BUDGET 2020

Analysis of Live Register Expenditure

OCTOBER, 2019

ORLAGH LAVELLE

DEASP VOTE

DEPARTMENT OF PUBLIC EXPENDITURE AND REFORM

This paper has been prepared by IGEES staff in the Department of Public Expenditure & Reform. The views presented in this paper do not represent the official views of the Department or the Minister for Public Expenditure and Reform.

1

Executive Summary

At end September 2019 the Live Register (LR) figure was 183,783, the lowest point since January 2008,

representing a reduction of 286,501 or 61% since the peak in 2011. These significant reductions have resulted in

LR savings of over €1.4 billion since 2014. While the LR has performed better than expected in 2019, more recent

data is showing signs of tightening and the LR reaching a lower bound. The 2019 average LR figure is estimated to

be higher than expected at 192,902 and is estimated to be €3m above the 2019 expenditure allocation.

2020 Baseline LR Forecasts

Five methods were used to forecast the LR for 2020 on a no change basis, without an external economic shock.

The forecast average in the table below captures the range of these estimates and outlines that there will be

minimal reductions in the LR in 2020, yielding negligible savings of around €6m.

Method Description Average LR 2020

Number Jobseeker

Expenditure €m

Difference on 2019 REV Allocation

€m

1 Flat Carryover 190,784 1,972 + 19

2 Trend, Upward Drift 191,406 1,977 + 24

3 Trend, Flows 188,680 1,953 0

4 Conversion Method 185,364 1,923 - 30

5 ARIMA 183,689 1,908 - 45

Forecast Average 187,984 1,947 - 6

Estimated Impact of a No Deal Brexit on the LR in 2020

The Department of Finance (DoF) forecast an unemployment rate of 5.7% in 2020 under a No Deal Brexit, this is

an increase of 0.5% on the 2019 rate of 5.2%. The forecasts are based on the numbers unemployed rising from

125,000 in 2019 to 140,000 in 2020, an increase of 15,000 persons (using the Labour Force Survey (LFS) definition).

Based on the conversion rate method, an increase of 0.5% in the unemployment rate is estimated to increase the

LR by 19,119. However, using observations from previous unemployment crises, in particular in relation to the

interaction of the LR and LFS, it was found that this relationship changes during periods of rising unemployment.

It is estimated that total additional LR costs could range from €164m and €347m in a No Deal Brexit scenario.

These costs are underpinned by an increase in the average LR figure of between 19,119 to 45,721 persons.

Increases in the number of persons on the LR will have further cost implications for other LR related schemes in

2020. Some of these are expected to include Supplementary Payments like Fuel Allowance, Exceptional Needs

Payments and Labour Market Activation supports.

2

Glossary

JA Jobseekers Allowance

JB Jobseekers Benefit

JA + JB Jobseeker Expenditure

LTU Long-Term Unemployed (> 1 year)

STU Short – Term Unemployed (< 1 year)

LR Live Register

YtD Year-to-Date

UE Unemployment

DEASP Department of Employment Affairs and Social Protection

CSO Central Statistics Office

DoF Department of Finance

ESRI Economic Social and Research Institute

CBI Central Bank of Ireland

LFS Labour Force Survey

DRCD Department of Rural Affairs and Community Development

ILO International Labour Organisation

SIF Social Insurance Fund

3

1. Introduction

The Live Register (LR) is a monthly series dated back to 1967 which provides a record of the number

of people registering for Jobseekers Benefit (JB), Jobseekers Allowance (JA) or for various other

statutory entitlements with the Department of Employment Affairs and Social Protection (DEASP). It

is a widely used and continually moving metric. In 2019, €20,498 million was allocated to DEASP, of

which €1,953 million was allocated to JA and JB schemes, accounting for 10% of the total allocated

DEASP spend. Over the course of the last seven years there have been significant declines in the

number of persons on the Live Register. Given the large quantum of Jobseeker expenditure, this paper

aims to analyse the current position and forecast developments of the Live Register for the remainder

of 2019 and 2020. The 2020 forecast estimates are written on no change basis, which is under the

assumption of no exogenous shocks to the economy. This sets the baseline position for the LR in 2020.

An additional section is included in this iteration of the LR paper which provides an analysis and

forecast of the impact of a potential Brexit related shock in 2020.

