ISBN 92-2-111756-1
ISSN 1020-5322
First published 1999

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Contents

Foreword

The present study is part of the ILO's follow-up to Commitment 3 of the Declaration and Programme of Action of the World Summit on Social Development in Copenhagen in 1995. Commitment 3 reiterates the importance of full, productive and freely chosen employment, as a basic condition for social progresss among UN organizations. The ILO has a specific responsibility for monitoring the progress made by countries in the fulfilment of Commitment 3.

In addition to the preparation of Country Employment Policy Reviews (CEPRs) in the developing and transition countries the ILO also decided to review progress of some OECD countries towards full employment. Among the countries experiencing improvements in their labour markets in recent years, four smaller European countries (Austria, Denmark, the Netherlands and Ireland) were selected. Contrary to some of the bigger European countries, these four countries have been experiencing an impressive labour market recovery, or have maintained a low level of unemployment over the long term. For each of these countries, a national CEPR was prepared in consultation with the social partners and the governments.

The present CEPR shows the remarkable achievement of Ireland in regard to the reduction of unemployment and the growth of employment. While this is certainly due to the exceptional high economic growth rate of the Irish economy which was spurred by foreign direct investment and European structural funds, factors such as the social dialogue, a stability oriented macroeconomic policy and labour market policy have also contributed to the Irish success. However some labour market problems remain, in particular youth and long-term unemployment. Moreover, although the gender balance of the labour market is also improving, Ireland is still lagging behind other countries in this regard.

While Ireland has certainly not overcome all its problems it has made remarkable progress towards to goal of full employment.

Gek-Boo Ng,
Employment and Labour Market Policies Branch,
Employment and Training Department

Acknowledgements

I am greatly indebted to Vanessa Gash for her enthusiastic and highly competent research assistance in the preparation of this study. I would like to thank Peter Auer at the ILO, for his patient guidance. Thanks are also due to Frank Doheny from the Irish Department of Enterprise, Trade and Employment, Brian Geoghegan, of the Irish Business and Employers Confederation, and Peter Cassells of the Irish Congress of Trade Unions, and to the participants in the ILO Expert Meeting on the European Employment Policy Review held in Geneva in October 1998, for comments on an earlier draft. Responsibility for remaining errors and omissions lies, as always, with the authors.

Executive Summary

The Irish economy has grown rapidly over the past decade, far outstripping the growth performance of its European neighbours. Since 1993 the economy has grown at annual rates in excess of 8 per cent. This exceptional growth has entailed high employment intensity, with the result that employment grew by about 25 percent between 1993 and 1998. Performance on the unemployment front, while positive, has been slower and somewhat less satisfactory, with a reduction in the unemployment rate from its high levels of almost 18 per cent in 1987 and almost 17 per cent in 1993 to less than 8 per cent in 1998. The decline in unemployment thus lagged behind the dramatic increase in total employment, largely due to strong growth in the labour market due to both demographic factors and increased labour force participation among women.

Principal labour market developments

The period since 1981 has seen dramatic fluctuations in trends in employment and unemployment. Total employment contracted by about 6 per cent between 1981 and 1985 and unemployment increased from less than 10 per cent in 1981 to a peak of almost 18 per cent in 1987. While impressive growth has been achieved over the 1987-98 period as a whole, the rate of growth was uneven, and three sub-periods are identified in Chapter 2.

1. Recovery, 1987-1990, aided by strong export growth and public sector cutbacks. Total employment increased by 4 per cent over the sub-period and unemployment fell to 13 per cent of the labour force in 1990.

2. Sluggish growth, 1991-93, reflecting the downturn in international activity. Employment grew by about 1.5 per cent over three years, and with strong labour force growth, unemployment climbed again to almost 17 per cent in 1993.

3. Very rapid growth, 1993-1998. Since 1993 the Irish economy has expanded very rapidly, with annual rates of growth in excess of 8 per cent averaged over the 1993-1997 period. Total employment grew by 25 per cent between 1993-1998 and unemployment fell to less than 12 per cent in 1997. By 1998 the standardised unemployment rate had fallen to less than 8 per cent - below the EU average. Continued growth is forecast in the medium term.

Gender and employment

Women's employment has been far more buoyant than men's. Over the decade 1988-1998 women's employment increased by an average of 6 per cent per annum - compared to a growth rate of less than 2 per cent for men. By 1998 the number of women at work was more than two-thirds greater than in 1981. Total employment among men fell during the 1980s and increased in the 1990s, but in 1997 the number of men at work was only marginally greater than that in 1981. Because of these diverging trends there was a marked change in the gender balance of employment: women's share of total employment increased from 29 per cent in 1981, to 33 per cent in 1993, and to almost 40 per cent in 1998.

Sectoral and occupational change

Sectoral trends in employment have been quite divergent over the period since 1981. Employment in agriculture continued its long-established decline, falling from 17 per cent of total employment in 1981 to 10 per cent in 1997. Employment in manufacturing went through a severe decline in the early 1980s - occasioned by a shakeout of uncompetitive indigenously owned industries. Manufacturing employment has grown rapidly in the 1990s, however, by about 3 per cent per annum. This is a trend which distinguishes Ireland from other developed economies, where manufacturing employment is in decline. The growth of manufacturing in Ireland is mainly due to the continued influx of foreign direct investment, prompted by a range of tax and grant concessions, as well as a plentiful supply of young well-educated labour earning relatively low wage levels. Trends in manufacturing notwithstanding, the largest growth in employment took place in services. Total employment in services grew by 40 per cent between 1981-1997, with most of the growth taking place in the 1990s and concentrated in market services.

Sectoral restructuring has combined with changes in the organisation of production and service delivery to generate a significant up-grading of the occupational structure. Over the 1981-1997 period the strongest growth took place among professional, technical and managerial occupations, but also in clerical and sales occupations. Expansion at the upper-end of the occupational structure was accompanied by a decline in the demand for semi- and unskilled manual workers, although there has been some growth in employment in these categories in the 1990s.

Part-time work

There has been a significant increase in the incidence of part-time work, which almost doubled its share of total employment, from 6.7 per cent in 1983 to 12.3 per cent in 1997. The large majority of part-time workers are women, and in 1997 women accounted for over three-quarters of all part-time workers. The incidence of part-time working among women increased from under 16 per cent of all women at work in 1983 to 23 per cent in 1997. The incidence of under-employment (i.e. part-time workers indicating that they would prefer a full-time job) among part-timers fell from 18 per cent in 1992 to 13 per cent in 1997, reflecting the tightening of the Irish labour market. In 1997 about one quarter of male part-timers were under-employed, compared to about 8 per cent of women working part-time. The most recent data from the new Quarterly National Household Survey, relating to the first and second quarters of 1998, show that part-time working accounts for almost 17 per cent of total employment-about 8 per cent of men and 30 per cent of women at work. However, it is difficult to compare these most recent data on working time with earlier years because of changes in survey methodology.

