Annually, the drop was more significant. In August 2016, the unemployment rate stood at 7.9%. A year later the rate was 1.6% lower, at 6.3%.
Are we nearing full employment?
Dictionaries define full employment as being the condition in which virtually all who are able and willing to work are employed.
Economists emphasise that full employment represents a “range” of possible rates. In the US, full employment during the past decade was defined as anything below 5.5%. In 2001, the unemployment rate in Ireland reached an all-time low of 3.6% and the country was at full employment. However, this has been revised upwards by the Irish Government to anything below 6%, which the country is expected to achieve in 2018. Internationally, the full employment rate is generally considered anything under 5%.
With full employment, there is no cyclical or deficient demand unemployed in the country. The full employment rate is above 0% as structural, frictional and voluntary unemployed still exist. Structural unemployment is generally due to a skills gap in the economy. There are plenty of jobs available but the unemployed do not possess the skills to fill these roles. The IT industry in Ireland is a good example of structural unemployment. Frictional unemployment occurs when people are between jobs. So, even at full employment there will be generally 3-5% of the population who are unemployed.
The current Irish government definition of full employment as being anything under 6% is therefore open to debate. However, if we take this definition as fact, the Irish economy is well on its way to achieve full employment in 2018.