The key objectives of this paper are to:

Brief overview of recent Live Register trends;

Provide analysis on 2019 Live Register position and expenditure compared to profile;

Provide a profile of persons on the Live Register;

Estimate the Live Register outturn for 2019 and the 2020 position;

Impact of potential Brexit shock in 2020.

4

Live Register Trends

The Live Register peaked in 2011 with just over 470,000 people signing on. Since then, the LR has been

on a continuous downward trajectory as shown in Figure 1 to reach 183,783 as of end September

2019 (Week 39), a reduction of 286,501 or 61% from the 2011 peak.

Figure 1: Number of persons on the Live Register, 2007- 2019 M09

Source: CSO Live Register Data

The LR number has significant seasonality, with numbers increasing during the summer months

followed by declines in September1. This seasonality exists irrespective of the unemployment level or

economic cycle, as shown in Figure 22.

1 During the summer months (and during mid-terms), there are inflows into the LR; (i) education sector temporary workers who claim jobseekers benefit (JB), (ii) Back to Education Allowance recipients who do not take up full-time employment during the summer can enter the LR for this period before exiting in September upon recommencement of course.

2 September LR data is necessary when constructing estimates as it provides an important indication of the actual year-to-date performance of the LR.

470,284

183,783

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LR LR Seasonally Adjusted

5

Figure 2: Number of persons on the Live Register, 2016 – 2019 M09

Source: CSO Live Register Data

(i) Jobseeker Expenditure

Jobseeker expenditure has reduced since 2010 reflecting developments in the number on the LR and

jobseeker payment rates. Figure 3 shows Jobseeker related expenditure (JA and JB) which peaked in

2010 at €4,104 million and decreased to €2,179 million in 2018, a reduction of €1,925 million.

Expenditure reductions in 2011 and 2012 were primarily driven by reductions in the weekly rate of

payments introduced in Budget 2010 and 20113. In more recent years, the JA and JB expenditure

reductions have been due to falling numbers on the Live Register. Expenditure reductions accelerated

from 2014 reflecting strong labour market performance over the period 2014 to 2018. The

expenditure reductions also meant that jobseeker related expenditure reduced as a proportion of

total DEASP spend. In 2010, jobseeker expenditure accounted for 20% of total DEASP spend, this has

reduced to 11% in 2018, a fall of 9 p.p.

3 Social Welfare rates were reduced by €8.30 and €8 in 2010 and 2011 respectively, reducing social welfare payment rates from €204.30 to €188 over the period.

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

2016 2017 2018 2019

6

Figure 3: Jobseeker Expenditure, 2009 -2018

Source: DEASP Admin Data

Table 1 shows more recent developments in total DEASP expenditure alongside jobseeker expenditure

over the 2014 to 2018 period. It demonstrates the quantum of savings that have accumulated through

reductions in the number on the LR and related expenditure, with jobseeker expenditure reducing by

35.6%. This has amounted to €1,190 million in LR savings over a five year period, 2014 to 2018. These

savings have provided additional funding for other areas of DEASP expenditure and have also been

used to fund new Budget measures and consecutive social welfare rate increases.

The underlying DEASP expenditure, which is total DEASP expenditure excluding jobseeker related

expenditure, has increased considerably, rising from €16,442m in 2014 to reach €17,885m in 2018, a

7% increase. This growth in underlying expenditure is masked by the significant LR savings which have

offset expenditure increases. This is demonstrated as total DEASP expenditure over the period

increased by just €254m or 1.3%. In addition, expenditure on employment supports has also fallen

from a peak of €1,024m in 2015 to €724m for 2019 REV allocation, a €300m reduction. €262m of

these expenditure reductions is related to declining demand and scheme closures (JobBridge,

Gateway), with €38m relating to the transfer of the Community Services Programme to the

Department of Rural and Community Development in 2018.

