economic insights summer 2021
TRANSCRIPT
Department of Finance | Economic insights – Summer 2021 Page | 1
Economic Insights – Summer 2021
July 2021
Department of Finance
www.gov.ie/finance
Department of Finance | Economic Insights – Summer 2021 Page | 2
Executive Summary
The first edition of The Department’s Economic Insights series, published in January this year,
addressed a number of surprising and topical trends in economic statistics during the Covid-19
pandemic, namely the elevated household savings rate, surging pharmaceutical exports, and
complexities associated with labour market statistics1. The second edition published in April continued
on the theme of the pandemic, focusing on economic developments through the lens of real-time data,
the role played by the so-called automatic stabilisers through the pandemic, and the longer-term issue
of post-pandemic ‘scarring’2.
This edition continues – in part – on that theme, further examining the labour market impacts of the
pandemic using real time data; and assessing the potential for structural changes in the post-pandemic
labour market as a result of the remote working phenomenon. It also moves into analysis of the post-
Brexit economy, providing a preliminary assessment of the immediate impact of the new arrangements
on Irish-UK bilateral trade.
Starting with the theme of Brexit, the first analytical note provides a preliminary assessment of the
immediate impact of the new arrangements on Irish-UK bilateral trade. The early data show that Irish
goods imports from the UK have declined significantly so far this year, while exports to the UK have
been quite resilient. While a number of other factors, in particular pre-Brexit stockpiling and the re-
imposition of stringent public health restrictions are also likely to have affected trade flows this year, the
stark divergence between exports to, and imports from the UK, suggest that the diverging non-tariff
barriers to trade have had an immediate impact on bilateral trade. The resilience of imports from the
EU and the divergence between trade with Northern Ireland and Great Britain, provide additional
evidence of the significant initial impact of Brexit on bilateral trade. However, given the phased
introduction of the new procedures by the UK, the full impact of Brexit on bilateral trade will not be
evident for some time.
Returning then to the pandemic, the second note demonstrates how this period has represented a ‘step-
change’ in work practices generally. As always, the aggregate picture only tells part of the story with
the magnitude of this change differing markedly across sectors, most notably narrowing the gap in
remote working practices between the public and private sector. The research examines how attitudes
to remote work have evolved, and identifies likely sectoral and occupational ceilings on the remote work
share beyond the pandemic. This shift could have powerful economic impacts not least with respect to
productivity, labour supply and competitiveness. The data presented can help inform policy discussions
around remote work, infrastructure planning, and weighing capacity against targets in terms of the future
of remote work in the public sector.
The third note uses high frequency data from the Pandemic Unemployment Payment and daily job
posting data from employment website Indeed to monitor developments in the labour market. The use
of high frequency data provides a better gauge of developments in the labour market than traditional
measures that are released on a monthly or quarterly basis. While there has been a significant recovery
in the labour market over the last number of months, the pace of recovery varies significantly across
sectors and counties. Sectors that are more consumer facing have tended to lag the recovery seen in
the rest of the labour market. There has also been significant divergence in the recovery across counties
with Dublin in particular recovering at a slower pace. Continued monitoring of these high frequency data
over the coming months can give better understanding of the most up to date developments in the
labour market and in turn better inform evidence-based policy.
1 “Economic Insights: Economic Statistics during Covid 19”. Department of Finance, Available at: https://assets.gov.ie/118266/3161fca0-c72c-417f-81a3-afb26982abc4.pdf 2“Economic Insights: Economic Developments during Covid 19 and beyond”. Department of Finance, Available at: https://www.gov.ie/en/publication/bc298-economic-insights-economic-developments-during-covid-19-and-beyond/
Department of Finance | Economic insights – Summer 2021 Page | 3
Contents3 Page
Executive Summary 2 1 Assessing the immediate impact of Brexit on Irish-UK bilateral trade 5 1.1 Introduction 5 1.2 Recent developments in IE-UK bilateral merchandise trade 6 1.3 Complicating factors 7 1.4 Merchandise trade with the EU 8 1.5 Merchandise trade with Great Britain and Northern Ireland 9 1.6 Services trade with the UK 9 1.7 Bilateral current account 11 1.8 Conclusion 12 2 Impact of Covid-19 on remote working in Ireland 13 2.1 Introduction and background 13 2.2 Pandemic impact on labour market 13 2.3 Step-change to remote working pattern during pandemic 15 2.4 Ireland in comparative terms 18 2.5 Remote work preferences 18 2.6 Conclusion 19 3 Covid-19 and the Irish Labour Market – Insights from High Frequency
Data 21
3.1 Introduction and background 21 3.2 Issues with standard labour market data 21 3.3 Pandemic Unemployment Payment data 22 3.4 Pandemic Unemployment Payment by sector 23 3.5 Pandemic Unemployment Payment by county 23 3.6 Demand for labour - Indeed Job Postings data 25 3.7 Demand for labour by sector 26 3.8 Demand for labour by county 27 3.9 Conclusion 28 Figures
Figures Figure 1 a) IE UK bilateral trade b) Underlying IE UK bilateral trade 6 Figure 2 a) Imports by sector b) Exports by sector 7 Figure 3 a) IE UK ‘underlying’ bilateral trade in €m b) Imports from the UK, change 8 Figure 4 a) IE bilateral trade Jan-April, change b) EU imports from UK as share of total 8 Figure 5 a) IE imports from UK, contribution b) IE imports from NI and GB, €m 9 Figure 6 Contributions to change in services trade a) imports b) exports 10 Figure 7 IE - UK current account balance, €m 11 Figure 8 a) Covid-adj. unemployment rate, per cent b) Covid-adj. employment, index 14 Figure 9 a) Covid-adj. employment and hours worked, change yoy b) Contribution to
difference in aggregate remote work share, percentage point 15
Figure 10 Working from home frequency, share of total employment 15 Figure 11 Remote work share, share of sector employment 16 Figure 12 Remote work share (public versus private), share of sector employment 17 Figure 13 Remote work share by occupational classification, share of classification 17
3The data and analysis set out in this document are compiled by Department of Finance staff. Every effort is made to ensure accuracy and completeness. When errors are discovered, corrections and revisions are incorporated into the digital edition available on the Department’s website. Any substantive change is detailed in the online version.
Department of Finance | Economic insights – Summer 2021 Page | 4
Figure 14 Remote work share 2019 v 2020 – international comparison, share of total employment
18
Figure 15 Remote working preference through the pandemic, share of respondents 19 Figure 16 Pandemic Unemployment Payment, persons in receipt 22 Figure 17 Pandemic Unemployment Payment recipients by sector, per cent of pre
pandemic employment 23
Figure 18 Pandemic Unemployment Payment, recipients by county, peak and current 24 Figure 19 Pandemic Unemployment Payment, recipients by country as per cent of peak 25 Figure 20 a) Indeed job postings, level b) Covid-adjusted unemployment, rate 26 Figure 21 Indeed job postings (total), per cent change from February 2020 26 Figure 22 Indeed job postings by county, per cent change from February 2020 27 Figure 23 Indeed job postings for Dublin & rest of country, per cent change from February
2020 28
Department of Finance | Economic insights – Summer 2021 Page | 5
Chapter 1: Assessing the immediate impact of Brexit on Irish-UK trade4
1.1 Introduction
The UK’s exit from the Single European Market (SEM) concluded at the end of last year and the Trade
and Cooperation Agreement (TCA) now governs trade between the two jurisdictions.5 From an Irish
perspective, this ensures a continuation of tariff-free, quota-free trade in goods for Irish firms exporting
to, and importing from, the UK. However, bilateral trade under this new regime will be negatively
affected by a variety of non-tariff barriers including rules of origin checks, customs procedures and
additional Sanitary and Phytosanitary (SPS) checks on agri-food products.6 Non-tariff barriers to trade
are generally assumed to be around 1½ times as costly as the relevant tariff, while recent research by
the Department of Finance indicates that a 10 per cent increase in non-tariff barriers would reduce the
total value of trade by just over 1 per cent.78
The TCA arrangements were introduced on 1 January 2021 across the EU for imports from the UK.9 In
contrast, the UK have chosen to implement the new procedures on its imports from the EU on a phased
basis with full customs checks planned to be introduced from the first quarter of 2022.10 Given this
phased introduction, the full economic impact of Brexit will not be evident for some time.
