Labourmarket participation is yet to return to pre-crisis levels due to young people remaining in education longer.
According to a European Commission report, labour market participation (LMP) stands out compared to the EU average, despite several years of economic growth and employment levels reaching pre-crash levels.
The report states there are two main factors that have impacted on the lack of improvement with LMP.
One is the lower activity rate of people between the ages of 15 and 24, which in the past had been much higher. With more and more young people staying in education longer, the rate has now fallen in line with the rest of the EU.
In 2017, 89.6 per cent of inactive young people cited education and training as the main reason for their inactivity. By remaining in education, the future activity and output could potentially be improved as they replace older workers.
The report does clarify that the positive impact could be lessened due to the lower share of the working age population, which now sits at 15 per cent compared to 18 per cent in the previous decade.
CSO statistics show that younger groups have a higher standard of education in comparison to older cohorts. Over half of all people aged 25 to 44 have received a third level education, compared to only 30 per cent of people aged 60 to 64.
As well as this, the LMP for people between the ages of 25 and 35 has shrunk over the last decade, despite the fact that they are usually the most active cohort. The Commission’s report explains that it fell by five percentage points due to a fall in birth rates that occurred in the 80’s.
Activity for those over 55 increased however, after the increase in the age of eligibility for a state pension was brought in in 2014.
There is also scope for improvement in women’s engagement with the labour market. The gender gap in activity is 12 percentage points in 2017, compared to the EU average of 10. According to the report, female activity falls in their late twenties or early thirties due to family reasons.
The report recommends that efforts to increase female labour participation would help to combat the effects of low engagement from the younger cohort. They recommend that the government promote accessibility and affordability of both childcare and disability services.
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