0%

5%

10%

15%

20%

25%

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500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Pro

po

rtio

n o

f D

EASP

sp

en

d %

Exp

en

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ure

€m

JA JB Jobseeker Expenditure as % of Total DEASP Spend

7

Table 1: Total DEASP and Jobseeker Related Expenditure4, 2014 - 2018

2014 2015 2016 2017 2018 Change 2014 - 2018

€m €m €m €m €m €m % Total DEASP Expenditure 19,785 19,906 19,802 19,944 20,305 +520 +1.3%

Jobseekers Related Expenditure

3,344 3,130 2,808 2,444 2,179 -1,190 -35.6%

Underlying DEASP Expenditure

16,341 16,776 16,994 17,500 18,126 +1,443 +8.7%

Source: DEASP Admin Data

2. Live Register Profile

While the LR has continued to fall in the early half of 2019, there are indications of the LR reaching its

lower bound or full employment. To assess whether this is the case, revisiting the profile of the

persons remaining on the Live Register will help in informing where the LR is expected to finish in 2019

and the 2020 position.

Non-Live Register Recipients and Dependants

Figure 4 shows the breakdown of the cohorts who receive welfare payments from the Jobseeker

expenditure allocation but are not included in the LR figures. Between 2014 and 2018, this cohort has

been increasing however in 2019 the numbers in this cohort have reduced, falling by 1,825 or 6%. This

is predominately due to lower numbers of Self-Employed and Over 65’s. This non LR cohort has an

upward effect on the average cost per 1,000 on the LR, therefore the lower numbers in this cohort for

2019 may have a small downward effect on the average cost for 2019.

4 These expenditure figures includes the Christmas Bonus paid in December to qualifying social welfare recipients; 25% payment rate in 2014,75% payment rate in 2015 and 2016, 85% payment rate in 2017 and 100% payment rate in 2018.

8

Figure 4: Non Live Register Cohorts5; 2014 – July 2019

Source: DEASP Admin Data

Table 2: Persistence Rates for Live Register, 2017 to 2019 Q1

2017 2018 2019 Q1

STU into LTU 24% 23% 22.2%

Source: DEASP Admin Data

Persistence rates in Table 2 measures the movement of those classified as short-term unemployed

(less than 1 year) into long-term unemployment (greater than one year). A low persistence rate is

preferable as it provides evidence that people are not staying on the LR for long periods upon entry

and are exiting the LR into education, training or employment. Since 2017, the persistence rate has

fallen from 24% to 22.2% in Q1 2019, a fall of 1.8 percentage points. This indicates that less people

are moving into long term unemployment.

5 The Other category includes recipients of Short-Term Enterprise Allowance; Work Placement Programme; and Systematic Short-Time workers.

10,734 10,085 9,098 7,945 7,356 6,294

5,214 7,7218,165

8,609 8,9428,418

1,199

8,218

14,76214,550 14,558

15,0232,563

1,516

1,060882 731

695

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2014 2015 2016 2017 2018 2019

Self-employed Over 65’s Jobseekers Transition Other*

9

Figure 5: Live Register by Duration, 1st September 2019

Source: DEASP Admin Data

Figure 5 shows the number on the LR broken down by duration of on the LR, showing that the largest

group are those with a duration of 3 months, with a share of 39%. The LR is a mobile metric and has

large volumes of inflows and outflows reflecting people moving between jobs, as such this category

can largely be considered as a transitional group and are a function of a well performing labour market.

The number of jobseekers on the LR with a duration of 3 to 6 months, 6 months to 1 year, and 1 to 2

years are the next largest cohorts at 21,909, 23,488 and 21,336 respectively. Cohorts of longer

durations on the LR are much smaller in size. For example, there are 6,267 persons on the LR with a

duration of between 4 and 5 years. The cohort size increases for those on the LR for 5 + years and 10+

years at 18,566 and 8,976 respectively, capturing a bigger range of duration. This pattern of fewer

persons LTU on the LR reflects the lower persistence rate as less people move into long term

employment resulting in diminishing smaller pools of long term unemployed. This pattern is also likely

as a result of the significant changes to activation policy with all jobseekers now subject to mandatory

activation and engagement with PES (public employment services).

The number of jobseeker casuals (JA and JB) as at end August 2019 was 36,779. This means that almost

18% of persons on the LR are working and in some form of employment6.

6 Persons that are working on a part time basis who are not working for four out of seven days in a week are entitled to receive a Jobseeker payment for the days they are unemployed. They are classified as Jobseeker casuals and are included on the LR.

