years got underway in the early 1990s - it was just no-one really knew that growth would run almost unbroken for the next 15 years. Even then, it took an age for unemployment to fall. Despite huge annual growth rates, the jobless rate only dipped below 10 per cent in 1999. After stuttering for a few years, growth went into overdrive, helping to bring the jobless rate near enough to full employment. The suddenness of the rise in the jobless rate in the last 18 months has cruelly hit people harder. Last week, the Central Statistics Office published its latest live register which showed that 394,134 people in May were unemployed, only working part-time or were otherwise claiming some sort of low-income credit. From its Quarterly National Household Survey, the CSO calculates the unemployment rate at 13.7 per cent of the available working population. It is creeping closer to the 14 per cent average at which numerous economists, the Central Bank and the Department of Finance forecast unemployment will peak some time next year. All the more surprising, then, that the single largest scourge of the economic slump is almost being reported as an inevitable and unavoidable consequence of the economic slump. For instance, RTE reported the latest rise in the jobless rate as the fourth or fifth item on one of its main evening television news bulletins last week. It led the bulletin instead reporting the latest monthly tax receipts that were no worse than expected. This is not to suggest that the monthly Government revenues are not a serious matter - the VAT returns published every month will be the main indicator of an improving economy. But, in truth, despite all the talk that Government finances are stabilising, even the Department of Finance does not expect a rapid recovery in its tax revenues any time soon. How do we know this? Because the department's own forecasts laid out on the back of the budget book it submits to Brussels says as much. Government revenues, the department forecasts, will remain under strain right out to the forecasting period of 2014, necessitating firm control of spending for years. Other than showing that Government finances are not getting significantly worse, the monthly exchequer returns will provide little good news. However, not covering the unemployment monthly figures will lead to hopelessness and stifle debate about the measures Government, trade unions and employers could agree together. The Government has rightly devoted huge amounts of time and resources in trying to keep the banks open. Critics are right, however, to unfavourably compare the huge efforts the Government put into setting up the National Asset Management Agency, the body that will pay out on behalf of taxpayers over €40bn for the banks' poisonous commercial property loans. After endorsing economic consultant Peter Bacon's report, it took the Government only a matter of weeks last year to have named an interim board to Nama. A leading economist from the Economic and Social Research Institute (ESRI) told RTE Radio on Sunday that saving the banks and savings jobs were interlinked. He was right. However, the quarterly reports the ESRI publishes on the Irish economy devote forests of pages discussing minuscule changes in GDP growth and provide relatively little analysis on the joblessness tide. In truth, many economists focusing on the big bill for saving the banks give little analysis to unemployment. This is where the recent publication, 'Rising youth unemployment - how to prevent negative long-term consequences on a generation', published by the Organisation for Economic Co-operation and Development, comes into its own. The report warns that Ireland and Spain that once recorded the largest falls in youth unemployment - among people under 25 years - will suffer the worst youth unemployment during this economic crisis. It says unemployment will "scar" a generation if governments fail to tackle the rising youth jobless tide. Warnings do not come plainer than this: "An economic recovery is already ongoing in a number of OECD countries, but the short-term prospects for youth unemployment in the OECD countries remain rather gloomy. The recovery is expected to be rather shallow in 2010 and to strengthen only in 2011. And given the large spare capacity accumulated by many firms during the recession, job creation is likely to lag significantly behind this modest recovery. "In this context, the youth unemployment rate is expected to stay at a high level over the next two years and many unemployed youth are likely to experience a prolonged period of joblessness," the OECD economists say. The OECD urges governments - and Ireland is on the top of that list - to look closely at the best training schemes possible if the "scarring" of a whole generation of people is to be avoided. The OECD's warning should trigger a real debate about unemployment. Anything that replaces the creeping sense of defeatism that unemployment is somehow inevitable would indeed be a start.