Unemployment

Total unemployment increased from under 10 per cent in 1981 to a peak of almost 18 per cent in 1987. Unemployment fell during the brief recovery of the late 1980s but increased again to 16.6 per cent in 1993. Rapid growth since then has reduced unemployment to 7.8 per cent in 1998. The dramatic growth in employment since 1993 has not been matched by a commensurate fall in unemployment, largely because of strong growth in the labour market due to the influx of new entrants, itself a function of Ireland's distinctive demographic structure, the marked increase in women's labour force participation, and a reversal of emigration.

Long-term unemployment

Long-term unemployment has fallen in recent years, following the trend in total unemployment. This suggests that long-term unemployment may be more responsible to cyclical labour market changes than had heretofore been believed. However, Chapter 2 argues that our measures of the balance between long- versus short-term unemployment probably underestimate the true incidence of long-term unemployment because of the large scale of active labour market programmes and because participants who return to unemployment after completing their programmes are counted as new entrants to unemployment, even where they were long-term unemployed before entry to the programmes. Long-term unemployment remains a formidable problem with a significant structural dimension. Long-term unemployment is particularly prevalent among older age categories - particularly among men aged over 45. There is also a strong concentration of poor educational qualifications among the long-term unemployed, and educational disadvantage is particularly marked among the older long-term unemployed. As the unemployment rate falls the stock of skills among the unemployed are likely to fall as the best equipped to compete for jobs are likely to be hired first. This will leave a residual group of increasingly hard to place long-term unemployed - which will not be able to compete in the labour market without extensive and effective state intervention.

Youth unemployment

As total unemployment soared over the course of the 1980s and again in the 1990s, so also did unemployment among young people. The unemployment rate among young people, aged under 25 reached its peak in 1993, when at over 27 per cent of the young labour force, it was almost double the unemployment rate among older labour force participants (14 per cent ). Unemployment among young people did respond to the tightening of the labour market and fell to less than 19 per cent in 1997, still substantially above the adult rate. Over the period from 1983-1997 the number of young people at work fell by 22 per cent , and the employment-population rate for young people fell from 47 per cent to 34 per cent . Young people accounted for 25 per cent of all jobs in 1983 but less than 17 per cent in 1997. The decline in the number of young people at work, and the continuation of relatively high rates of unemployment despite falling labour force participation, suggests that over time young people have found it increasingly difficult to find a foothold in the world of work. Young people, moreover, have benefited less from the employment expansion of recent years than their older counterparts.

The marked growth in participation in education among the younger age groups has meant that the supply of well-qualified candidates for jobs has increased. In a crowded labour market, young people with low or intermediate levels of qualification compete for jobs with somewhat older candidates who have higher levels of qualification, or work experience, or both. Young people with poor educational attainments thus face very high risks of unemployment. Thus, for example, 58 per cent of young labour force participants (aged 15-24) with no educational qualifications were unemployed in 1993, compared to 27 per cent of those aged over 25. The unemployment rate among young people who had completed the upper cycle of secondary education was 20 per cent , compared to 8 per cent of adults with a similar level of education. Furthermore, analysis of annual survey data of leavers from secondary education shows that between 1990-1995 while the employment prospects of those who completed the senior cycle of secondary education improved, the labour market prospects of those who left school with inadequate qualifications actually deteriorated, with lower employment and higher unemployment rates in 1995 than in 1990, despite the economic boom.

Given changes over time in the demand for labour, resulting in a general up-grading of positions, as well as extended educational participation among younger labour market entrants, educational attainment and skills have become the most significant labour market currency. Accordingly, young people entering the labour market with inadequate qualifications, as well as older displaced workers with skills rendered obsolete by structural change, are marginalised. Neither group can be expected to share in the fruits of rapid growth without extensive and effective intervention by the State to enhance their skills and hence their capacity to compete in the labour market.

The distributional consequences of success

Assessment of the distributional consequences of Ireland's economic and labour market successes presents a somewhat mixed picture, but one that suggests that much remains to be done if the fruits of success are to be distributed evenly across all sections of Irish society. There was a moderate increase in the average wages and salaries of those at work over the decade 1987-1997. However, the effects of these wage gains, combined with low inflation and tax reductions over the decade 1987-1997, were to add significantly to the disposable incomes of those at work. The numbers at work also increased dramatically over the same period. All of this means that economic success has been successful in generating substantial improvements in the material living standards of workers in Ireland.

However, rapid economic growth has coincided with an increase in inequality. The incidence of low-paid employment increased between 1987 and 1994. So also did the incidence of poverty. Lack of data prevents us from assessing trends in inequality over the full period 1987-1998. The increase in low-pay is mainly due to market forces: a growth in sectors with high demand for low skilled workers. The growth in poverty is largely attributable to the failure of social welfare payments to keep pace with the rate of growth in average incomes during the period of rapid economic growth.

Despite the dramatic increase in women's paid employment, married women and women with children face a series of interrelated obstacles to entering paid work. These include low wages, the lack of state support for child care, and disincentives in the taxation and welfare systems.

Interpreting the growth phenomenon

Following a period of virtual stagnation in the first half of the 1980s the Irish economy expanded rapidly after 1987. In Ireland, growth over the decade from 1987-97 averaged over 5 per cent per cent per annum, compared with 2.3 per cent in the EU and 2.7 per cent in the OECD (OECD, 1997). Real GDP growth in Ireland averaged 8 per cent per annum in the years 1994-97, about three times the average rate of growth in either the OECD or the EU, and Irish growth is forecast to continue at close to its current pace over the medium term. Total employment grew by almost 35 per cent between 1987 and 1998 and by about 25 per cent in just five years from 1993-98. Thus in terms of both output and employment growth, Irish performance is well ahead of the average performance of the EU and OECD groups of countries.

Most interpretations of the Irish success have sought an explanation in terms of a fortunate conjuncture of factors combining to generate rapid growth since about 1987.

Domestic policy

Bradley et al. (1997) argue that the maintenance of a stable macroeconomic environment, combining low inflation, low public deficits and surplus in the Balance of Payments have fostered a stable environment for business and have been crucial to the success of the Irish economy since 1987. They identify three elements of domestic policy as being of particular importance to success: (i) industrial policy; (ii) fiscal policy; and (iii) institutional reform.