77,891

21,909 23,488 21,336

12,515 8,145 6,267

18,566

8,976

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20,000

30,000

40,000

50,000

60,000

70,000

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90,000

<3 months 3-6months

6m-1y 1-2y 2-3y 3-4y 4-5y 5y+ 10y+

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Duration on the LR

10

Table 3 below shows the breakdown of the LR by duration and the percentage share of each cohort

having some form of dependant i.e. qualified adult (QA), qualified child (QC) or both (QA and QC).

Persons on the LR with dependants are not solely characteristic of those with longer durations on the

LR and appear broadly characteristic of persons across all durations, with between 40% and 56% of

persons in each duration category having some form of dependant. As of 1st September 2019, 46.6%

of people on the LR had some form of dependant, while 53.4% of people on the LR had no dependants

and were individual jobseeker claims. Figure 6 shows the composition of claims with dependants and

individual claims by volume.

Table 3: Persons on the Live Register and Dependants, 1st September 2019

Duration Persons on Live Register Dependant %

<3 months 77,891 44%

3-6 months 21,909 40%

6m-1y 23,488 46%

1-2y 21,336 53%

2-3y 12,515 55%

3-4y 8,145 53%

4-5y 6,267 48%

5y+ 18,566 45%

10y+ 8,976 56%

Total 199,093 46.6%

Source: DEASP Admin data

11

Figure 6: Overview of Live Register Claimants, 1st September 2019

Source: DEASP Admin data

3. Developments in 2019

This section reviews key LR metrics to assess the current 2019 position which will provide a basis for

the estimated end year position and inform LR forecasts for 2020.

Overview

In 2019, €1,953 million was allocated to fund jobseekers payments, €1,607 million allocated for JA

payments and €346 million for JB payments. This represents a €201m reduction on 2018 levels of

expenditure. The 2019 expenditure allocation was based on a number of assumptions which are

summarised in Table 4. These key assumptions include a 29,604 reduction in the average number of

persons on the LR and an increase of €0.46m in the average cost per 1,000 on the LR to reach an

annual average of €10.19m in 2019.

106,215

39,070

31,201

22,607

No Dependants Qualfied Child (QC) Qualified Adult (QA) Both QA and QC

12

Table 4: Key Live Register Budget Parameters, 2018 –2019

2018 Outturn

Number

2019 REV Estimate

Number

Change

Number

Average Live Register 221,323 191,719 -29,604

€m €m €m

Cost per 1,000 on LR (€m) 9.73 10.19 +0.46

Total Jobseeker Expenditure 2,154* 1,953 -201

Jobseekers Allowance 1,815 1,607 -208

Jobseekers Benefit 339 346 +7 Source: DEASP Admin data *This figure excludes the 2018 Christmas Bonus paid at 100%

Latest Position

(i) Number of Persons on the LR

As at end September 2019, the average number of persons on the Live Register fell from 201,251 to

an average figure of 196,382 over the first 39 weeks of the year. This is 974 below the average LR

profile number as shown in Figure 7.

Figure 7: Average Live Register Profile versus Outturn 2019, Week 1 to 39

Source: DEASP Admin Data

197,356

196,382

180,000

185,000

190,000

195,000

200,000

205,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

2019 Profile 2019 Outturn

13

Table 5 shows a comparison of the LR position from January to September from 2017 to 2019. There

has been a slow-down in the rate and volume of reductions on the LR in 2019, which may suggest

that the economy has reached full employment and the LR is approaching its lower bound.

In 2017 and 2018, between Week 1 – 38, the LR reductions were 30,718 and 28,406 respectively or

11% and 11.9%. Over the same period in 2019, the LR reduction was 13,961 or 6.9% between Week 1

- 38. This suggestion of reaching the lower bound of the LR is reflected by reviewing LR data which

excludes the education sector numbers to assess the current position of the underlying LR (LR

excluding education sector).

Table 5: Comparison of 2017, 2018 and 2019 LR performance for period Jan to Sept (Week 1 - 38)

2017 2018 2019

Change in LR Week 1- 38 - 30,718 - 28,406 - 13,961

Change % - 11% - 11.9% - 6.9%

Source: DEASP Admin Data

a. Education Sector Effects

As mentioned earlier, the LR has a significant seasonal component with LR numbers increasing during

the summer months primarily from the education sector, for example temporary teachers/workers

not on permanent contracts and participants on the Back to Education Allowance scheme7.

