Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

12. To ask the Minister for Finance if he will explain the unusual anomaly recently highlighted by his Department, where growth has failed to match forecasts but the employment/unemployment situation has apparently improved; and if he will make a statement on the matter. [49254/13]

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
Link to this: Individually | In context | Oireachtas source

We will do away with the 30 second introduction, if Deputy Richard Boyd Barrett does not mind.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Available data for the year to date to the end of quarter 2 show GDP has fallen by 1.1%, while employment has grown by 1.5% in the same period. This implies negative productivity growth relative to the same period last year. While quarterly data in Ireland are volatile, my Department is nonetheless projecting a fall in labour productivity this year. This is a somewhat unusual development. One of the main factors behind it is the composition of output this year. Output and exports are falling in the pharmaceutical sector, reflecting the impact of the patent expiry for a number of important products. The pharma-chem sector accounts for about one quarter of exports and about 12% of gross value added. In other words, the sector is very large relative to Ireland’s overall GDP. In contrast to its high share of output, the labour share of this sector is small, accounting for just 2% of overall employment in Ireland. As a result, employment at an aggregate level has been largely unaffected by the decline in activity in this sector.

For 2013 as a whole, my Department expects GDP to be supported by a positive contribution from domestic demand which, as it tends to be more labour intensive in nature, will assist continued employment growth. Next year and over the forecast horizon, my Department does not expect the divergence in growth of GDP and employment to continue, as expansion is forecast in both the domestic and externally driven components of the economy.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
Link to this: Individually | In context | Oireachtas source

The Minister's officials pointed to this anomaly at a pre-budget briefing. We do not have growth, but the Minister is claiming an improved position in terms of employment and unemployment. The ABC of economics says if we have more people working, it is contributing to GDP. How can the Minister claim there is an improvement in the employment position when we do not have the growth to match it? The explanation is not what the Minister has just told us about pharmaceuticals; it has more to do with the fact that many of the jobs it is claimed are being created are not real jobs. People are being counted as employed if they are not on the live register but on schemes and through the various ways the Minister has created to massage the employment figures. They are not real jobs; they are not properly paid and contribute nothing to GDP. That explains the anomaly.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The CSO produces the figures; I do not make them up. They are based on the statistics from labour force surveys and are real jobs. What was interesting over the summer was that a movement creating part-time jobs had led to a movement creating full-time jobs. More full-time jobs are now being created than part-time jobs. Extra jobs are being created. The anomaly is that normally employment creation follows growth, but last year the statistical economy showed a decline because of the movement off patent in the pharma industry for many key products. The statistical decline does not affect the level of employment much because the pharmaceutical industry which employs 25,000 people or 2% of the labour force did not let people go. The value of the product produced went down because there was competition from generic medicines once the key lead medicines had moved off patent. There is a statistical quirk in it that does not fully reflect what is happening in the economy. Other sectors grew and jobs were created, but the statistical drag back stems from what is called the patent cliff.