First, foreign direct investment has played an unusually important role in the Irish economy and represents the major dynamic force in the Irish economy, accounting for about 45 per cent of manufacturing employment. Policies to attract mobile investment have been actively pursued since the late 1950s, offering a package of grant- and tax-based incentives to export-oriented manufacturing firms. The success of the strategy has resulted in significant economic restructuring, particularly in manufacturing, giving rise to marked gains in international competitiveness for the economy as a whole. In more recent years there has been some reorganisation of industrial policy to promote the development of indigenous firms and that sector has expanded over the past 5 years or so.

Second, over the course of the late 1970s and up to the mid-1980s, Irish public finances went out of control with high budget deficits and a burgeoning public debt. Fiscal imbalance was one of the main causes of the recessionary period in the early to mid-1980s. Restoring order to the public finances was achieved by severe cutbacks in public expenditure in 1987-90. Current public spending fell by over 10 per cent in constant terms between 1987 and 1989 and public sector borrowing fell from over 14 per cent of GNP in 1986 to 2.4 per cent in 1990 (Tansey, 1998). Budget deficits have been maintained at 3 per cent or less ever since then.

Third, fiscal crisis, mass unemployment and soaring emigration in the 1980s led to a fundamental re-evaluation of policy making, creating the conditions for a consensual approach to national policy-making that was more appropriate to the needs of a small open economy.

Demographic structure

Ireland has a distinctive demographic profile, with a strong increase in its population of working age and a secular increase in women's labour force participation. These two factors combined mean that the labour force has the potential to grow by about 2 per cent per annum throughout the 1990s. These demographic trends have also generated a sharp fall in the dependency ratio.

Investment in human capital

The Irish educational system has expanded dramatically over the past three decades, giving rise to a gradual increase in the human capital of the workforce. Three decades of investment in education has increased the supply of skilled labour while reducing that of unskilled labour. Over the same period the demand for labour has changed, with a substantial increase in demand for skilled and a fall in demand for unskilled labour. Empirical evidence indicates that the returns to education have increased in recent years, suggesting continued demand for skilled labour. Nevertheless, comparative evidence suggests that skilled labour remains relatively cheap in Ireland, compared to other EU countries. This is likely to be a factor in the continued attractiveness of Ireland as a site for mobile international capital.

International economic integration

Since the late 1950s the Irish State has actively promoted closer integration with the international economy. This has entailed progressive dismantling of trade barriers and the active promotion of foreign direct investment in manufacturing. This outward looking strategy has resulted in economic restructuring, modernisation and diversification, as well as marked gains in productivity and international competitiveness, and to marked expansion of exports: the proportion of Irish output that is exported has more than doubled in the past two decades.

Investment aid from the EU

As a relatively underdeveloped region of the EU, Ireland has benefited substantially from the transfer of funds from Brussels since the mid-1970s. Total net transfers from the EU under the Community Support Framework (CSF) and the Common Agricultural Policy (CAP) rose from about 5 per cent of GNP in 1986 to a peak of 7 per cent in 1991 and fell back to around 5 per cent in 1994 and 1995. The growth in EU transfers from the structural funds made a significant direct contribution to the development of the Irish economy at a crucial period of economic change, but their impact should not be exaggerated. Empirical analyses suggest that the long-run effects of the Structural Funds investments over the period from 1989-1999, is to raise the level of GNP by about 2 percentage points above what it would have been without the transfers.

Social partnership

In the midst of the crisis of the mid-1980s, it became clear that regaining and maintaining international competitiveness represented an essential ingredient for economic growth. This required a particular mix of policies to promote a stable macro-economic environment, including appropriate macro-economic and exchange rate stances, but also, and crucially, low inflation and moderate wage increases, buttressed by the tax cuts which could only come about with fiscal restraint. Arguably, the Irish variant of social partnership, which in essence, entailed an exchange of wage moderation in return for tax-cuts, provided the institutional framework to achieve the combination of policies which transformed a failing economy into one of the fastest growing economies in Europe over the course of a decade.

The exchange of tax-cuts for incomes restraint in pursuit of international competitiveness was achieved through public sector cut-backs. Compared to many other European countries, the ratio of State expenditures to Gross Domestic Product are relatively low in Ireland. Averaging across the 15 EU countries, both total government expenditures and spending on social security transfers increased as a proportion of GDP between 1987 and 1994, as did government receipts. In Ireland, however, total government spending fell by 9 percentage points and both spending on social security transfers and receipts also fell somewhat over the period. In terms of both total government and core social security spending, Ireland bears closer resemblance to the United Kingdom, where the quality of social citizenship rights has declined to a point well below many of the other more prosperous European countries. The comparatively low ratio of public expenditure to GDP is partly reflected in the increase in poverty between 1987-1994, mainly affecting households dependent on social welfare payments, which have lagged behind increases in average incomes in recent years. It is also reflected in growing dissatisfaction with the quality of public services in Ireland; including the absence of state support for child care, the lengthening waiting lists in the public health system, resource constraints in the education system, and the quality of physical infrastructure, particularly in the transport system.

As Ireland's average income per capita converges with that of its more prosperous European neighbours, major strategic social questions are beginning to emerge about the appropriate role of the State, about whether the ratio of public expenditures and taxes should remain relatively low, following a UK/US model, or whether the quality of social citizenship should rise to levels achieved in other European countries following a more inclusive social model, such as the Netherlands, Denmark or Austria. Emulating the more inclusive European model may prove more conductive to the maintenance and strengthening of the social partnership arrangements which have underpinned the Irish successes to date, but this would require strategic social and political choices which in several vital respects would depart from the principles guiding policy formation, particularly fiscal policy, over the past decade.

Labour market policy

While rapid economic growth generated unprecedented growth in employment in the 1990's, reductions in unemployment were achieved more slowly, although by 1998 unemployment had fallen to well below the EU average. There is now growing evidence that the surge in employment over the past 5 years is beginning to exhaust the available supply of labour. Emerging labour shortages, which are now appearing across a wide range of occupations, can be expected to lead to increased pressure on wages. There is already evidence of growing dissatisfaction among workers, particularly the low paid, who do not see sufficient evidence of the fruits of growth in their wage packets. Average wages are forecast to increase by over 6 per cent during 1998, although substantially higher increases are anticipated in particular sub-sectors experiencing severe skills shortages. Various commentators, including the ESRI and the Central Bank have cautioned that wage increases above those in other Euro countries could undermine Irish competitiveness and threaten growth prospects.