The early data show that Irish goods imports from the UK have declined significantly so far this year,
while exports to the UK have been fairly resilient. While a number of other factors, in particular pre-
Brexit stockpiling and the re-imposition of stringent public health restrictions, are also likely to have
affected trade flows this year, the stark divergence between exports to, and imports from the UK,
suggest that the diverging non-tariff barriers have had an immediate impact on bilateral trade. The
resilience of Irish imports from the EU and the increase in trade with Northern Ireland so far this year,
albeit from a low base, provide additional evidence of the significant initial impact of Brexit on bilateral
goods trade. In contrast, data from the first quarter indicates little to no immediate Brexit impact on
bilateral services trade. This paper aims to highlight these initial impacts of Brexit on Irish-UK trade
seen in the early data.
4 This note was prepared by Martin Erskine and Ian Power, economists in the Economics Division of the Department of Finance. The analysis and views set out are those of the authors only and do not necessarily reflect the views of the Department of Finance or the Minister for Finance. Any outstanding errors or omissions remain those of the authors 5 The UK formally left the European Union at end-January 2020, but remained in the Single European Market until end-December 2020, as part of transitory arrangements. While Northern Ireland remains part of the UK customs territory, it remains within the EU Single Market for the movement of goods. 6 The TCA covers trade in goods; work continues on a memorandum of understanding in respect of regulatory cooperation in relation to financial services. 7This is assumed in the joint modelling work conducted by the ESRI and Department of Finance: Bergin, A. Economides, P. Garcia-Rodriguez, A. and Murphy, G (2019). “Ireland and Brexit: modelling the impact of deal and no-deal scenarios”. Available at: https://www.gov.ie/en/publication/ca41b6-r/ 8 This manifests itself primarily through both a significant decline in the number of exporters and the number of products exported. SMEs and sectors that contain time-sensitive goods are estimated to be particularly sensitive to waiting times. Rehill, L. and Murphy, G (2020). “Trade costs and Irish goods exports”. Department of Finance, Available at: https://www.gov.ie/en/publication/a8001-trade-costs-and-irish-goods-exports-september-2020/ 9 Further requirements were applied by the EU, in respect of composite produces, from April 2021. 10 Checks on live animals and low risk plants and plant products will not take place until March 2022. Revised timetable on UK border controls is available at: https://questions-statements.parliament.uk/written-statements/detail/2021-03-11/hlws833
Department of Finance | Economic insights – Summer 2021 Page | 6
1.2 Recent developments in IE-UK bilateral merchandise trade11
Irish imports from the UK have declined significantly since the new arrangements were implemented at
the start of this year. Imports from the UK declined by almost 30 per cent over the January to April
period on an annual basis with ‘underlying’ imports (i.e. excluding pharma and aircraft) falling by a
similar amount (Figure 1a).12
A corollary to this is an acceleration in the long-term trend decline in the share of Irish imports sourced
from the UK (Figure 1b). In the first quarter of 2021, just one-fifth of (underlying) Irish merchandise
imports were sourced from the UK; a decade earlier, the equivalent figure was two-fifths.
Figure 1: a) IE UK bilateral trade, yoy change b) Underlying IE UK bilateral trade, per cent of total
Source: CSO; Dept. of Finance analysis. Note: ‘Underlying’ imports and exports exclude trade in pharma and aircraft.
At a sectoral level, the decline in imports was broad-based with very significant falls recorded in almost
all sectors (Figure 2a). The decline in food and live animal imports, one of the sectors most exposed
to non-tariff barriers, was particularly sharp, down 35 per cent over the January to April period.
The decline in imports was particularly sharp following the immediate introduction of the new
arrangements in January and February where imports from the UK fell by around 50 per cent and 40
per cent respectively, the largest annual declines on record. The decline in imports has eased
significantly in recent months (down 12 per cent in March and 5 per cent in April, respectively) with a
number of sectors recording solid increases, in particular mineral fuels reflecting inter alia the increase
in oil prices (Figure 2a).
In contrast, Irish exports to the UK have been quite resilient, up 12 per cent so far this year. While this
was primarily driven by very strong growth in pharma exports, underlying exports were still in positive
territory up 2 ½ per cent. Exports to the UK were initially impacted by temporary disruptions in January,
but have since recovered (although they are still below 2019 levels). On a sectoral basis, the food and
live animals sector remains in negative territory so far this year, albeit with evidence of some recovery
in recent months (Figure 2b).
11 This analysis looks at merchandise trade data up to and including April 2021. 12 Trade in aircraft and pharmaceuticals are high volatile on a monthly basis. Furthermore, trade in aircraft mainly reflects the purchase and sale of portfolios of aircraft by the aircraft leasing sector, which has a relatively limited impact on domestic value-add. In contrast, ‘underlying’ trade has a stronger connection to domestic employment conditions.
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Figure 2: a) Imports by sector, yoy change b) Exports by sector, yoy change
Source: CSO; Dept. of Finance analysis. Note: Increases in exports of aircraft, manufactured goods and mineral fuels in April are labelled in figure 2b. ‘Underlying’ imports and exports exclude trade in pharma and aircraft.
The divergent outcome for exports and imports led to Ireland recording its first quarterly merchandise
trade surplus with the UK since 2012 and largest in two decades.
1.3 Complicating factors
Assessing the immediate impact of Brexit on bilateral trade between Ireland and the UK is complicated
by the fact that there are a number of other factors, which are also likely to have affected trade flows in
the early months of 2021. Specifically, there was a large increase in underlying imports from the UK in
the months leading up to Brexit, up 8 per cent over the November to December period on an annual
basis, which is indicative of pre-Brexit stockpiling. This is further reflected in the in the manufacturing
PMI over the same period, with significant increases recorded in purchasing activity and the level of
inputs held in stock as firms took measures to minimise disruption to production ahead of the end of the
Brexit transition period. Stockpiling was particularly evident in the food and beverages (F&B) sector with
imports up by around 25 per cent on an annual basis over the November to December period (Figure
3b). Evidence of stockpiling was also present across a number of other sectors (e.g. manufactured
goods and articles, and ‘core’ machinery & equipment i.e. excluding aircraft).
The re-imposition of stringent public health restrictions in both jurisdictions is also likely to have affected
goods trade, although the fall in imports in the first four months dwarfs the decline seen in Q2 2020
during the first lockdown when a broadly similar level of restrictions were in place (Figure 1a).
While these factors may also be at work, the stark divergence between exports to, and imports from,
the UK means that it is difficult to avoid the conclusion that diverging non-tariff barriers are impacting
upon bilateral trade between Ireland and the UK. Also, notwithstanding a pick-up in recent months, the
continued weakness of imports in March and April is further evidence of the impact of Brexit as the
negative impact from pre-Brexit stockpiling should have eased over time as stocks are depleted. The
recent pick-up in annual terms reflects the weakness of imports in April 2020, the first full month
following the introduction of public health restrictions, but may be indicative of a gradual adjustment by
firms to the new arrangements.