Figure 8 shows the underlying LR figure each year from 2016 to July 2019. It shows that the underlying

LR for 2017 and 2018 has been on a downward trend over this period. The beginning of 2019 follows

the patterns seen in previous years, however the increase in the underlying LR during the 2019

summer is higher than in previous years and these increases are of a longer duration. It demonstrates

a slowdown in the rate of reduction in the LR from mid-2019.

7 There is a stock of education sector workers on the LR at any point in time however this number inflates significantly during

the summer months. From 2016 to 2018, this number reached 21,000 in mid-summer, before declining in September. These are shown in Figure 22 in the Appendix 7.

14

Figure 8: Number of persons on Underlying LR, 2016 – 2019 M07

Source: DEASP Admin Data

The larger increases in the underlying LR are likely related to the weekly summer increases lasting for

longer durations; in 2019 there were 10 weeks of consecutive increases to the underlying LR,

compared to 5 weeks of consecutive summer increases in the underlying LR in 2018, as shown in Table

6. This demonstrates that when the education sector seasonality is excluded, there are greater

numbers entering the LR and this will have implications for jobseeker expenditure. This is also

contributing to the slow-down in the rate of reduction. As Table 6 shows, during the summer period

the nominal increase in the LR rose from 2,407 in 2018 to 5,012 in 2019. The 2019 increase represents

a 2.8% increase in the underlying LR during the summer months, compared to a 1.1% increase in 2018.

Table 6: Underlying LR, 2016 - 2019

Summer Period Underlying Live Register Increase

LR Change Increase %

Duration Weeks

2016 4,885 1.7% 4 Weeks

2017 3,147 1.2% 4 Weeks

2018 2,407 1.1% 5 Weeks

2019 5,012 2.8% 10 Weeks

Source: DEASP Admin Data

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

260,000

270,000

280,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Pe

rso

ns

on

Un

de

rlyi

ng

LR

Week No.

2017 2018 2019

2.8%

1.2%

1.1%

15

The decline in the rate of reduction of the LR excluding seasonality is outlined in Table 7. It shows

there was a 44,298 or 14.8% year on year reduction in the LR in 2017. In 2018, the percentage

reduction increased to 15.4% year on year with a decrease of 39,214. The same week in 2019 shows

a year on year reduction of 13.4% or 28,886, a 2 percentage point decline from 2018.

Table 7: Changes in the Underlying LR number at Week 29, 2016 - 2019

Week 29 Underlying Live Register Number

Change YoY Number

Change YoY %

22-Jul-2016 299,227 - -

21-Jul-2017 254,929 - 44,298 - 14.8%

20-Jul-2018 215,715 - 39,214 - 15.4%

19-Jul-2019 186,829 - 28,886 - 13.4%

Source: DEASP Admin Data

b. Live Register Inflows and Outflows

The Live Register comprises both Jobseeker Allowance and Jobseeker Benefits recipients8. Reviewing

the LR flows of JA and JB claims also appears to indicate that the LR is approaching its lower bound.

Comparing year to date 2019 flow data to 2018 data over the same period, shows that inflows (LR

entries) to Jobseeker Allowance have decreased by 8,426 or 9% year on year, however outflows (LR

exits) from JA have also decreased by 17,934 or 16%. This means that there is still a downward effect

on JA, but the size of the reduction has declined by 56% between 2018 and 2019. See Table 8 below.

Table 8: Cumulative Jobseeker Allowance Inflows and Outflows Week 1-38, 2018 - 2019

Jobseeker Allowance 2018 Cumulative No.

2019 Cumulative No.

Difference %

Inflows 98,619 90,193 -8,426 -9%

Outflows 115,665 97,731 -17,934 -16%

Net effect -17,046 -7,538 9,508 -56%

Source: DEASP Admin Data

Table 9 shows the inflows (LR entries) and outflows (LR exits) from Jobseeker Benefit and compares

the same period in 2018 and 2019. The number entering JB has increased year on year by 3,491 or

3.7%, and the number exiting JB has reduced by 566 or 0.6% year on year. While there is still a

8 In addition, people on credits are also counted in the LR total number however they are not in receipt of a payment. There are 22,414 on the LR that are not on a JA or JB payment and are claiming PRSI credits, as of September 2019.