One strategy to ease wage pressure is to implement policies designed to increase the supply of labour. The introduction of a national minimum wage scheduled for the year 2000 is expected to raise the wages of substantial numbers of low-paid workers, and should, therefore, contribute to easing labour shortages, although the demand-side impact of the minimum wage on low-paid employment is not yet known. State intervention in child care could also help reduce labour shortages while alleviating the financial burden on working mothers.

Given that labour shortages are now emerging in low-skill occupations, it is also useful to consider the role of labour market policies in stimulating labour supply. Here at least part of the problem is that many low-skill, and low-paid, jobs are not sufficiently financially rewarding. Over the past two decades, Ireland has followed an international trend in which labour market policies have undergone a shift in emphasis to active measures to promote the reintegration of the unemployed into employment. This has meant that passive measures have been reformed in order to reduce the effects of unemployment traps and other barriers which derive from the structure of the taxation and welfare system and which can create disincentives for the unemployed to return to work, while active measures to provide training and subsidize employment have been expanded. In relation to unemployment compensation through the social welfare system, the empirical evidence suggests that neither replacement rates nor the tax-wedge are substantially higher in Ireland than in other EU countries, although tax- and welfare-based disincentives do exist for some low-paid workers. Moreover, in recent years the Irish authorities have been particularly innovative in introducing a series of reforms in both the tax and social welfare systems to reduce the tax wedge and ease the transition of the unemployed back to work. Carefully targeted measures such as these can have the effect of mitigating unemployment traps, and the numbers making the transition from unemployment to employment has grown rapidly in recent years. The success of these programmes serve to highlight the importance of further progress in reducing the tax burden on the low paid, and the potential of tax reforms targeted specifically at the lower paid for further reducing unemployment. The 1999 budget, which targets substantial tax cuts on those on low and middle incomes and removes the very low paid from the tax net altogether, can be expected to lead to further reductions in work disincentives.

The State in Ireland has been particularly active in developing active labour market policies, and over the last decade such measures have become central to the policy response to unemployment. Ireland is one of the leading countries in the share of national income devoted to active labour market policies and operates a wide range of differing programmes catering to a diversity of target groups among the unemployed and other socially excluded groups. Empirical assessment of the impact of active labour market programmes in Ireland shows that programmes with strong linkages to the labour market - training in specific employable skills and subsidies for real jobs in the market place - do enhance the subsequent employment prospects and earnings of their participants. Programmes with weak market linkages, including general programmes as well as subsidised employment in the public or voluntary sectors are much less effective in improving participants' job prospects. Recent years have seen a substantial increase in activity on active programmes to combat unemployment. However, most of the additional resources appear to have been used to achieve an expansion in the quantity of provision rather than an improvement in the quality of programmes. The evidence on the effectiveness of programmes suggests that there is a need to improve the quality of programmes, particularly those targeted at the most disadvantaged, as well as to ensure progression to effective programmes with close linkages to the open labour market, leading to the final phase of reintegration paths and to sustainable employment. Such an approach would require the allocation of substantial resources targeted specifically at those most disadvantaged in the labour market, particularly the long-term unemployed, although it should be recognised that the cost of tackling the problem would decline with the success of the strategy.

Current policy developments adopted in response to EU wide policy guidelines, however, represent a shift in the priorities underlying labour market policies. These guidelines, which call for preventative measures to minimise the inflow to long-term unemployment, rather than to provide interventions to assist the stock of long-term unemployed, represent a dilution of the commitment to the most marginalised in the labour market. In Ireland according priority to the long-term unemployed in active labour market provision has been a long- and well-established axiom of practice. This approach to policy seems particularly appropriate to current conditions, given both the substantial reduction in total unemployment achieved over the past five years, and the strong probability that in a buoyant labour market the best equipped among the unemployed are hired first, leaving a residual group of particularly disadvantaged long-term unemployed, unlikely to make the transition to work without assistance. The new approach, however, targeting young entrants to unemployment appears to entail a shift in the balance of resources and interventions away from those already long-term unemployed- the most marginalised in the labour market. These shifts in the balance of resources are, of course, partial, and the long-term unemployed continue to be eligible to participate in labour market programmes. Moreover, a strong case can be made for early intervention on behalf of poorly qualified young people, whose labour market prospects remain grim, even in the booming labour market. Nevertheless, while a preventative approach may make strategic sense in other European countries - particularly those with sluggish employment growth and relatively low rates of long-term unemployment - a similar policy prescription may be inappropriate in the Irish case where employment is growing rapidly, but long-term unemployment remains unacceptably high. Rapid employment growth and the emergence of labour shortages mean that the market is sufficiently buoyant to absorb the "short-term" unemployed without State intervention. In the Irish case prioritising the long-term unemployed could serve both efficiency and equity goals - representing a better investment of public resources while combatting social exclusion.

Chapter 1. Introduction
Astonishing Success: Economic Growth in Ireland

The Irish economy has been transformed over the last decade. In the late 1980s Ireland was an economy in crisis. In 1987, with mass unemployment, falling employment levels, a fiscal crisis of the State and living standards well below the European average, it was widely regarded as "a sick man of Europe." A decade later the economy was performing at exceptional levels. Gross National Product grew at an astonishing rate of over 8 per cent in 1998 - a continuation of more than a decade of rapid growth. Unemployment had fallen to less than 8 per cent - well below the European average. Employment had been growing at over 4 per cent per annum for the previous five years. Instead of incurring heavy deficits in order to keep the economy and society afloat the government was able to report a public budget surplus for the first time in decades.

Tansey (1998:249), reviewing the transformation writes:

The Irish economy has enjoyed a decade of unparalleled economic progress. Irish economic growth has been unmatched in the European Union. Material living standards have risen appreciably for the majority of Irish citizens. Social safety nets have been strengthened. The exodus of people from the country has ceased. The population is growing.

Popular accounts of the transformation have referred to Ireland as the 'Celtic Tiger', evoking comparison with the rapidly growing newly industrialising countries in Asia - no longer such a welcome title following recent Asian difficulties. The decade of growth in Ireland compares well with the Netherlands, which was dubbed the "Dutch Miracle" on the basis of annual growth rates of 2.2 per cent in GDP, and 1.5 per cent in employment between 1991-1996, and the reduction of unemployment to 6 per cent (Visser and Hemerijck, 1997). Ireland's rates of output and employment growth have been higher than those of the Dutch, and its fiscal balance is healthier, but the unemployment rate remains higher in Ireland than in the Netherlands. However, much unemployment in the Netherlands is hidden by exceptionally high proportions of the adult population in receipt of disability payments (and thus counted as outside the labour force) and moreover, large numbers of workers are in subsidised employment. Nevertheless, continued high long-term unemployment in Ireland undermines its strong performance on other fronts and represents the unfinished business of the Irish transformation.

