What makes Ireland's labor market more flexible than that of Spain?
The President of the European Central Bank (ECB), Mario Draghi, has compared the labor market flexibility of Spain unfavorably against that of Ireland.
At the recent 2014 Jackson Hole Economic Symposium, Draghi commented on issues relating to eurozone unemployment, and causes behind disparate unemployment levels across member states.
Following the sovereign debt crisis, jobless levels in Spain and Ireland saw significant changes. Between 2011 and 2013, structural unemployment decreased by 0.5% in Ireland and increased by 2.5% in Spain.
Draghi asserts that the reason for the discrepancy is that Ireland entered the crisis with a relatively flexible labor market, having adopted more labor market reforms under its 2010 European Union / International Monetary Fund (EU / IMF) program. By contrast, labor reforms in Spain only started in 2012.
Nevertheless, in a recent blog post, Ronan Lyons sounded a note of caution on the current state of the Irish job market: “Of all sectors, only three are currently registering larger numbers of jobs than in 2007-2008 period.”
Furthermore, around 100,000 households in Ireland are currently unable to pay their mortgage despite having regular income from employment. This accounts for nearly 63% of all mortgages in the nation.
The Organisation for Economic Cooperation and Development (OECD) reports that more Spanish firms have been hiring employees on permanent contracts since the reforms in 2012.
Inbound migration is regarded more seriously as a political issue during times of high unemployment. Amelie F. Constant has written on the subject of whether migrants take native workers’ jobs. She concluded that they rarely do, and boost overall employment in the long term.
Read more here.
Related articles:
Do migrants take the jobs of native workers? by Amelie F. Constant
The impact of migration on trade, by Murat Genç
Circular migration, by Klaus F. Zimmermann