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Department of Finance | Economic insights – Summer 2021 Page | 8
Figure 3: a) IE UK ‘underlying’ bilateral trade, €m b) Imports from the UK, yoy change
Source: CSO; Dept. of Finance analysis. Note: The red lines in the lhs chart refer to the three Brexit deadlines: 29 March 2019, 31 October 2019 and 31 December 2020. ‘Underlying’ imports and exports exclude trade in pharma and aircraft.
1.4 Merchandise trade with the EU
The impact of Brexit can also be seen by comparing the change in Irish (underlying) imports from the
UK and EU over the same period. While underlying imports from the UK fell by almost 30 per cent,
underlying imports from the EU increased by 6 per cent (Figure 4a). Data from the Irish Maritime
Development Office (IMDO) for the first quarter also suggest a shift in trade patterns with considerable
declines in roll-on/roll-off (RoRo) volumes between ROI-GB (down 31 per cent) partially offset by a
significant increase in ROI-EU traffic (up 74 per cent).13
Figure 4: a) IE bilateral trade Jan-April, yoy per cent change b) EU imports from UK, per cent of total
Source: CSO and Eurostat; Dept. of Finance analysis. Note: EU member states included in the chart are the 8 largest (excluding Ireland) importers of goods from the UK. The 2019/2020 figures are averages over the two years. ‘Underlying’ imports and exports exclude trade in pharma and aircraft.
13 The IMDO note that importers and exporters who chose to use direct EU services benefitted from an unprecedented level of additional capacity introduced by shipping operators in the last 6 months. In the RoRo market, the response by shipping operators doubled available capacity on direct RoRo services to continental Europe. Available at: https://www.imdo.ie/Home/site-area/statistics/quarterly-statistics/quarterly-statistics
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Notably, all other EU countries also recorded a decline in imports from the UK in the first quarter, with
the share of imports from the UK well below the pre-Brexit share in most EU member states (Figure
4b).14
1.5 Merchandise trade with Great Britain and Northern Ireland
The early data also suggests that Brexit has led to substantial growth in merchandise trade with
Northern Ireland, which is not subject to the new customs and regulatory checks due to the provisions
in the Northern Ireland Protocol. Exports to, and imports from, Northern Ireland increased by around 40
and 60 per cent (approximately 35 per cent on an underlying basis) over the January to April period,
respectively, albeit from a low base.15 This helped somewhat offset the significant decline in imports
from Great Britain of almost 40 per cent and may indicate an initial substitution of goods trade and
associated change in UK supply chains following Brexit (Figure 5). Indeed, Figure 5 demonstrates the
much more pronounced impact of Brexit on imports from Great Britain which, notwithstanding a partial
recovery in recent months, still remain well below 2020 levels (down around 20 per cent in both March
and April on an annual basis).
Figure 5: a) IE imports from UK, pp. contribution to yoy change b) IE imports from NI and GB, €m
Source: CSO; Dept. of Finance analysis.
1.6 Services trade with the UK
The UK’s exit from the Single European Market has had a clear and immediate impact on bilateral trade
in goods between Ireland and the UK. However, to evaluate the overall initial impact of Brexit on IE-UK
bilateral trade, trade in services also needs to be assessed.
Following the UK’s exit from the SEM, UK services firms lost the automatic right to sell services across
the EU and will now primarily have to comply with host-country rules across the various EU Member
14 ONS data suggests a far more modest impact on EU imports from the UK (UK exports to the EU) than Eurostat. This appears to be due, in part, to the ONS recording trade on a change of economic ownership basis instead of the Eurostat approach, which is based on goods physically entering and leaving a country. This suggests that part of the fall in the Eurostat data reflects a decline in intra-company transactions and associated changes to multinational supply chains. See Trade off: different ways of measuring imports and exports: https://blog.ons.gov.uk/2021/05/14/trade-off-different-ways-of-measuring-imports-and-exports/ 15 However, the CSO have reported that historical data with Northern Ireland is subject to ongoing revisions, which may affect the scale of the increase.
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States. For instance, this means that from the start of this year the ‘passporting’ of financial services
between the EU and the UK ceased, with financial services firms now needing to seek authorisation
from local regulators to be able to continue to carry out regulated activities.16 While there is the
possibility of equivalence for some areas of financial services, the TCA does not include any such
provisions.17 Some UK firms took the decision to re-locate to and establish a presence in an EU country
to continue to provide financial services across the EU market.
Research indicates that EU membership has had a significant positive effect on services trade flows,
suggesting that IE-UK bilateral services trade could be adversely affected by the UK’s exit from the
EU.18 However, balance of payments data from the first quarter suggests little to no immediate Brexit-
related impact on trade in services. Both exports and imports of services increased by around 6 per
cent in Q1 (Figure 6). As a result, the services trade surplus increased from €3.4 billion to €3.6 billion
(Figure 7).19
Figure 6: Contributions to yoy change in services trade a) imports, per cent b) exports, per cent
Source: CSO; Dept. of Finance analysis.
At a sectoral level, service exports were driven by massive growth in computer services (up 23 per cent
on annual basis) and financial services (up almost 30 per cent) which offset a dramatic decline in
tourism, travel and transport exports (down over 70 per cent) due to the impact of the pandemic.20 On
the imports side, financial services were the main driver of growth up almost 40 per cent. The size and
nature of the growth in the financial services sector over the last few years, in part due to firms relocating
to Dublin in advance of the UK leaving the EU, could have played a role in the increase in bilateral trade
in financial services post Brexit. Also, while Brexit has had an impact on the degree of financial services
activity that can be carried out between the UK and the EU, not all financial services trade has been
impacted by the UK leaving the Single Market and in some areas the impact has been temporarily
deferred through EU, UK and domestic policy measures.
16 Passporting allows firms who are registered in one EEA Member State to access the entire EU Single Market without further authorisation. 17 Equivalence is a system where foreign financial services firms are granted access to the domestic market to offer a limited number of services based on the principle that that both countries have ‘equivalent’ regimes. 18 Lawless, M (2018). “Irish-UK services trade and Brexit” ESRI Working Paper. Available at: https://www.esri.ie/publications/irish-uk-services-trade-and-brexit 19 Ireland runs a persistent surplus in services trade with the UK due to the strength of computer service exports. 20 Business service exports fell by almost 20 per cent although this is also, at least in part, due to the impact of the pandemic as a similar level of business service exports were recorded in Q2 and Q3 of 2020.
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Department of Finance | Economic insights – Summer 2021 Page | 11
Some steps have been taken on the UK side to help mitigate the impact on bilateral services trade and
smooth the transition. For example, for European firms who intend to carry out business in the UK for
the longer term, the UK have established a Temporary Permission Regime (TPR).21 This regime allows
EEA firms to operate for a period up to three years after the ‘passporting’ regime ends, while they seek
authorisation from UK regulators. On the EU side, a temporary equivalence decision for Central
Counterparties (CCPs) was granted by the EU for financial stability reasons, which has allowed EEA
firms to continue to use UK CCPs until June 2022. In addition, Ireland introduced a Temporary Run-Off
Regime (TRR) for insurers and insurance intermediaries (including ancillary insurance intermediaries)
to protect consumers of insurance products by ensuring that existing policies could continue to be
serviced after 31 December 2020. 22
1.7 Bilateral current account
Overall, there was a significant increase in Ireland’s trade surplus– goods and services – with the UK
in the first quarter. This was primarily driven by the reversal in the goods balance from a deficit of €650
million in Q1 2020 to a surplus of €1.3 billion in Q1 2021 due to the divergent outcomes in exports and
imports discussed earlier (Figure 7).23 The income deficit also declined significantly, primarily due to a
fall in profit outflows by UK firms resident in Ireland, which appears to be unrelated to Brexit.24 As a
result, Ireland recorded a substantial bilateral current account surplus with the UK – the largest since
2016 (when the bilateral current account series began) – of €3.4 billion in the first quarter of this year,
up from a deficit of €400 million in the same period in 2020.
