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Discuss the economic effects on the Irish economy of the growth in employment in recent times. - Leaving Cert Business - Question 2B - 2015
Question 2B
Discuss the economic effects on the Irish economy of the growth in employment in recent times.
Worked Solution & Example Answer:Discuss the economic effects on the Irish economy of the growth in employment in recent times. - Leaving Cert Business - Question 2B - 2015
Step 1
Discuss the impact of increased discretionary income
Answer
As employment has grown, individuals in Ireland now have more discretionary income. This increase allows people to spend more on luxury items, such as new cars and holiday experiences, thereby stimulating various sectors of the economy. A notable statistic from the Society of the Irish Motor Industry (SIMI) indicates that new car registrations in January 2015 rose by 31% compared to January 2014. This uptick in consumer spending bolsters businesses and contributes to overall economic growth.
Step 2
Evaluate the change in business confidence and enterprise growth
Answer
The growth in employment has fostered a positive shift in business confidence. The unemployment rate in Ireland has seen a decline from 14.2% in 2011 to 9.9% in April 2015. This decrease suggests that more businesses are either newly established or expanding, leading to increased enterprise activity. As confidence grows, enterprises may invest further, which can enhance self-esteem and job security within the workforce.
Step 3
Analyze government expenditure and social welfare implications
Answer
With more individuals employed, government expenditure should decrease as fewer people will rely on social welfare claims. Consequently, this allows the government to allocate more resources towards essential public services such as health and education, improving the quality of life for citizens.
Step 4
Assess the increase in government revenue
Answer
The rise in employment levels is likely to increase government revenue as tax receipts from various sources—such as Value Added Tax (VAT)—will rise. As more individuals engage in the workforce and contribute to taxes, the government will have additional funds to invest in public initiatives. This could lead to further job creation and a boost in economic activities.
Step 5
Consider the impact on emigration and brain drain
Answer
The growth in employment may also have potential implications for emigration trends in Ireland. As job opportunities increase, the trend of skilled labor leaving the country, often referred to as the 'brain drain,' could reverse, benefiting the economy by retaining talent that contributes to innovation and productivity.