Unemployment and Employment Concepts

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Questions and Answers

What does full employment refer to, and what unemployment rate typically indicates it?

Full employment refers to a situation where everyone who wants a job can find one at existing wage levels, typically indicated by an unemployment rate of 4%.

Differentiate between employment and unemployment.

Employment refers to those engaged in work for payment, while unemployment refers to those not working but available for work and actively seeking employment.

What is the unemployment rate, and how is it calculated?

The unemployment rate is the proportion of the labor force that is currently unemployed, calculated by dividing the number of unemployed individuals by the total labor force.

Explain the concept of underemployment and provide an example.

Underemployment occurs when a worker's skills or time are not fully utilized; for example, a highly qualified individual working in a job that requires no qualifications. Signup and view all the answers

What is the Live Register, and what are its limitations?

The Live Register measures individuals receiving unemployment-related social welfare but is limited by including those in part-time work, hidden economy workers, and voluntarily unemployed individuals. Signup and view all the answers

How does the Labour Force Survey (LFS) provide a more accurate measure of unemployment?

The LFS invites a significant number of households to participate in a survey each quarter, replacing the less reliable Quarterly National Household Survey. Signup and view all the answers

What causes structural unemployment, and why is it significant?

Structural unemployment is caused by a mismatch between job skills and available positions, often due to technological advancements making certain jobs obsolete. Signup and view all the answers

Why might some individuals on the Live Register be considered 'voluntarily unemployed'?

Some individuals might not be actively seeking work while receiving benefits, leading to their classification as 'voluntarily unemployed'. Signup and view all the answers

What were the major factors that contributed to the economic challenges in Ireland during the austerity period?

Factors included a public sector recruitment ban, pay cuts, high taxes, and a lack of job opportunities, all leading to high emigration. Signup and view all the answers

How did the government attempt to restore control over public finances during the economic crisis?

The government implemented austerity measures, involving cuts to spending and increases in revenue. Signup and view all the answers

What was the impact of the COVID-19 lockdowns on the Irish economy in 2020 and 2021?

The lockdowns caused a rise in unemployment, decreased consumer spending, but also led to a surge in household savings. Signup and view all the answers

What economic conditions generally occur due to rising unemployment?

Rising unemployment leads to reduced consumer spending, decreased investment, and increased social welfare costs. Signup and view all the answers

In what ways can unemployment lead to increased emigration rates?

High unemployment acts as a push factor, encouraging individuals to seek job opportunities abroad. Signup and view all the answers

Identify two policies the government can implement to reduce unemployment.

The government can reduce VAT on certain goods and offer subsidies to employers for hiring. Signup and view all the answers

How did the tourism sector perform between 2013 and 2020, and what was its effect on Irish employment?

The tourism sector experienced year-on-year growth, which led to increased employment in hospitality and tourism. Signup and view all the answers

What role did Foreign Direct Investment (FDI) play in the recovery of the Irish economy from 2013 to 2020?

FDI helped boost economic recovery by injecting capital into the economy and creating jobs. Signup and view all the answers

What are some implications of rising poverty levels during periods of high unemployment?

Rising poverty levels can lead to difficulties in affording basic necessities and increased mortgage repayment difficulties. Signup and view all the answers

Explain how increased unemployment affects government finances.

Increased unemployment leads to higher social welfare costs and decreased government revenue, widening budget deficits. Signup and view all the answers

What was the government's response to the economic challenges pertaining to public health in 2020?

The government implemented measures to boost exports and support the tourism sector despite the pandemic's challenges. Signup and view all the answers

Name two specific retraining programs mentioned that the government supports for the unemployed.

The Bord na Móna retraining initiative and the Springboard program. Signup and view all the answers

How can reducing business costs alleviate unemployment?

By lowering commercial rates and employers' PRSI, it can ease operations for firms and promote job creation. Signup and view all the answers

What strategies did the Irish government employ to encourage exports since the late 1950s?

The government consistently promoted exports as a key economic policy to support growth. Signup and view all the answers

What are the potential drawbacks of emigration during an economic downturn?

Emigration can lead to a 'brain drain' where educated workers leave, impacting the country's future workforce. Signup and view all the answers

What is one method the government can use to reduce unemployment related to the end of peat harvesting?

The government can implement retraining programs, as seen in the 'Just Transition Plan'. Signup and view all the answers

Define frictional unemployment in your own words.

Frictional unemployment occurs when individuals are temporarily out of work while transitioning between jobs. Signup and view all the answers

Which industry often experiences seasonal unemployment?

The tourism industry frequently faces seasonal unemployment, especially during winter months. Signup and view all the answers

What economic event led to a rise in cyclical unemployment in Ireland in 2008?

The financial crisis caused a downturn in demand for goods and services, leading to increased cyclical unemployment. Signup and view all the answers

How does an increase in the minimum wage impact employment levels?

Higher minimum wage can lead to reduced demand for labor, as employers may hire fewer workers. Signup and view all the answers

What effect do high interest rates have on economic activity?

High interest rates can slow down economic activity by reducing borrowing for investment. Signup and view all the answers

How can exchange rate fluctuations impact the hospitality sector in Ireland?

If the euro strengthens, the cost of Irish exports increases, potentially decreasing tourism, thus raising unemployment in hospitality. Signup and view all the answers

What was a key factor in the drop of unemployment in Ireland from the mid-1990s to 2007?

