Photo AI
Outline the major causes of the recent increases in unemployment in the Irish economy - Leaving Cert Economics - Question e - 2009
Question e
Outline the major causes of the recent increases in unemployment in the Irish economy. Discuss economic policies which the Irish government might pursue in order to... show full transcript
Worked Solution & Example Answer:Outline the major causes of the recent increases in unemployment in the Irish economy - Leaving Cert Economics - Question e - 2009
Step 1
Outline the major causes of the recent increases in unemployment in the Irish economy.
Answer
-
Economic recession / cyclical unemployment
The current worldwide recession has resulted in a reduction in aggregate demand leading to business closures and layoffs. This issue is not isolated to Ireland as many firms worldwide have reduced their workforces. -
Re-location of industry
Firms have attempted to lower costs by moving operations to countries with cheaper labor, resulting in job losses in Ireland. -
Irish companies exporting to US and UK
The decline in demand for exports due to fluctuations in currency values has caused job losses in export-oriented sectors, particularly in hospitality and tourism industries. -
Banking crisis
The banking sector crisis has restricted access to credit, forcing businesses to close and consequently resulting in job losses. Many restaurants and businesses have had to shut down due to this lack of financial support. -
Uncertainty for the future
Economic uncertainty has led consumers to cut back on spending, which in turn causes businesses to reduce their workforce in fear of dwindling sales. -
Reliance on the construction sector / structural unemployment
The downturn in the construction sector has had a ripple effect, leading to significant job losses in related trades and industries.
Step 2
Discuss economic policies which the Irish government might pursue in order to reduce the level of unemployment.
Answer
-
Reduce taxation
By lowering VAT rates, the government can stimulate consumer spending, which would increase demand for goods and services and subsequently encourage hiring. -
Subsidise additional labour employed
Reducing the cost of PRSI for additional employees could incentivize businesses to hire more staff, thus improving employment figures. -
Reduce costs for business
Implementing regulations that curtail excess costs for businesses, such as utilities, might help in reducing their overheads. This allows for increased demand and hiring. -
Prudent management of the economy / improved regulatory framework
Restoring public confidence through effective economic management can lead to a resurgence in demand, thus aiding in job creation. -
Infrastructure development
Investing in infrastructure projects can create jobs directly and indirectly, helping to stimulate the economy. -
Investment in education and training
Enhancing educational programs to match industry needs can equip the workforce with necessary skills, enabling better job matches and reducing unemployment.