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What's the view from Dublin? Don't write off job potential of manufacturing

By Dan O'Brien

Published 30/08/2016

Dan O'Brien
Dan O'Brien

The surge in job creation in the second quarter of this year, which saw net employment grow by 20,000 in just three months, points to an economy that is growing rapidly.

The improvement in the labour market in recent years and the recovery in the wider economy have also led to a turning of the migration tide. In the 12 months to April 2016, the Central Statistics Office (CSO) estimates that slightly more people came to live in Ireland than departed the country.

And, if anything, those estimates are likely to understate the scale of net inward migration, as they do not incorporate the latest census data, which point to bigger population growth than the demographers had anticipated.

From a labour market and business perspective, one of the most positive aspects of recent inward migration is that a considerable majority of those settling and resettling here are highly qualified.

Ireland has been different from most other European countries - in that those who come to live here are more likely to be educated to third level and above than those who move elsewhere. That trend has continued, according to the latest data.

The figures show immigration has rebounded strongly from a low point in 2010, and that most of those arriving were people with third level qualifications.

In the year to April 2016 such people accounted for 57% of all immigrants, broadly in line with recent years, but up by 10 percentage points from the beginning of the decade.

Given that the number of graduates immigrating to Ireland exceeded the number emigrating for the first time since 2009, it can safely be said the migration effect on the economy's stock of human capital has turned positive.

What is driving the jobs growth that is attracting immigrants and that has brought the unemployment rate into single digits from its post-crash peak of 15%? The construction industry has increased employment in leaps and bounds. Having employed more than a quarter of a million people when the property bubble popped, the sector dipped to below 100,000 at its low point at the beginning of 2013. Construction employment then stabilised for a year before taking off in 2014. In the two years to the second quarter of 2016 more than 30,000 people flooded back into work in the building industry. And plenty more jobs are likely to be created in the sector in the coming years.

Another high-growth sector has been hospitality. Restaurants, hotels and pubs have benefited both from a recovery in consumer spending and confidence as well as a strong rebound in tourism. Boffins and the besuited have also benefited from the upswing. The professional and scientific category of workers has been the third-fastest growing sector for jobs since the recovery began.

This is unsurprising, given the strength of industries such as pharmaceuticals and the wider rebound in the services sector. Following behind the three fastest-growing sectors by quite a distance is another group of three: general administration, IT and industry (which is mostly accounted for by manufacturing, but also includes activities such as electricity generation).

These three industries have grown employment by between 7% and 11% over the past four years. Unlike the three leaders, the pattern over that time frame has been very similar, with a return to hiring coming more recently than in the frontrunners.

If anything stands out about this group it is that industry and manufacturing - which are in long-term decline, at least as far as employment is concerned - have been adding jobs at more or less the same rate as the future-focused and much more glamorous IT sector.

In absolute terms, they have generated three times as much additional employment because they still employ three times as many people as IT. We are still a long way from being a de-industrialised, high-tech economy.

Belfast Telegraph

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