Executive summary
Ireland’s labour market fares well in comparison with other OECD countries. Employment rates, at 74% for the population aged 15-64 in 2022 were well above the OECD average of 69% and the unemployment rate fell to its lowest level in decades in 2022, at 3.4%. Nevertheless, certain challenges remain in the Irish labour market. Even with record-low unemployment levels in 2022, there were still almost 30 000 people in long-term unemployment in Ireland, representing 32% of all unemployed. Many of these people face employment barriers and require tailored support to reconnect with the labour market. In addition, important disparities remain, with people with low education levels and youth facing more barriers in entering the labour market than other groups. One further challenge relates to the labour shortages amid a scarcity of skilled labour.
In this context, active labour market policies (ALMPs) have an important role to play in connecting people with jobs and mitigating the risk of long-term unemployment. Over the past 15 years, Ireland has taken several steps to modernise the public employment service (PES) to streamline services and increase activation requirements for jobseekers and leverage on digitalisation to make the PES more effective and efficient. Nevertheless, Ireland spends 0.21% of GDP (0.37% of the modified GNI) on ALMPs, below the OECD average of 0.43% in 2021 and about half of ALMP spending is focused on direct job creation (public works programmes). This places Ireland in the seventh place among OECD countries in terms of its spending on these ALMPs. This high spending on public works programmes in Ireland, as well as their historical importance for the country, highlight the necessity to evaluate the impact of public works on participants’ subsequent labour market outcomes and identify recommendations for improvement.
Drawing on rich data linked across different registers and a methodology that compares programme participants with similar non-participants, this report shows that the Community Employment (CE) scheme and Tús have a positive impact on the earnings of participants in the long-term. In addition, the report shows that long-term unemployed persons can experience a wide range of different labour market journeys, and about half of people eligible for CE and Tús (mainly long-term unemployed) find unaided employment within four years.
Building on the data-related work and the analysis conducted in this report, the Department of Social Protection (DSP) of Ireland could invest in further developing its capacity to link administrative data for research purposes by including additional data from different registers (e.g. data on health and education) and improving the quality of the data currently linked by DSP.
The key policy recommendations emerging from this report for Ireland include:
Combine CE with other types of support, especially counselling towards the end of the placement, to facilitate quicker transitions into the primary labour market after CE.
Consider introducing more flexibility in CE working hours, placement types and training.
While Tús and CE should be maintained, potential future increases in ALMP spending should be channelled towards training programmes that have shown to be effective and other types of ALMPs that perform well to ensure a balanced ALMP suite of provision in Ireland.
Consider introducing random selection into CE to encourage participation among a broad group of job seekers who are long-term unemployed, including those who have no local knowledge about specific programmes, and maintain random selection for Tús.
Further enhance the value of administrative data by linking Department of Social Protection (DSP) data with data from other registers to provide more detailed policy insights and develop a longitudinal dataset that maximises the power of the available administrative data.