Figure 7: IE - UK current account balance, €m
Source: CSO; Dept. of Finance analysis.
21 See Trade in Services: Brexit Readiness Action Plan, 9 September 2020: https://www.gov.ie/en/publication/04ede-trade-in-services-brexit-readiness-action-plan/ 22 See Brexit FAQ –Financial Services Firms, Central Bank of Ireland: https://www.centralbank.ie/regulation/how-we-regulate/brexit-faq 23 The surplus in goods trade in the balance of payments is larger than that recorded in the external trade data due to the strong positive contribution from net exports linked to merchanting. 24 The decline in primary income outflows is due, in part, to a fall in yield on debt used by money market funds and an increase in the total assets of funds domiciled in Ireland. This change is in line with the overall change in money market funds so it doesn't appear to be a UK specific effect.
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1.8 Conclusion
Irish imports from the UK have declined significantly since the new arrangements under the TCA were
implemented at the start of this year, while overall exports to the UK have been fairly resilient excluding
the initial disruptions in January.
Assessing the immediate impact of Brexit on bilateral trade between Ireland and the UK is complicated
by the fact that there are a number of other factors that need to be considered, in particular pre-Brexit
stockpiling and the re-imposition of stringent public health restrictions, which are also likely to have
affected trade flows in the early months of 2021. However, while these factors may be at work, the
divergence between Irish merchandise exports to, and imports from the UK, means that it is difficult to
avoid the conclusion that diverging non-tariff barriers are impacting upon bilateral merchandise trade
between Ireland and the UK. The resilience of imports from the EU and the divergence between trade
with Northern Ireland and Great Britain, provide additional evidence of the significant initial impact of
Brexit on bilateral trade.
The immediate impact on Irish goods exports to the UK has been more limited while the early data
indicates little to no immediate Brexit impact on bilateral services. However, given the phased
introduction of the new procedures by the UK and the limited data available, the full impact of Brexit on
bilateral trade will not be evident for some time.
While this paper has focussed on the immediate impact on trade, an additional channel through which
Brexit may impact the Irish economy is through domestic prices. Higher costs due to trade frictions may
result in higher import prices which could in turn be passed through to wholesale and consumer prices.
While the early data point to an uptick in both wholesale and consumer price inflation since the
beginning of the year, it is not possible to attribute these increases solely to Brexit effects. Indeed, there
are a number of other global factors that have helped fuel inflationary pressures in recent months,
including rising oil prices, global supply-chain shortages and increased shipping costs. Nonetheless,
various business surveys have cited Brexit related customs checks as a key driver of price rises, while
non-energy industrial goods inflation, which consists largely of UK imports, has picked up since the
beginning of the year. The potential impact of Brexit on domestic prices will need to be monitored closely
as more data becomes available.
The Department will monitor, and report on, additional data over the course of this year and, more
importantly, next year once UK customs checks are fully applied by the UK authorities.
Department of Finance | Economic insights – Summer 2021 Page | 13
Chapter 2: Impact of Covid-19 on remote working in Ireland25
2.1 Introduction and background
The impact of Covid‐19 on our economy has been unprecedented. The containment measures
introduced to supress the spread of the virus triggered a dramatic decline in economic activity. The
labour market was on the economic front-line. The impact was uneven, with sectors dependent on close
contact, or deemed non-essential, affected more acutely. Other sectors – those deemed essential, less
contact-intensive, or more amenable to remote work were more resilient, particularly in later waves.
The nature of the shock precipitated profound structural changes – pausing or reversing some pre-
existing trends – and accelerating others. The pandemic necessitated a ‘step-change’ in how and where
people worked. Indeed, the shift to remote work and ‘learn-by-doing’ effects through successive waves
helped to offset and diminish the economic impact of lockdowns. The data presented in this note
demonstrate that this shift was heterogeneous, with some sectors and occupations having more
capacity to adapt. In all sectors with such capacity, the pre-crisis trend of detachment of work from place
accelerated. In some sectors, such as the public sector, this represented a significant shift relative to
the pre-pandemic remote work share26.
Looking beyond the pandemic, public and private sector companies with remote working capacity are
likely to promote a secular change in the ‘culture’ of remote work. The data presented here can
contribute to policy discussions around that change, identifying the likely sectoral and occupational
ceilings on remote work, where previous assessments were reliant on survey data or estimates. This
will be important in terms of planning for remote working infrastructure, and weighing capacity against
targets for remote work in the public (and private) sectors. A number of questions also arise including
the implications for productivity; labour force participation; competitiveness; migration; our
environmental obligations; and potential growth over the longer-term. Further research in these areas
is recommended.
2.2 Pandemic impact on Labour market
The sudden and unprecedented restriction of economic activity arising from the Covid-19 pandemic
turned the labour market on its head. Employment fell rapidly, and unemployment moved from historic
lows at the beginning of 2020, to a Covid-adjusted unemployment rate exceeding 31 per cent in April
during lockdown 1.0 (Figure 8a). By the first week of May 2020, more than 1.2 million workers (or
approximately half the pre-pandemic labour force) were being supported by some form of income
assistance from the state.
Although severe restrictions returned in the first quarter of 2021 (Lockdown 3.0), the Covid-adjusted
unemployment rate did not return to its previous peak of April 2020 (Figure 8a). This suggests that
some adaption had occurred, and ‘learn-by-doing’ effects had helped to diminish the economic impacts
in later waves of the virus and restrictions.
25 This note was prepared by Patrick O’Brien, an economist in the Economics Division of the Department of Finance. The analysis and views set out are those of the authors only and do not necessarily reflect the views of the Department of Finance or the Minister for Finance. The author would like to thank Mike Fahy and Brendan O’Connor for input, and the Department of Enterprise, Trade and Employment for providing feedback. Any outstanding errors or omissions remain those of the authors. 26 The remote work share is defined here as persons who work at home on a usually or sometimes basis (as a share of aggregate or sector employment). As such, the remote work share here includes some respondents who work from home but not remotely (i.e. home based GPs and childminders), and excludes some respondents who work remotely but not from home (remote hubs, travelling etc.). The analysis is based on Labour Force Survey data available from the CSO.
Department of Finance | Economic insights – Summer 2021 Page | 14
Figure 8: a) Covid-adjusted unemployment rate, per cent; b) Covid-adjusted employment, index
Source: CSO; Dept. of Finance analysis. b) Index (Q419 = 100). Contact intensive = accommodation and food; wholesale and retail; other, including personal services. Knowledge intensive = ICT; finance & real; professional; science and technical services.
The Covid-adjusted employment data (Figure 8b) demonstrate that the most significant impact through
the pandemic occurred in sectors relying on close contact, or where activity was more reliant on
attendance at the primary workplace. Covid-adjusted employment in the second quarter fell by almost
60 per cent in the contact-intensive and construction sectors, relative to pre-pandemic levels in the final
quarter of 2019. By comparison, the impact in sectors more amenable to the detachment of work from
place was less severe (knowledge intensive services and public administration; both c.-8 per cent in
the second quarter). Those sectors least impacted by initial lockdowns also demonstrated more
resilience relative to contact-intensive sectors, less ‘remotable’ sectors, and to earlier waves (Figure
8b).