16

downward net effect in 2019 of 896, this is significantly smaller than in 2018, an 81% reduction in the

net effect. This is indicating collectively that less people are becoming unemployed and entering the

LR, however those already on the LR appear to be staying on the LR and are not exiting as readily as

in previous years.

Table 9: Cumulative Jobseeker Benefit Inflows and Outflows Week 1-38, 2018 -2019

Jobseeker Benefit 2018

Cumulative No.

2019 Cumulative No.

Difference %

Inflows 92,451 95,942 + 3,491 3.7%

Outflows 97,404 96,838 - 566 - 0.6%

Net Effect - 4,953 - 896 + 4,057 - 81%

Source: DEASP Admin Data

(ii) Live Register Expenditure

Table 10 shows that jobseeker expenditure outturn to August amounted to €1,327m, this is €6m

below what the expenditure was profiled to be. This can be expected given that the average LR is also

below profile. The average cost per 1,000 is €10.04m as of August 2019, which is €0.01m below the

profile figure of €10.05m.

Table 10: Comparison of 2019 profile and outturn for Key LR metrics

2019 Profile

(August) 2019 Outturn

( August) Variance

Average Live Register 198,515 197,180 -1,335

Cost per 1,000 on LR (€m)

10.05 10.04 -0.01

Jobseekers expenditure €m €m €m

Jobseekers Allowance 1,092 1,090 - 2

Jobseekers Benefit 241 237 - 4

Total 1,333 1,327 - 6

Source: DEASP Interim Finance Report, CSO Live Register data

17

(iii) Live Register Average Costs

Average costs per 1,000 on the LR have a number of drivers which make them challenging to forecast.

The average LR costs are influenced by the composition of the LR i.e. the number of persons who have

dependants versus a single claimant and the number of persons on the Non-Live Register9 i.e. persons

who are not on the LR but who are paid from the jobseeker allowance expenditure, this cohort will

increase average costs. New Budget measures will also increase average costs, for example

consecutive social welfare rate increases have driven up average costs in recent years and the

introduction of Jobseeker Benefit for the self-employed from November 2019 will also impact average

costs.

Finally, the number on the LR has a non-linear negative relationship with jobseeker expenditure,

meaning that reductions in the number on the LR will not result in an equal reduction in LR related

expenditure. The non-linear negative relationship between the LR and average cost per 1,000 means

that as the number on the LR decreases, the average cost per 1,000 increases and vice versa. The large

declines in the LR in recent years has contributed to the annual increases in the average costs shown

in Table 11. As of August 2019, the average cost per 1,000 is €10.04m, which €0.15m or 1.5% below

the 2019 profiled annual average for 2019.

Table 11: Average cost per 1,000 on the LR, 2012 - 2019

2012 2013 2014 2015 2016 2017 2018

2019

Annual

Profile

2019

August

Average cost per 1,000 (€m)

8.67 8.74 8.66 8.69 9.23 9.39 9.73 10.19 10.04

Annual change (€m)

0.07 -0.08 0.03 0.54 0.16 0.34 0.46 -0.15

Annual change (%)

0.8% -0.9% 0.3% 6.2% 2% 3.6% 4.7% -1.5%

Source: DEASP Admin Data

9 Over 65s are those who were in receipt of a jobseekers payment and are in transition for qualifying for the state pension at age 66 years. These individuals are not on the official LR but are paid from the Jobseekers expenditure allocation.

18

4. Forecasts

This section sets out the methodologies used for estimating the number of persons on the Live

Register and the associated jobseeker expenditure for the remainder of 2019 and 2020. Economic

shocks are not included in the forecasts presented here which are intended only to forecast the

baseline position for 2020.