The Irish economy has grown rapidly over the past decade, far outstripping the growth performance of its European neighbours. Since 1993 the economy has grown at annual rates in excess of 8 per cent . This exceptional growth has entailed high employment intensity, with the result that employment grew by about 25 per cent between 1993 and 1998. Performance on the unemployment front, while positive, has been slower and somewhat less satisfactory with a reduction in the unemployment rate from its high levels of almost 18 per cent in 1987 and almost 17 per cent in 1993 to less than 8 per cent in 1998. The decline in unemployment was thus slow to match the dramatic increase in total employment. This is largely because of strong growth in the labour force due to the influx of young labour force entrants, increased labour force participation among women, and the reversal of the long-standing pattern of emigration to one of net immigration.

This study focuses on the Irish labour market. Chapter 2 presents a detailed account of the principal trends in the labour market over the period 1981 to 1998. That section shows the remarkable turnaround in the labour market, beginning with crisis in the mid 1980s, a hesitant recovery in the late 1980s and buoyant growth since about 1993. It also shows that long-term unemployment remains a significant structural problem affecting in particular the older long-term unemployed displaced by economic restructuring and young early school leavers ill-equipped to compete in today's economy.

Chapter 3 discusses the distributional consequences of success in the economy and the labour market. It shows that rapid growth has coincided with increased poverty and low paid work. It also shows that despite the dramatic increase in the number of women at work in Ireland achieved during the 1990s, married women and women with children continue to be confronted by a series of barriers to participation in paid work.

Chapter 4 examines social partnership in Ireland. The chapter traces the roots of current partnership arrangements in the crisis confronted by Irish society in the mid-1980s and provides a detailed description of the complex processes of negotiation and interaction that it entails. Our interpretation of the Irish growth phenomenon suggests that social partnership provided the essential framework for the development and implementation of a mix of policies in a small open economy, which allowed a sustained improvement in international competitiveness.

While social partnership played an important role in the Irish story, most commentators refuse to accord success to one single factor, arguing instead for a conjuncture of fortunate trends which have come together in Ireland during the past decade. Chapter 5 examines the elements of that fortunate conjuncture. It also discusses unfinished business, in particular the further reduction in long-term unemployment and poverty, and reflects on the sustainability of the Irish success as well as the challenges facing Irish society.

Chapter 2. Principal Developments in the Labour Market

2.1 Population Trends

The trend in the total population of Ireland has been somewhat varied over the past fifteen years. The population grew by about 2.8 per cent between 1981-86, fell slightly between 1986-91, and resumed its growth in the first half of the 1990s. These population trends have been mainly driven by two underlying factors: declining natural increase and fluctuating trends in migration.

Table 2.1 shows total population for each of the Census years between 1981-1996 as well as the components of annual average changes in the intercensal periods. Although declining, natural increase due to a sharp decline in the number of births since 1980, has exerted a consistent downward influence on population growth throughout the period, the trend variations can be largely attributed to net external migration. There were substantial net migratory outflows throughout the decade from 1981-91, particularly in the latter half of the 1990s, when the average net annual outflow amounted to 27,000, equivalent to about 0.8 per cent of the population annually. These migration patterns are closely related to labour market conditions, and with the improvement in labour demand in the 1990s, the migratory flow has turned positive.

The decline in the birth rate was one of the most important demographic changes to occur in Ireland in recent decades. The birth rate fell from 22 per thousand of population in 1980 to 13.7 per thousand in 1996 due to marked increases in the educational attainment of the population and far greater participation in the labour force by women of all ages. The decline in the birth rate, which brought Ireland into line with European fertility patterns, is expected to continue, although at a more gradual rate of descent, well into the next century (Fahey and Fitz Gerald, 1997).

Table 2.1 Population levels and intercensal natural increase, net migration and population change, 1981-1996 (Thousands)

The decline in the birth rate has given rise to a fall in the numbers of children (aged less than 15 years), offset by a growing bulge in the older age groups, particularly those aged 35-64). The number of children fell from 1,044,000 in 1981 to 859,000 in 1996, representing a decrease in their share of the total population from 30 per cent to fewer than 24 per cent . Over the same period the numbers in the 25-64 year age group increased by almost 292,000, or from 41 per cent to 47 per cent of the total population. The increase in the numbers aged 25-64 is a reflection of population trends, particularly heavy outward migration in the from the end of the Second World War to the mid-1960s and substantial return migration, particularly of those of childbearing age, in the 1970s.

Figure 2.1 Child and elderly dependency ratios in Ireland, 1981-2006

Note:* Projections
Sources: 1981-1996: Central Statistics Office, 1997
2001-2006: Fahey and Fitz Gerald, 1997

These population movements have given rise to a population structure, which differs in two important respects from most other European countries. First, the proportion of young people is larger in Ireland, although this is no longer concentrated in the youngest age group (less than 15 years) which is in decline. Second, the proportion of the population aged 65 and over has remained very stable since the 1960s and is not projected to show any substantial increase until after 2010. These two trends are depicted in Figure 1, which shows the dependency ratios for both children (the population aged under 15 divided by the working age population, aged 15-64) and the elderly (the ratio of the population aged 65 and over to the working age population) from 1981 to 1996 with projections to 2006. The child dependency ratio has already fallen from 51 per cent in 1981 to 36 per cent in 1996 and is projected to fall to less than 30 per cent by 2006. The elderly dependency ratio fluctuates between 17 per cent and 18 per cent throughout the observed and forecast period. The combined dependency ratio, fell from almost 70 per cent of the working age population in 1981 to 54 per cent in 1996 and is expected to fall to 47 per cent by 2006. Ireland is thus in the middle of a demographic transition, which entails a very substantial decrease in the dependency ratio at a time when population ageing is exerting upward pressure on dependency ratios in most other European countries.

2.2 Labour force

Labour force trends over the past decade and a half have been erratic, alternating between periods of very rapid growth, as at present, to periods of contraction, as during the late 1980s. Trends in the labour force reflect not only underlying demographic trends in the adult population, but also changes in women's labour force participation, levels of participation in education, retirement patterns, and, particularly in the Irish case, migration. Table 2.2 shows adult population by principal economic status from 1981 to 1996, distinguishing between those in the labour force; in education, engaged in home duties and an "other" residual category which mainly consists of those who have retired from the work force.