A highly educated labor force and low wage rates attracted significant Foreign Direct Investment (FDI). Signup and view all the answers

What was the unemployment rate in Ireland during the peak of the financial crash in 2008?

The unemployment rate soared to over 15% during the financial crash of 2008. Signup and view all the answers

How did the Universal Social Charge (USC) impact consumer spending?

The introduction of the USC led to higher tax liabilities, further decreasing consumer spending. Signup and view all the answers

What happened to construction employment numbers between 2006 and 2012?

Construction employment numbers plummeted from nearly 80,000 homes built in 2006 to just 8,500 in 2012. Signup and view all the answers

Why did some businesses relocate from Ireland in recent years?

Businesses relocated primarily due to lower production costs and financial incentives offered by other countries. Signup and view all the answers

What characterizes the 'Celtic Tiger' period in terms of employment?

The 'Celtic Tiger' period was characterized by soaring employment and rising incomes, driven by economic growth. Signup and view all the answers

What was one result of the increase in bad debts faced by banks during the 2008 financial crash?

One result was a significant plummet in property prices and a rise in unemployment rates. Signup and view all the answers

Study Notes

Full employment: A state where all willing workers can find jobs at prevailing wages. An unemployment rate of 4% typically indicates full employment. Zero unemployment is unrealistic due to frictional and structural unemployment.
Employment: Being actively involved in paid work.
Unemployment: Lack of work, availability for work, and active job seeking.
Workforce: All employed individuals.
Labor force: All those available for work and actively seeking or currently engaged in work (employed and unemployed).
Unemployment rate: Percentage of the labor force who are unemployed.
Underemployment: A situation where a worker's skills or time are not fully utilized, e.g., a highly skilled individual working in a less skilled role.

Measuring Unemployment

Live Register: A measure of people receiving unemployment benefits (like jobseeker's allowance). Not the most accurate measure due to part-time employment, hidden economy participation, and potentially 'voluntary' unemployment.
Labour Force Survey (LFS): Introduced in 2017, replacing the Quarterly National Household Survey. It's considered a more accurate measure using a 32,500 household sample each quarter. A time lag exists between the survey period and results publication.

Causes of Unemployment (Types)

Structural unemployment: A mismatch between available jobs and worker skills. Often results from technological advancements, e.g., self-service tills replacing checkout operators. Retraining programs can mitigate this type.
Frictional unemployment: Occurs when workers transition between jobs, leave current jobs for new ones, or enter the workforce. It's a natural part of the labor market but can take some time to transition effectively. Little government intervention is required.
Seasonal unemployment: Workers are unemployed during certain times of year; e.g., tourism industry employees during winter months.
Cyclical unemployment: Unemployment resulting from reductions in demand for goods/service during a downturn in the economy, e.g. the 2008 financial crisis or the 2020 pandemic.

Factors Affecting Employment

Increased labor costs: Higher minimum wages reduce the number of workers employers can hire.
Employer PRSI: Employer contributions for social welfare (PRSI) add to labor costs.
High interest rates: Increased interest rates, particularly during inflation, can discourage borrowing for investment causing economic slowdown.
Exchange rate fluctuations: Changes in the Euro's value impact export costs, and tourism, potentially causing unemployment.
Uncertainty: Economic downturns or crises create pessimism influencing investment and consumer spending.
Multinational relocation: Businesses relocating due to factors like lower labor costs or government incentives impact local employment.

Ireland's Employment and Unemployment (1990s-2021)

Mid-1990s-2007: Declining unemployment and increasing employment due to attracting FDI (partly aided by low wages, tax incentives, and highly-educated workforce). Construction boom concealed job losses in other sectors.
2008-2013: The 2008 financial crisis led to a severe drop in credit access, plunging property prices and construction, resulting in high unemployment and increased emigration. Government implemented austerity measures.
2013-2020: Economic recovery with continued FDI. Tourism sector growth contributed and construction and other sectors began recovering.
2020-2021: COVID-19 lockdowns caused a significant increase in unemployment, particularly in certain sectors.

Implications of Unemployment

Reduced consumer spending: Fewer jobs and earning potential reduce household spending.
Decline in investment: Lackluster demand and pessimism discourages corporate investment.
Increased social welfare costs: More people require unemployment support, and other social welfare needs (health, housing).
Decreased government revenue: Reduced economic activity translates to lower tax revenue.
Rising budget deficits: Increased spending and reduced revenue result in larger deficits.
Increased emigration: Motivating individuals to pursue work elsewhere.
Higher poverty rates: Difficulties in affording necessities due to low income.
Mortgage repayment issues: Economic downturn led to job losses and difficulties repaying mortgages.
Growing inequality: Unequal distribution of economic downturn consequences impacting different socioeconomic groups.

Government Measures to Reduce Unemployment

Reducing VAT for specific industries or services might boost demand; eg., a reduced tourism VAT rate.
Employer subsidies for hiring new employees.
Providing or facilitating retraining programs to equip the workforce.
Boosting tourism.
Promoting exports.
Reducing business costs like commercial rates.
Supporting new businesses to stimulate job creation.

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Explore the key concepts of full employment, unemployment, and the labor force. This quiz will test your understanding of terms like underemployment and the unemployment rate. Gain insights into measuring unemployment and related workforce metrics.