Box 1: Previous Live Register Forecasts10

10 2014 LR paper can be accessed here: https://igees.gov.ie/wp-content/uploads/2014/11/Analysis-of-Jobseekers-and-Related-

Expenditure.pdf 2015 LR paper can be accessed here: https://igees.gov.ie/wp-content/uploads/2014/11/Analysis-of-Jobseekers-and-Related-Expenditure-1.pdf 2016 LR paper can be accessed here: https://igees.gov.ie/wp-content/uploads/2013/06/FINAL-Estimating-JA-and-JB-for-2016-2017.pdf 2017 LR paper can be accessed here: https://igees.gov.ie/wp-content/uploads/2018/04/Analysis-of-Live-Register-and-Related-Expenditure.pdf 2018 LR paper can be accessed here: https://igees.gov.ie/wp-content/uploads/2019/01/Analysis-of-Live-Register-Related-Expenditure.pdf

The table below outlines how the LR forecasts from previous iterations of the Live Register paper

have performed compared to the actual LR outturn figure. It shows that overall the forecasts have

a variance of between 1% and 3%.

Live Register

paper

Forecast Average LR

Number

Actual Average LR

Number

Variance

Number

Variance

%

2014 395,000 385,000 - 10,000 - 3%

2015 340,000 344,234 + 4,234 + 1%

2016 306,250 303,749 - 2,501 - 1%

2017 267,800 263,876 - 3,924 - 1%

2018 225,967 221,323 - 4,644 - 2%

The mean absolute percent error (MAPE) expresses accuracy as a percentage of the error. The

MAPE for the LR forecasts from previous iterations is -1.2%, which means on average the LR

forecasts have a deviation of -1.2%, and as such are considered accurate and within acceptable

standard deviations for forecasting (Athanasopoulos, 2018). See Appendix 9.

19

Methodology

Economic forecasters often have a variety of different models and forecasts of the same variable from

which to choose. These models and forecasts may differ due to underlying assumptions, or differences

in the data used. Forecasts from a given method may provide some useful information that is not

conveyed in forecasts from other methods. Thus, instead of choosing a single forecasting method, a

technique called forecast averaging considers information generated by several forecasts and then

combines this information.

A number of studies have shown that averaging forecasts of multiple methods is more accurate than

limiting a forecast to a single method. Timmermann (2006) offers a good overview of such studies,

citing Clemen (1989) and Makridakis (2000) in particular. The approach taken in this analysis is to

employ a number of forecast techniques ranging from simple trend forecasting method to more

complex autoregressive modelling, and then to take an average forecast of these methods.

Forecast Methodologies

Method 1: Flat Method with Seasonality (Carryover No trend)11

This method uses the 2019 estimated outturn for end year as the baseline starting position for 2020

with seasonal increases over the year based upon the same volume of seasonality in 2019. It assumes

a flat trajectory for 2020 with no downward trend component. The method intends to capture the

pure carryover impact of having a lower starting number in 2020 than in 2019.

Method 2: Trend Upward Drift Method

This method uses the 2019 estimated outturn for end year as the starting position for 2020. It is based

on two data components, the underlying LR and the education sector number on the LR. It uses the

average trend increase in the underlying LR seen in 2019 up to week 29 (July) which is an average

weekly change of 0.3%, and this trend is carried through to 2020 and is increased to 0.4% for the latter

half of 2020, a slight acceleration in the average increase in the underlying LR. The number of persons

relating to the education sector on the LR is kept constant on 2019 levels. This method allows the

forecasts to increase or “drift” upwards over time based on the average increase in the more recent

observed LR data. The forecasts for the increase in the underlying LR is shown in Figure 18 in the

Appendix 1.

11 The 2020 estimates are inclusive of the additional numbers expected on the LR as a result of the introduction of the JB for the self-employed. It is estimated that this will increase the LR by 1,980 in 2020. These are indicative estimates of take up from DEASP.

20

Method 3: Inflows and Outflows Trends

The LR is a constantly moving metric with large volumes of inflows and outflows reflecting the

movement of workers and seasonality of certain sectors. Using LR flows data in forecasting takes

account of these movements and captures the LR trends beneath the overall LR aggregate figure to

inform the 2020 position. The recent inflows and outflows average trends are extrapolated forward

to 2020; on average inflows have reduced by 0.2% however, outflows have reduced by 7% on average

in 2019 year to date (Week 1- 38).

Method 4: Conversion Rate Method

The conversion method calculates the number on the Live Register for every 1% unemployment rate

published in the Labour Force Survey (LFS). This methods uses the macroeconomic unemployment

forecasts from the Department of Finance and the Central Bank for 2019 and 2020 and applies the

change in the unemployment rate between 2019 and the 2020 forecast and converts this change into

a corresponding Live Register forecast for 2020. The average conversion number12 is 38,238, this

means that every 1% unemployment rate equates to 38,238 persons on the Live Register. The

conversion rate estimate results in a 4% year on year reduction in the LR.