More granular employment and hours worked data support the observation that less ‘remotable’ sectors
had a higher risk of deterioration in labour market outcomes (Figure 9a). By end 2020, Covid-adjusted
employment fell by more than half in contact-intensive sectors such as accommodation and food (-88
per, compared to Q4 2019), other, including personal and wellbeing services (-55 per cent); and by
around a quarter in the construction sector (-25 per cent). Conversely, the impact was less severe in
sectors with greater capacity to undertake activity remotely, such as ICT (+3 per cent compared to Q4
2019), public administration (-1 per cent), and industry (-2.5 percent). Indeed, the more resilient sectors
in employment terms were also the largest contributors to the increasing share of employees working
remotely by the end of the year (Figure 9b)27. This indicates that adaption, through the capacity to shift
to remote working, was a contributory factor in mitigating the employment impact of the Covid-19
pandemic.
The same sectoral trends are broadly apparent in terms of hours worked, though the overall fall in hours
worked is less severe with the burden of layoffs falling on part-time workers (Figure 9a). Also of note,
total hours worked grew in a number of sectors where employment declined, such as public
administration, industry, and finance & real estate (Figure 9a). This potentially points towards increased
working hours from a change to remote working practices in some sectors. Indeed, early survey data
indicates that working hours have increased for the majority of people working remotely28.
27 Contributions to difference in remote work share in Q420 were, ICT (+3.0pp.), public admin (+2.5pp.), industry (+2.7pp.). 28 51 per cent of respondents to National Remote Working Survey engaged in remote work stated total hours worked had increased.
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Department of Finance | Economic insights – Summer 2021 Page | 15
Figure 9: a) Covid-adjusted employment and hours worked, yoy change in Q4-20; b) Contribution to difference in aggregate remote work share, yoy pp. change in Q4-20.
Source: CSO; Dept. of Finance analysis. Change year over year in Q4 2020.
2.3 ‘Step-change’ to remote working pattern during pandemic
The remote working data demonstrated that sectors with a higher contribution to the change in the
aggregate remote working share (yoy in Q4 2020) had a significantly lower risk of deterioration in labour
market outcomes and in total hours worked. Data on the aggregate remote work share show that the
cumulative impact of adaption in those sectors was a ‘step-change’ in the overall remote work share
over the same period (Figure 10).
Preceding the pandemic – in the final quarter of 2019 – the remote work share was around 22 per cent
of total employment. By end 2020, that share had increased some 16 percentage points to 38 per cent,
On the same basis, the numbers who ‘never work from home’ fell to 62 per cent. The latest data indicate
that the remote work share has expanded by a further 6 percentage points, to 44 per cent, during the
renewed lockdown in the first quarter of this year.
Figure 10: a) and b) Remote work, share of total employment
Source: CSO; Dept. of Finance analysis. Note: Series do not sum to 100 due to ‘not stated’ category and rounding.
-100% -80% -60% -40% -20% 0% 20%
Accom. & Food
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All
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Transport
Prof., Science, Tech.
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Admin & support
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Education
Health & social
Prof., science, tech.
Public admin
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ICT
Contribution to difference inaggregate remote work share
13%
22%
38%
44%
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Usually or sometimes work from home
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Never work from home
Department of Finance | Economic insights – Summer 2021 Page | 16
The contribution of sectors to the aggregate change in the remote work share – before and during the
pandemic – depended both on capacity and culture within each sector (Figure 11). Some sectors had
both capacity and a culture of remote work preceding Covid-19 restrictions, such as ICT (42 per cent
remote work share in Q4 2019); finance and real estate (31 per cent); and professional, scientific and
technical services (39 per cent). These sectors (knowledge intensive services), had additional capacity
for remote work and expanded into it in responding to the mitigation measures; to 86 per cent, 73 per
cent, and 67 per cent remote work share respectively.
Another category of sectors had limited capacity for adaption in terms of remote work; these sectors
were mainly customer facing and contact intensive, such as accommodation and food (8 per cent in Q4
2019), wholesale and retail (12 per cent), and other, including personal services (21 per cent). These
sectors had more negligible growth of -3 per cent, 6 per cent, and 9 per cent respectively (yoy in Q4
2020). The third category comprised sectors with additional capacity prior to the pandemic, but a lower
share of remote work in practice. Public Administration is of particular note here, increasing from 11 per
cent in Q4 2019 to 56 in Q4 2020 (Figure 11).
Figure 11: Remote work share by sector, share of sector employment
Source: CSO; Dept. of Finance analysis. Remote work = share of sector employment working from home ‘usually or sometimes’.
Of particular note is the relative remote working patterns in the public and private sectors. Prior to the
pandemic, the public sector had lagged private sector office services significantly in terms of remote
working practices. Following a five-fold increase in public sector workers who work at home ‘usually or
sometimes’ by end 2020 (from Q4 2019), and a further increase during the first quarter of this year, the
gap between work practices in the sectors has almost halved (Figure 12). While containment measures
during the pandemic necessitated that ‘step-change’, there is now a commitment to a greater share of
remote workers in the public sector29. The National Remote Work Strategy mandates that remote work
should ‘be the norm’ for 20 per cent of public sector employment. This suggests that the share of public
sector workers working remotely is likely to be permanently higher, and that ‘remote-working gap’
between public and private sector is likely to be permanently narrower. It also points to a potential ceiling
of around 60 per cent in terms of remote-working capacity.
29 See Guidance for Working Remotely, and Making Remote Work - national remote work strategy, Department of Enterprise, Trade and Employment (2021)
0%
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Pro., sci., tech.
Public admin
Industry
Wholesale & retail
Other services
Department of Finance | Economic insights – Summer 2021 Page | 17
Figure 12: Remote work share, public versus private, share of sector employment
Source: CSO; Dept. of Finance analysis. Private sector office = (ICT; finance & real; prof., science, tech.; admin & support).
The evolution of the remote work share also varied in terms of occupational classification. As shown in
Figure 9, Covid-related job losses tended to be in sectors that were consumer-facing, contact intensive,
and less amenable to remote work. The occupational data is consistent with this (Figure 13), with lower
shares shifting to remote work in service and labour intensive occupational categories.
The share of remote work in labour intensive employment (process/plant/machine operation, and
elementary) remained broadly stable from immediately pre-pandemic to end 2020, as capacity for
remote work in these sectors is limited. There was an indication of increased adaption during renewed
lockdowns in the first quarter of 2021, but the share of remote work remained below 10 per cent. More
service intensive work, centred on caring, increased the remote work share by 7pp.(yoy in Q4 2020).
Figure 13: Remote work share by occupational classification; share of classification
Source: CSO; Dept. of Finance analysis. Due to low response rates, respondents in the ‘Not stated’ category are included in the service and labour intensive categories. High skill = managers, technicians, professional, associate professional; Middle skill = skilled trades and administrative/secretarial; service intensive = caring, leisure, other, sales & customer services; labour intensive = process, plant, machine, & elementary.
0%
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2 2
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High skill
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Service intensive
Labour intensive
Department of Finance | Economic insights – Summer 2021 Page | 18
The remote work share in ‘middle skill’ occupations, expanded more robustly by around 18pp. over the
same period, driven by a sharp increase in administrative and secretarial work particularly (+36pp.), as
scope for remote work within the ‘skilled trades’ was much more limited. The remote work share in
occupations classified as ‘high skill’ increased by approximately 23pp. from the fourth quarter of 2019
to the fourth quarter of 2020, driven by growth in the professional (+25pp.); associate professional &
technical (+31pp.); and management, directors/senior officials (+ 7pp.) classifications. The share in all
skill categories increased during the renewed lockdown in the first quarter of this year, indicating some
additional adaption through successive lockdowns. Overall, there was a strongly positive correlation
between higher skill occupational classifications and remote working potential.