The numbers in the labour force grew slowly at an annual average of about 11,000 per annum between 1981 and 1991, and very rapidly by almost 30,000 per annum between 1991-96. These labour force trends can be attributed to four principal factors. First, there was strong underlying growth in the adult population over the entire period. Second, however, growth in both the labour force and the adult population was reduced by net emigration, which, as discussed above, peaked in the latter half of the 1980s. The reversal of net migration since 1991 has meant that the adult population grew unhindered by 7 per cent between 1991-1996.

Table 2.2 The labour force and economically inactive population aged 15 or over, 1981-96

Third, there has been a marked increase in women's labour force participation. Historically, women's labour force participation in Ireland has been low, and, it has been argued, lagged behind what might be expected from the rapid industrialisation of the economy since the 1960s (O'Connor and Shortall, forthcoming). The female labour force participation rate was less than 28 per cent in 1971, and it remained under 30 per cent a decade later (O'Connell, forthcoming). The growth in female labour force participation continued to be sluggish through the mid-1980s (32 per cent in 1986), but it increased dramatically thereafter, to 35 per cent in 1991 and to almost 41 per cent in 1996. The Irish pattern of sluggish growth followed by rapid increase in female labour force participation rates has been attributed to the lagged effects of the removal of discriminatory labour market practices and regulations, particularly in the 1970s, increased educational attainment, and rapid expansion in demand, particularly in the services sector and in part-time working (O'Connell, forthcoming). Men's participation in the labour force has been moving in the opposite direction: the participation rate fell from 81 per cent of adult males in 1971 to 76 per cent in 1981 and 72 per cent in 1991. Even with the upturn in the labour market in the 1990s the declining trend continued - to 71 per cent in 1996. These countervailing trends in men's and women's labour force participation meant that the overall labour force participation rate remained virtually unchanged over the 1980s - 53 per cent in 1981 and 53.5 per cent in 1991 - although it increased to 55.4 per cent of the adult population in 1996.

A fourth underlying factor influencing labour market trends results from increased educational participation. The total numbers engaged in education increased from 200,000 in 1981 to 283,000 in 1991 and to 340,000 in 1996. Thus the numbers in education increased by 70 per cent over the 1981-96 period, and by 40 per cent in the decade from 1986-96. This had two countervailing effects: (1) It radically reduced the number of young people in the labour force (the labour force participation rate for the 15-24 year age group fell from 61 per cent in 1981 to about 45 per cent in 1996; and (2) as noted above, it led to increased labour force participation among women. Sexton and O'Connell (1996) note that increased participation in education among younger age groups, as well as increased retirement among older age groups, and the dramatic increase in women's labour force participation meant that the apparent near stability in labour force participation rates over the past 15 years entailed fundamental changes in the structure of the labour force entailing a much greater proportion of women and a burgeoning share accounted for by the 'middle age' group.

2.3 Employment and unemployment

The decade of the 1980s was particularly severe for the Irish economy. Table 3 shows how the numbers at work declined over the first half of the 1980s while the size of the labour force increased, due both to natural population growth and increasing labour force participation by women. Contraction in employment combined with labour force growth resulted in an increase in the unemployment rate from just under 10 per cent of the labour force in 1981 to a peak of almost 18 per cent in 1987. The decade from 1987-97 saw a remarkable turn-around in Irish economic fortunes, with growth in GDP amounting to 79 per cent over the decade, giving rise to substantial increases in employment, and in the 1990s, to a marked fall in unemployment.

While impressive growth was achieved over the decade as a whole, the rate of growth was, in fact, uneven, and three sub-periods can be identified. Table 2.3 shows trends in numbers at work, unemployed, and the labour force, as well as net migration over the years 1987-1998.⁽¹⁾

Table 2.3 Numbers at work, unemployed, labour force and net migration, 1981-1998

1. Recovery, 1987-90. A period of recovery from 1987-1990, with strong growth in investment and exports and curtailment of public spending. In the labour market, these aggregate growth trends generated a brief employment boom between 1989-90, when total employment increased 4 per cent and unemployment fell to 13 per cent .

2. Sluggish growth, 1991-93. A downturn in international activity, initially in Britain in 1990 and throughout Europe in 1992 and 1993, which coincided with dramatic increases in interest rates and an exchange rate crisis, meant that growth faltered in Ireland. In Ireland sluggish growth lead to employment declines in 1991 and 1992, and with burgeoning growth in the labour force, to increased unemployment, which reached almost 17 per cent in 1993.

3. Very rapid growth, 1993-1998. Since 1993 the Irish economy has expanded very rapidly, with annual rates of growth in excess of 8 per cent averaged over the 1993-1997 period, stimulated by both accelerated export growth and by increased domestic demand. These growth rates have given rise to a rapid and dramatic improvement in labour market conditions. Total employment grew by over 290,000, or about 25 per cent , in the five years from 1993 to 1998. By April 1998 the employment rate had declined to 7.8 per cent - below the European average and lower than at any time in the last two decades. All forecasts are for a continuation of rapid growth for the foreseeable future, with unemployment levels continuing to decline.

Emigration has fluctuated in accordance with demand in both domestic and external labour markets. It rose dramatically in the late eighties and peaked in 1989, when net emigration (in-migration minus out-migration) rose to 44,000 individuals, representing almost 3.5 per cent of the labour force in that year. Net emigration subsequently fell, and in 1998 inward migration exceeded out-migration by about 22,000.

2.4 Employment by gender

Table 2.4 shows employment by gender for the years 1988, 1993 and 1998. Total employment increased by an average of 3 per cent per annum over the entire period, although this entailed slow growth in the 1988-93 period, followed by growth of almost 5 per cent per annum between 1993 and1998.

Table 2.4 Total employment by gender, 1981-1997

Employment trends have differed between men and women, with total employment among men falling strongly in the first half of the 1980s (Sexton and O'Connell, 1996), and increasing only marginally between 1988-93. It was only in the 1990s that men's employment levels picked up - increasing by 3.8 per cent per annum in the 1993-98 period. As a consequence of these fluctuating trends, male employment in the late 1990's was only marginally above its level in 1981, although as we shall see, the composition of that employment has shifted markedly in the intervening period.

