3 Several angles Manpower resource balance – skill mismatch? – job mismatch? Long-term unemployment rate on the rise? Pace of employment growth in current upturn, c.f. average cycle in the 1980s and 1990s Major shifts in Phillips curve over time ?
10 Improvement in long-term unemployment in latest upturn is across-the-board Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2Q4Q2 1996199719981999200020012002200320042005 0 1 2 3 4 5 6 Percent Manufacturing Construction Wholesale, retail, import/export, restaurants and hotels Transport, storage and communications Financing, insurance, real estate and business services
11 III. Slow-down in pace of employment upturn after 98?
13 Job losses in manufacturing vs job gains in service sectors Change in employment Between 1990 and 1996 Between 1997 and 2003 trough Between 2003 trough and 05 H1 (‘000) Manufacturing-269-168-48 Construction44-361 Services551236217 Wholesale/retail trade69-3325 Import/export trade926098 Restaurants/hotels44-2418 Transport, storage and communications6327 Financing-158 Insurance8884 Real estate1711 Business services57528 Community, social and personal services13816838 Total29625170 Job losses-302-291-59 Job gains598317229
14 Average change in employment (% per annum) Between 1990 and 1996 Between 1997 and 2003 trough Between 2003 trough and 2005 H1 Manufacturing-7.1-7.7-9.1 Construction3.0-2.10.1 Wholesale/retail, restaurants and hotels3.6-1.63.8 Services ex wholesale/retail, restaurants and hotels 220.127.116.11 of which: Trade-related18.104.22.168 Total employment22.214.171.124 c.f. Domestic exports-2.2-6.7-2.8 PCE6.4-0.56.4 Construction5.3-5.9-7.8 Exports of goods and services11.85.013.8 GDP126.96.36.199
15 % change in employment per % change in output Between 1990 and 1996 Between 2003 trough and 2005 H1 Manufacturing3.293.19 Wholesale/retail, restaurants and hotels 0.560.59 Services ex PCE–related sectors0.460.30 of which: Trade-related0.420.49 Overall0.320.31
18 Discussion: How much more can unemployment improve further? Cyclical vs structural part of unemployment? Shifts in long-run Phillips curve and nairu? S tructural factors/rigidities: Increasing job/skill mismatch ? Wage inflexibility? Labour legislation? Ageing? Welfare policy? High public transport fare & public housing policy? Increasing barriers to businesses and/or less entrepreneurship?
33 Value added per person 19932003 (‘000) Manufacturing172247 Services347390 W/R, I/E and R/H236283 Transport, storage and communication 250351 Financing, insurance, real estate and business services 734532 Community, social and personal services 245307 Economy average306373
34 % change in employment per % change in GDP Trough2 years after trough 19820.26 19850.22 19890.11 19950.87 19980.20 20030.36 Peak-to-Peak 1987 – 970.31 Average: 0.36