2.4 Ireland in comparative terms
While Ireland had above average share of remote working prior to the pandemic on an annual average
basis in 2019, it also saw above average increases in the share during the pandemic. According to
Eurostat data, prior to the pandemic in 2019, Ireland had on average around 20 per cent of total
employment engaged in remote work on a ‘usually or sometimes’ basis – above the Euro Area average
of around 15 per cent (Figure 14). Following the introduction of containment measures in 2020, the
share of remote workers in Ireland increased by 12 pp. to 32 per cent, much higher than the growth in
remote working for the euro area (+8pp.)
Figure 14: a) and b) Remote work share 2019 & 2020, annual share of total employment
Source: Eurostat; Dept. of Finance analysis. Data on an annual average basis.
2.5 Remote work preferences
The pandemic has had a clear impact on workers disposition toward remote work. Surveys taken
through the pandemic indicated that preferences for remote work have grown significantly. Over 95 per
cent of workers now favour some form of remote working according to the survey. While the numbers
wanting to engage in daily remote work has increased 20 percentage points (from April 2020) to almost
one-third of workers surveyed in April 2021. Only 5 per cent now state that they favour a return to office
on a full time basis.
0% 20% 40% 60% 80% 100%
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Department of Finance | Economic insights – Summer 2021 Page | 19
Figure 15: Remote working preferences through the pandemic, per cent of respondents
Source: National remote working survey. Dept. of Finance analysis.
2.6 Conclusion
The pandemic necessitated a ‘step-change’ in how, and where, people worked, however the impacts
were heterogeneous, with some sectors and occupations having more capacity to undertake
employment away from the primary workplace. In all sectors with such capacity, the pre-crisis trend
toward a greater share of remote work accelerated. In some sectors, such as the public sector, this was
a profound shift relative to the pre-pandemic share of remote work.
Looking beyond the pandemic, public and private sector companies with remote working capacity have
signalled that they will seek to promote a secular change in the ‘culture’ of remote work. The most
recent National Remote Working Survey indicated a significant shift in preferences for ‘daily’ and
blended remote working arrangements, with only 5 per cent favouring a return to full time office-based
employment after the pandemic. The publication also noted that around 10 per cent of those surveyed
had already relocated to work remotely, with a further 24 per cent stating they would consider moving
based on their experience of remote working.
In relation to policy, the Government have considered the potential short and medium-term implications
arising in recent publications and policy statements. These publications, including the National Remote
Work Strategy and National Economic and Recovery Plan, addressed some of the arising policy
implications, including on accelerating digital infrastructure, remote working hubs, and urban versus
rural infrastructure development over the medium term. How these developments might interact with
wellbeing and the Government’s Climate Action Plan are also considered.
The data presented in this paper can assist in contributing to and informing current policy discussions
in relation to the future of how, and where, people will work. In particular, the findings in this paper can
help inform the discussions in identifying the likely sectoral and occupational ceilings in remote working
terms, identifying remote working preferences beyond the pandemic in terms of infrastructure planning,
and weighing capacity against targets in terms of remote work in the public sector.
Based on the analysis in this note, a number of questions emerge from the data in terms of the potential
macroeconomic impacts that a permanently larger remote work share may have on growth in the
economy, including in terms of impacts on productivity. While the literature is generally positive on the
5%
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I do not want to work remotely
Several times a month
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Department of Finance | Economic insights – Summer 2021 Page | 20
impact of remote working practices on worker and firm level productivity, the results are not uniform
across sectors/occupations, and the OECD have outlined that net effects are dependent on the
structure/intensity of remote work30. Further analysis is recommend to assess these impacts in the
context of Covid-19 in Ireland, and the ‘step-change’ in remote working practices that has occurred.
Another factor emerging from the data is the greater ‘remotability’ in higher skilled occupations and
higher value added sectors that tend to be located in more urban settings. This could impact the
structure of urban economies, and capital and labour costs for firms that operate there. The net effect
on migratory patterns and the implications for labour supply over the longer term are uncertain, but
increased labour force participation owing to more flexible working arrangements is another potential
outcome of the increase in remote work.
Additional work to understand these potential structural changes is required – with the evolution of
preferences and the fixed capital costs of the remote work shift undertaken by the sectors (private and
public) amenable to remote work – a significant share of the change to structure of remote work is likely
to persist beyond the pandemic.
30 Organisation for Economic Co-operation and Development, 2020. Productivity gains from teleworking in the post Covid-19 era: how can public policies make it happen?. OECD Publishing.
Department of Finance | Economic insights – Summer 2021 Page | 21
Chapter 3: Covid-19 and the Irish Labour Market – Insights from High Frequency Data31
3.1 Introduction and background
Arguably, the most significant impact of the Covid-19 pandemic on the Irish economy has come through
the labour market. In the period preceding the pandemic the labour market was considered to be at full
employment with the unemployment rate just below 5 per cent. However, at the peak of the crisis in
May 2020 the upper bound measure of the unemployment rate increased above 31 per cent.32
Furthermore, the impact of the pandemic across the labour market has not been symmetric with
customer facing sectors effected to a much greater extent than those where remote working is more
feasible.
One of the most prominent features of the pandemic has been the speed with which changes in
underlying health conditions have affected the labour market. In particular, movements between the
different levels of the public health restrictions, which were put in place to prevent the spread of the
virus, have resulted in significant fluctuations in both employment and unemployment levels over the
last year. Unfortunately, standard or traditional measures of labour market conditions (such as the
Labour Force Survey) were unable to capture the speed at which developments in the labour market
evolved, as these measures are released with a lag on monthly or quarterly basis. As a result, data with
a higher time frequency were and continue to be needed to monitor labour market developments in the
Covid-19 era.
This paper analyses some real-time indicators of the labour market in the form of the Pandemic
Unemployment Payment (PUP) and job postings data from the employment website Indeed. Not only
are these indicators more timely, providing data on a weekly basis, they also provide granular detail on
the labour market e.g. across sectors and counties. The purpose of the analysis is to assess the impact
that the pandemic has had on the labour market through the prism of these data and determine if there
are any early signs of recovery. The data show that though there has been a significant pickup in the
labour market in recent months, the pace of recovery is very different across sectors and counties.
Sectors that are more consumer facing have tended to lag the recovery seen in other areas of the
labour market. There has also been significant divergence in the recovery across counties with Dublin
in particular recovering at a slower pace. From a policy perspective, such real time indicators give us a
better understanding of the most up to date developments in the labour market and in turn help inform
evidence-based policy, including decisions on labour market supports.
3.2 Issues with standard labour market data
The Covid-19 pandemic has not only had a significant impact on the labour market but also the
traditional metrics that are used to measure its performance. The most comprehensive labour market
release from the Central Statistics Office (CSO) is the Labour Force Survey (LFS). The LFS provides
detailed labour market statistics including measures of employment, unemployment and participation,
by sector, age and region. However, since the start of the pandemic there has been a disconnect
between the standard metrics of the labour market and underlying conditions in the domestic economy.
31 This note was prepared by Matthew Allen-Coghlan, an economist in the Economics Division of the Department of Finance. The analysis and views set out are those of the author only and do not necessarily reflect the views of the Department of Finance or the Minister for Finance. The author would like to thank Mike Fahy, Patrick O’ Brien and Brendan O’Connor for their input and guidance. The author would also like to thank the Department of Social Protection for providing feedback and Jack Kennedy at Indeed for providing additional data. Any outstanding errors or omissions remain those of the author. 32 For further information on the Covid-19 adjusted measure of unemployment see the CSO’s ‘Monthly Unemployment and Covid-19 Adjusted Estimates August 2020 Technical Note’.