Total employment among women grew strongly - by an average of 6 per cent per annum over the 1988-1998 period. Women's employment was also influenced by labour market conditions, with the result that in the early 1980s, while total employment did not fall, as it did among men, employment growth was negligible. Growth in women's employment increased to 3.8 per cent per annum from 1988 to 1993, and then took off, averaging an annual increase of 6.9 per cent between 1993 and 1998. By 1998 the total number of women at work was more than two-thirds higher than it had been in 1981. Because of these diverging trends between men and women, there was a marked change in the gender balance of employment, and women's share of total employment increased steadily from 29 per cent in 1981 (Sexton and O'Connell, 1996) to 33 per cent in 1988 and to almost 40 per cent in 1998.

2.5 Employment by economic sector

Sectoral employment trends have been quite divergent over the period since 1981. Employment by sector is presented in Table 2.5, and annual average changes for 1981-91 and 1991-97 are shown in Figure 2.2. Employment in agriculture continued its long-established decline: total employment in the sector fell by 55,000 from 189,000 in 1981 to 134,000 in 1997. The share of agricultural in total employment accordingly fell from 17 per cent to 10 per cent . Manufacturing employment went through a severe decline in the early 1980s, and even after some recovery in the late 1980s the numbers employed in the sector fell by 20,000 between 1981-1991, and its share of total employment fell from 23 per cent to less than 22 per cent. Manufacturing employment has grown rapidly in the 1990s, by an annual average of 3 per cent, a similar rate of expansion to that of employment as a whole, with the result that manufacturing employment maintained its share of almost 22 per cent of the total between 1991-97. The expansion of employment in manufacturing marks Ireland as an exception to trends elsewhere in the developed world, where industrial employment is in decline (Sexton and O'Connell, 1996). The growth of manufacturing in Ireland is mainly due to the continued influx of foreign direct investment- prompted by a range of tax and grant concessions, a moderate cost structure, and the plentiful supply of young well-educated workers. Krugman (1997) notes that US direct investment in Ireland is 50 per cent higher per capita than in the UK, and 6 times as high as in France and Germany.

Table 2.5 Employment by economic sector, 1981-1997

Underlying these trends have been significant compositional changes within the manufacturing sector. Irish manufacturing activities can be broadly subdivided into a traditional indigenously owned subsector and a more high-tech area in which multi-national enterprises tend to predominate. The former would include activities such as clothing and textiles and food processing while the latter would involve the engineering, instrumentation, computers and chemical industries. In general, the more modern high-tech subsector has tended to expand continuously over the period under discussion, while the more traditional indigenous subsector has at times, been subject to severe employment decline. This applied particularly in the recession of the early 1980s when many uncompetitive traditional enterprises were forced permanently out of business. Sweeney argues that "there was a massive shake-out in industry between 1973 and 1994" (1998:129). He shows that the indigenous sector suffered particularly heavily, and between 1973 and 1996 total employment in Irish indigenous manufacturing firms fell by 25,000 (18 per cent ). In contrast, total employment in foreign owned manufacturing grew by 43 per cent over the same period, with the result that by 1996 foreign owned firms accounted for over 45 per cent of all manufacturing employment. However, in recent years the resurgence of growth in manufacturing has occurred in both indigenous as well as foreign owned firms, and employment in the former grew by 8,400 between 1993-1996.

Figure 2.2 Average annual percentage change in employment by sector, 1981-91 and 1991-97

The fortunes of the construction industry in Ireland have tended to reflect cyclical conditions in the economy as a whole. There was significant employment decline over the 1980s but strong recovery, of the order of about 4 per cent growth per year over the period 1991-1997.

The largest growth in employment took place in services. Employment increased across the broad range of service activities over the entire period from 1981-1997: slowly during the 1980s and rapidly during the 1990s. Total services employment grew from 582,000 in 1981 to 818,000 in 1997, an expansion of over 40 per cent . Most of the employment expansion in services generally can be attributed to market services, which increased by 100,000 (or 23 per cent ) from 427,000 in 1991 to 527,000 in 1997. Within the market services sector, employment trends in transport, communication and distribution have been erratic, and most of the growth in the sector has been concentrated in a range of professional, business and professional services (Sexton and O'Connell, 1996).

Figure 2.2 shows that the highest percentage rate of growth in the 1991-97 period occurred in non-market services (mainly public sector activities). However, this exaggerates the contribution of this sector, and overstates the relative share of public versus private sector employment growth, since the percentage increase is calculated on a lower base than in the case of market services, and the numerical increase in non-market services was a more modest 62,000 between 1991-97. Within non-market services, the bulk of the growth took place in education and health services (Duggan, Hughes and Sexton, 1997). Tansey (1998) shows that public sector employment actually declined due to budgetary austerity measures between 1987 and 1989, with a slow recovery thereafter, with the result that public sector employment grew by only 2.3 per cent in the decade from 1987 to 1997. He notes that private sector employment grew by almost 32 per cent over the same period.

2.6 Changes in occupational structure

We have seen the far-reaching changes in the sectoral structure of employment over the past decade and a half above. However, the changes run even deeper than these figures suggest. Different industries have significantly different occupational or skill profiles and, therefore, the structural movements over recent decades have given rise to fundamental changes in the occupational/skill mix of the employed workforce. While the influence of sectoral change has been dominant, occupational profiles per se have also been evolving within industries. This is particularly true of managerial and professional activities, which have assumed greater importance within enterprises across all sectors. Service related activities have also become relatively more important. In contrast, the extent of manual activities (particularly those which are unskilled) has been in decline.

The extent of these changes is shown in Table 2.6 (taken from Duggan, Hughes and Sexton, 1997) which shows a classification of those at work by broad occupational groups for 1981-1995. Consistent with sectoral trends, the share of agricultural workers in total employment fell from almost 16 per cent in 1981 to 11 per cent in 1995. The proportion of manual workers also declined over the period, although for both skilled and unskilled manual workers, Figure 3 shows that the fall in the numbers employed during the 1980s was followed by some expansion during the 1990s. Employment of semi- and unskilled manual workers also fell from 1 per cent in 1981 to fewer than 12 per cent in 1997, although, as Figure 2.3 shows, there was some growth in the number of semi- and unskilled workers during the 1990s.

Table 2.6 Employment by main occupational group, 1981-1995

The strongest growth took place among professional occupations, which expanded their share of total employment from 14 per cent in 1987 to 18 per cent in 1995. Service and sales workers also increased their share of the total, as did managers, while the share of clerical workers in total employment remained a constant 14 per cent throughout the period.