Department of Finance | Economic insights – Summer 2021 Page | 22
This has largely resulted from the fact that international standards for measuring the labour market in
the form of International Labour Organisation (ILO) guidelines used in the LFS were not designed to
take account of the extraordinary government support payments introduced in the wake of the
pandemic.33 Given that it is only released on a quarterly basis with a lag, the LFS is also of limited use
for taking into account the significant real-time volatility in the labour market over the past year.
The CSO also release the unemployment rate on a monthly basis. Using the standard ILO methodology
the unemployment rate in June was just over 7½ per cent. However, this measure does not fully account
for the effects of the pandemic. In order to try correct for this, over the last year the CSO have published
an additional Covid-19 adjusted unemployment rate alongside the standard rate. The Covid -adjusted
series attempts to take into account the impact of the pandemic on the labour market by adding the
number of people on the PUP to the number of people who are unemployed. However, as the
Department has previously outlined, this is also an imperfect measure.34 Given the rapidly changing
situation around the pandemic over the last year, even monthly data has failed to provide sufficient
insights into developments in the labour market in a timely enough manner. In response, there has been
increased use of alternative higher frequency (e.g. daily or weekly) data sources over the last year that
have enabled real time monitoring of the impact of Covid-19 on the labour market.
3.3 PUP data
The PUP is a social welfare payment introduced in March 2020 for those who have lost their
employment due to the Covid-19 pandemic. The magnitude of uptake in the PUP scheme has
demonstrated just how significantly the labour market has been impacted by the pandemic. At the peak
of the crisis in May 2020 there were over 600,000 people claiming the PUP (Figure 16). As restrictions
were eased through summer 2020 this number declined to around 200,000 but rose sharply again at
the start of 2021 as Level 5 restrictions were reintroduced to combat the surge in the virus. As of
February 2021, there were over 480,000 people on PUP. However, this figure has since declined to just
over 220,000 as public health restrictions continue to be relaxed following the improved epidemiological
situation. PUP data are released on a weekly basis and so can be used to provide a timely indicator of
labour market conditions.
Figure 16: Pandemic Unemployment Payment, persons in receipt
Source: Department of Social Protection; Dept. of Finance analysis.
33 For further information on this issue see the CSO’s ‘Information Note on Implications of Covid-19 on the Labour Force Survey’. 34 For a discussion on the issues around this measure see a previous Department of Finance Economic Insights paper ‘Ireland’s Unemployment Rate and Covid-19 Disruption’, January 2021. www.gov.ie/en/publication/20b2f-economic-insights-economic-statistics-during-covid-19/
Peak: 605k
Phase 1:May 18
Phase 2:June 8
Phase 3:June 29
Level 3:Oct 7
Level 5-:Oct 22
Level 3:Dec 3
Level 5:Dec 26
Level 5-:April 12
Level 3:May 10
Level 3-:June 7
Latest:221k
0
100000
200000
300000
400000
500000
600000
700000
23/03
/20…
05/04
/20…
18/04
/20…
01/05
/20…
14/05
/20…
27/05
/20…
09/06
/20…
22/06
/20…
05/07
/20…
18/07
/20…
31/07
/20…
13/08
/20…
26/08
/20…
08/09
/20…
21/09
/20…
04/10
/20…
17/10
/20…
30/10
/20…
12/11
/20…
25/11
/20…
08/12
/20…
21/12
/20…
03/01
/20…
16/01
/20…
29/01
/20…
11/02
/20…
24/02
/20…
09/03
/20…
22/03
/20…
04/04
/20…
17/04
/20…
30/04
/20…
13/05
/20…
26/05
/20…
08/06
/20…
21/06
/20…
04/07
/20…
Department of Finance | Economic insights – Summer 2021 Page | 23
3.4 PUP by sector
While the shock of the pandemic to the labour market as a whole has been unprecedented, the impact
across sectors has not been equal with some sectors faring much worse than others. Sectors that are
more customer facing or require close contact between workers have been most significantly impacted
while those more amenable to home-working or which are considered essential have been impacted
less. This disproportionate impact across different sectors of the economy is illustrated in Figure 17
below that shows the number of people on PUP by sector as a percentage of pre-pandemic employment
in 2019.
At the peak of the pandemic in May 2020 an estimated three quarters of those employed in the
Accommodation and Food services sector in 2019 were availing of the PUP scheme. While this figure
has fallen considerably since then, over 35 per cent of the sector remain on the PUP. Similarly, there
was also a very large proportion of those working in the Construction sector on the PUP scheme at the
peak of the crisis, almost three-fifths of pre-pandemic employment. As the sector re-opened there has
been a four-fold decline PUP, standing at just under 15 per cent. The significant impact of the pandemic
on these sectors contrasts sharply with other sectors of the economy that were only marginally impacted
by the pandemic. For example, at the peak of the crisis the proportion of those receiving PUP as a
percentage of pre-pandemic employment was less than 10 per cent in the ICT, Public Admin, Health &
Social Work and Agriculture sectors. The most recent data shows that these figures have declined by
at least half in each of these sectors.
Figure 17: PUP recipients by sector, as percentage of pre-pandemic sector employment
Source: Department of Social Protection; CSO; Dept. of Finance analysis. Latest data to end of June. Note: Sectoral breakdowns of PUP are published by the Department of Social Protection at www.gov.ie/en/publication/f4c60c-covid-19-statistics/. Sectors recorded in these reports are based on the sector of the last known employer on the Department’s administrative records and may not reflect the current sector of self-employed workers.
3.5 PUP by county
Not only has the impact of the pandemic been unequal across sectors but it has also had an asymmetric
impact on the labour markets of different counties. Figure 18 displays two heat maps with the number
of people on PUP in each county at both the peak of the crisis in May 2020 (LHS) and the most recent
data (RHS). The decline in the amount of people on PUP across the country is evident when comparing
the two maps. The LHS map shows that at the peak of the pandemic there were 9 counties in which
there were over 20,000 people on the PUP. The most recent data on the RHS shows that this has fallen
0 10 20 30 40 50 60 70 80
Accommodation & Food
Construction
Administrative
Wholesale & Retail
Professional
Transport
Financial and Real estate
Industry
Education
ICT
Public Admin
Health & Social Work
Agriculture
per cent
Peak Latest
Department of Finance | Economic insights – Summer 2021 Page | 24
to just 2 counties. There are now 21 counties in which there are less than 10,000 people claiming PUP,
up from 9 counties at the peak. Unsurprisingly, counties that have the largest populations also tend to
be those with the highest amount of people on PUP. In both periods Dublin had the highest number of
recipients of the PUP while Leitrim had the lowest.
Figure 18: PUP recipients by county, level at peak (LHS); and latest (RHS)
Source: Department of Social Protection; Dept. of Finance analysis. Latest data to end of June
Perhaps more informative for the purpose of making cross county comparisons is Figure 19 which
shows the proportion of people on the PUP in the most recent data as a percentage of the number of
people on PUP at the peak in May 2020. A higher value of this indicator suggests that there has been
less of recovery from the worst period of the pandemic crisis in terms of the labour market. Across all
counties the value of this indicator ranges from 30 per cent (Wexford) to 50 per cent (Dublin). Dublin is
the only county in which the numbers of recipients that have their incomes supported by way of the
PUP now remains over half the amount that were on PUP at the peak of the crisis. Other counties in
which this indicator is highest are those with large urban populations including Galway and Limerick, as
well as the commuter counties around Dublin. Counties in the midlands and around the border region
tend to have a lower value of this indicator.