These changes in the occupational structure reflect a long-running trend towards upgrading of positions in the labour market - a process which has been taking place since the early 1960s (O'Connell, forthcoming). The Irish pattern of occupational change follows a similar pattern to those evident in many other Western economies, and involves much more than just a shift from manual to non-manual activities. In general, the types of jobs and occupations which are growing tend to require either qualifications or personal skills as well as a degree of flexibility not characteristic of traditional forms of employment.

Figure 2.3 Annual changes in employment by occupation, 1981-91, 1991-95

In Ireland, the fact that the changes in occupations as well as in working arrangements coincided with the removal of many impediments to female involvement in the labour market resulted in many of these new opportunities being availed of by women. It was also the case that many of those who suffered job loss from traditional areas (such as industry) were not equipped with the appropriate qualifications, skills or aptitudes associated with the newly emerging vacancies. As we discuss below, the inevitable consequence for those displaced by economic restructuring is unemployment, and eventually long-term unemployment, this is particularly true of older workers. It is also shown below, however, that many of the new job opportunities, which emerged, involved low wage or part-time work.

2.7 Self-employment

At first sight there would appear to be remarkable stability in the proportion of those at work who are self-employed in Ireland, with about 20 per cent of those at work self-employed throughout the period from 1981-96 (Table 2.7). In Ireland, however, the vast majority of those working in agriculture are self-employed, and historically, farmers have accounted for a substantial share of self-employment. If we exclude the declining agricultural sector (In Panel B of Table 2.7), we find that the apparent stability in self -employment has, in fact, been maintained by a substantial expansion in self-employment outside of agriculture. In the non-agricultural sectors, self-employment increased from 90,000 in 1981 to 149,000 in 1996, representing less than 10 per cent of total employment at the start of the 1980s but 13 per cent in the mid-nineties. Most of that expansion in self-employment took place during the decade after 1986.

Table 2.7 Numbers at work by employment status, 1981-1996

The increased popularity of self-employment, particularly during the latter half of the 1980s may have been due to a resort to self-employment as an alternative to unemployment in a slack labour market, and the growth of self employment may be partially a response to state programmes providing a range of supports to assist the unemployed to start their own businesses. Such an option would only have been feasible for those with particular skills and competencies on demand in the market place: in general self employment would rarely count as a viable option for the poorly skilled unemployed. Sexton and O'Connell (1996) argue that the growth of self-employment may also be due to the more liberal income tax regime which applies to the self employed, compared with the more rigid PAYE withholding system for employees.

2.8 Part-time work

We noted above that there has been a significant increase in part-time working, particularly amongst women. Table 2.8 shows the trend in part-time working over the period 1983-1997 on the ILO classification. The share of part-time workers rose from under 7 per cent of total employment in 1983 to over 12 per cent in 1997. For men the proportion of part-timers rose from under 3 per cent to over 5 per cent in 1997 while among women, the increase was from under 16 per cent to 23 per cent .

Table 2.8 The incidence of part-time working, 1983-1997 (ILO basis)

Sexton and O'Connell (1996) show that part-time work accounted for all of the modest increase in total employment that occurred between 1983 and 1993 and that the numbers in full-time employment declined during this time. However the balance between growth in full- versus part-time work has altered again with the recent surge in employment. Measured on the ILO basis, total employment increased by 197,000 between 1993 and 1997, of which 42,000 (22 per cent) were part-time. However, even if the absolute increase in employment since 1993 consisted mainly of full-time jobs, the rate of increase in part-time employment was higher, with the result that the share of part-time working in total employment continued to rise gradually. The 1998 data, as we have noted before (see footnote 1 above) are not comparable with earlier years because of changes in the measurement of employment in 1998, which yield a more precise, but much higher number of part-time workers. The 1998 data show that almost 17 per cent of employment was part-time, accounting for almost 8 per cent of men at work and 30 per cent of women.

The large majority of part-time workers are women and in 1997 they accounted for well over 70 per cent of all part-time workers. Women's labour force participation has thus partly increased in response to an increase in the demand for part-time workers, an arrangement which allows women greater scope to combine working with child rearing and other domestic work - a particularly important factor in Ireland, given the absence of public provision of, or even support for, child-care services.

Table 2.9 Part-time employment by gender and under-employment, 1992, 1997 and 1998

Table 2.9 presents an analysis of part-time workers by gender and 'under-employment' for 1992, 1997 and 1998. Part-time workers are considered to be under-employed if they indicate in response to the Labour Force Survey or the Quarterly National Household Survey that they were looking and available for another part-time job or a full-time job. The table suggests that most part-time working is a matter of preference: in each year well over 80 per cent of all part-time workers were not under-employed - i.e. they were not working part-time because of an inability to find a full-time job. The table also indicates that the incidence of under-employment among part-time workers fell. Between 1992 and 1997 the proportion underemployed fell from 18 per cent to 13 per cent , reflecting the tightening of the Irish labour market. One of the noteworthy features of the table is that while the total number recorded by the QNHS in 1998 as working part-time increased dramatically, both the absolute number as well as the proportion of those underemployed fell very substantially.

Table 2.9 also reveals interesting gender differences, with men who are working part-time being far more likely than women to indicate that they were under-employed: in 1997 over one-quarter of men working part-time reported that they were under-employed, true of only 8 per cent of women working part-time.

Table 2.10 Part-time and total employment by economic sector, 1991 & 1997

Table 2.10 shows total employment and part-time working by economic sector in 1991 and 1997. The most important sectors for part-time working are all in services, including commerce, insurance, finance and business, as well as professional and other services. In 1997, part-time workers accounted for 30 per cent of those working in 'other services' and 18 per cent in professional services, but only 4 per cent of manufacturing. The growth of part-time working in Ireland is thus largely a function of the expansion in the services sector in recent years.

2.9 Unemployment

We have already discussed the aggregate trends in unemployment over the period from 1981 to 1998 above (see Table 2.3). This section provides a more detailed breakdown of unemployment by age, gender and duration. Table 2.11 shows unemployment by age and gender. The number of unemployed men, 97,000 is substantially higher than that of women, 62,000. The unemployment rate among women is lower than that among men. In this regard Ireland differs from gender-related patterns of unemployment in many other countries, where women tend to suffer higher rates of unemployment than men. O'Connell and McGinnity (1997) argue that the true level of women's unemployment may be underestimated by survey-based data, since women who are not in employment may be more likely than men to report that they are engaged in home duties. This latter effect may be particularly strong in Ireland with its comparatively low rate of female labour force participation.

Table 2.11 Unemployment by age group, 1997