Department of Finance | Economic insights – Summer 2021 Page | 25
Figure 19: PUP recipients, as percentage of peak (%)
Source: Department of Social Protection; Dept. of Finance analysis. Latest data to end of June.
3.6 Demand for labour - Indeed Job Postings data
The increased demand for real time indicators in the pandemic-era has led researchers and policy
makers to look for alternative sources of labour market data. One such data source is job-posting data
from online job boards. The employment website Indeed accumulates statistics on the number of job
postings made in the country each day which provides a real time indicator of the demand for labour.35
By comparing total postings against the pre-pandemic situation (on 1 February 2020), it is possible to
gauge how the labour market has been effected by the pandemic. Figure 20 shows the growth in total
and new postings over this period.
As of the end of June, the total number of job postings in Ireland were over 6 per cent greater the pre
pandemic level, with new job postings, which are postings made in the previous 7 days, 20 per cent
above. The strong rate of growth in both these measures represents significant recovery in the labour
market from the worst period of the crisis in 2020 when total and new job postings fell by more than half
and two-thirds respectively. The posting data has a clear inverse relationship with the Covid-19 adjusted
monthly unemployment rate which peaked at over 31 per cent around the same time that the posting
data bottomed out and has generally declined over periods in which the posting data has recovered.
35 For further information on this data see www.hiringlab.org/indeed-data-faq
Department of Finance | Economic insights – Summer 2021 Page | 26
Figure 20: Indeed job postings, change from 1 Feb 2020 (LHS); Covid-adj. unemployment rate (RHS)
Source: Indeed; CSO; Dept. of Finance analysis. Latest data to .end of June
3.7 Demand for labour by sector
As seen in the PUP statistics, there are significant differences in the recovery of the labour market
across sectors in terms of total job postings. Figure 21 shows the growth in total job postings for a
selected group of sectors, all of which were significantly impacted by the pandemic.36 The nadir of job
postings for each of these sectors came in May/June of 2020 and ranged from -60 per cent in the retail
sector to -90 per cent in the hospitality sector. Since then there has been a general recovery in postings
across most sectors, though the impact of the imposition and lifting of restrictions over the past year is
evident. For example, job postings in the construction sector were just below the pre-pandemic baseline
in December 2020 before strict restrictions were reintroduced in January that resulted in a substantial
decline in postings at the start of the year. In both the retail and food sectors total postings are now
greater than their pre-pandemic baseline levels. The recovery has remained most subdued in the real
estate sector where job postings are 40 per cent below the pre pandemic level.
Figure 21: Indeed job postings (total), change from 1 Feb 2020
Source: Indeed; Dept. of Finance analysis. Latest data to end of June.
36 These sectors are based on the internal taxonomy of Indeed and do not necessarily align with the definition of sectors under NACE classification.
0
5
10
15
20
25
30
35
-80
-60
-40
-20
0
20
40
01
/02/2
0
26
/02/2
0
22
/03/2
0
16
/04/2
0
11
/05/2
0
05
/06/2
0
30
/06/2
0
25
/07/2
0
19
/08/2
0
13
/09/2
0
08
/10/2
0
02
/11/2
0
27
/11/2
0
22
/12/2
0
16
/01/2
1
10
/02/2
1
07
/03/2
1
01
/04/2
1
26
/04/2
1
21
/05/2
1
15
/06/2
1
per
cent
per
cent
New postings Total postings Covid-19 adjusted unemployment (RHS)
-100
-80
-60
-40
-20
0
20
40
60
01
/02/2
0
26
/02/2
0
22
/03/2
0
16
/04/2
0
11
/05/2
0
05
/06/2
0
30
/06/2
0
25
/07/2
0
19
/08/2
0
13
/09/2
0
08
/10/2
0
02
/11/2
0
27
/11/2
0
22
/12/2
0
16
/01/2
1
10
/02/2
1
07
/03/2
1
01
/04/2
1
26
/04/2
1
21
/05/2
1
15
/06/2
1
per
cent
Construction Food Hospitality Real Estate Retail Admin
Department of Finance | Economic insights – Summer 2021 Page | 27
3.8 Demand for labour by county
Looking at job postings across the country (Figure 22) we can see there are clear divergences in the
recovery between counties. As was the case with the PUP data, Dublin appears to be faring worse than
most other counties with job postings remaining 7 per cent below the pre-pandemic baseline. Limerick
is the only county with a weaker recovery than Dublin with job postings 9 per cent below the pre-
pandemic baseline.
Figure 22: Indeed job postings by county, change from 1 Feb 2020
Source: Indeed; Dept. of Finance analysis. Latest data to end of June
With over half of all job postings in the country based in Dublin it is worth monitoring developments in
the capital separately to the rest of the country. The significant difference in the trend in job postings
between Dublin and the rest of the country is illustrated in Figure 23. While the decline in postings was
very similar between the start of February and June last year, the recovery has looked very different.
The pace of recovery has been much more rapid outside the capital with total postings now up over 20
per cent relative to pre-pandemic. It is likely that the reason why postings growth in Dublin is so far
below the rest of the country relates to the fact that capital cities tend to have a higher proportion of
jobs in consumer facing sectors. As shown above these sectors have been the slowest to recover from
the pandemic.37 As the economy and businesses continue to reopen up through the summer, we may
see an acceleration in improvements in the labour market in Dublin.
37 For further discussion on the slower recovery in Dublin see ‘Dublin Economic Monitor: March 2021’.
Department of Finance | Economic insights – Summer 2021 Page | 28
Figure 23: Indeed job postings – Dublin & Rest of the Country, change from 1 Feb 2020
Source: Indeed; Dept. of Finance analysis. Latest data to end of June.
3.9 Conclusion
The rapidly changing situation around the pandemic has increased the demand for high frequency
indicators of the labour market. Likewise, the asymmetric impact of the pandemic across different
sectors of the economy and society has increased the demand for data on a more granular level. These
data are being used in real time to inform policy makers on some of the most pressing policy issues
facing the country including decisions on labour market supports.
Both the PUP and Indeed data show that on aggregate there has been significant recovery in the labour
market this year. The amount of people on the PUP is at its lowest level since early-October 2020 while
the number of job postings in the country exceeds the pre-pandemic baseline. However, the recovery
has not been symmetric across the labour market with some sectors and counties lagging the recovery
seen in others. In particular, consumer facing sectors are lagging sectors more amenable to remote
working with urban areas, such as Dublin, which are more reliant on these sectors, also recovering at
a slower pace.
.
Slower pace of recovery in Dublin
-60
-50
-40
-30
-20
-10
0
10
20
30
01
/02/2
0
21
/02/2
0
12
/03/2
0
01
/04/2
0
21
/04/2
0
11
/05/2
0
31
/05/2
0
20
/06/2
0
10
/07/2
0
30
/07/2
0
19
/08/2
0
08
/09/2
0
28
/09/2
0
18
/10/2
0
07
/11/2
0
27
/11/2
0
17
/12/2
0
06
/01/2
1
26
/01/2
1
15
/02/2
1
07
/03/2
1
27
/03/2
1
16
/04/2
1
06
/05/2
1
26
/05/2
1
15
/06/2
1
per
cent
Rest of Country Dublin Slower recovery in Dublin
Department of Finance | Economic insights – Summer 2021 Page | 29
Tithe an Rialtas. Sráid Mhuirfean Uacht, Baile Átha Cliath 2, D02 R583, Éire Government Buildings, Upper Merrion Street, Dublin 2, D02 R583, Ireland T:+353 1 676 7571 @IRLDeptFinance www.gov.ie/finance