Method 5: Auto-Regressive Integrated Moving Average Method (ARIMA13 model No Seasonality)

An ARIMA is a forecasting technique that is used to regress a variable on its lagged values and errors,

and then forecast future data points for the variable. ARIMA projects the future values of a series

based on its own inertia, and can be used in conjunction with exogenous independent variables. Its

main application is in the area of short-term forecasting. It optimally works when the data exhibits a

stable or consistent trend over time with a minimum number of outliers, which the annual LR data

demonstrates. The ARIMA model uses seasonally adjusted monthly CSO data backdated to 1970 to

most recently available monthly LR as at August 2019.

12 This is the average conversion number from monthly data between 2017 and August 2019. Further detail on the conversion rate number can be found in Appendix 2.

13 Auto-Regressive, Integrated, Moving Average Model. The LR forecast was modelled using Eviews software which ran 600 econometric models and specification tests to ensure the best fitted model was used in the forecast projection.

21

Results

a. End 2019

The 2019 outturn figure provides the baseline LR for the 2020 estimates. Using the current year to

date position, the end 2019 position for the LR was estimated using a trend analysis factoring in a

slowdown in the year on year rate of reduction to 0.3% over the remainder of the year. This is the

average weekly change in the lower rate of reduction which can be seen in more recent summer 2019

data14. In addition, the introduction of the Jobseeker Benefit for the Self-Employed from November

2019 is projected to result in an additional 350 persons on the LR by end 2019.

The 2019 trajectory and forecast outturn can be seen in Figure 9. The end year 2019 outturn figure is

estimated to be 186,763 and this figure forms the baseline or starting position for 2020. At the

beginning of 2019 the LR was 201,251 and this estimate would result in an in-year reduction of 14,488

or 7.1%. This is compared to a 19% in-year reduction in 2018. The average LR figure for 2019 is

estimated at 192,902, which is 1,183 higher than estimated. The 2018 average LR was 221,323 which

would correspond to an average year on year LR reduction of 28,421 or 12.8% in 2019. This compares

to the 2017 to 2018 year on year average reduction of 38,882 or 15%.

Figure 9: Live Register Trajectory and Forecast for 2019

Source: DEASP Admin data & Author' own calculations

14 Details can be found in Figure 19 in Appendix 1.

238,052

199,669 201,251

186,763

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

280,000

300,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

2018 2019 2019* 2017

Average LR 2020 = 192,902

22

The key metrics for the 2019 estimated outturn are set out in Table 12 below. The average cost per

1,000 figure is estimated to finish €0.05m below profile. This is calculated using 2018 weekly changes

in the average cost per 1,000 on 2019 baseline data to date15 to estimate average 2019 outturn. The

lower than profiled average costs is primarily due to a reduced number of non LR recipients and a

higher LR number than profiled. Based on trends to date and the expected slowdown in the LR

trajectory for the remainder of 2019, the LR 2019 expenditure outturn is estimated to be €3m over

profile.

Table 12: Key Live Register metrics, 2019 Outturn

2019 Allocation

Number

2019 Estimated Outturn

Number

Variance

Number

Average Live Register 191,719 192,902 +1,183

€m €m €m

Average Cost per 1,000 on LR 10.19 10.14 -0.05

Jobseekers expenditure 1,953 1,956 +3

b. 2020 Forecasts

Method 1: Flat Method with Seasonality (Carryover No trend)

Using Method 1 the 2020 LR is estimated to have a relatively flat trajectory from the 2019 outturn,

with LR increases from seasonality only, as shown in Figure 10. The latter half of 2020 increases above

2019 levels as there is no downward trend component offsetting the seasonal increases. The

estimated end year 2020 figure is 191,460. This method has an estimated average LR for 2020 of

190,784 and an average year on year reduction of 2,118 or 1%.

15 Analysis and extrapolation of 2018 weekly trends uses only full payment weeks and excludes December figures due to impact of the Christmas Bonus paid in the first couple of weeks in December.

23

Figure 10: Method 1 Flat No Trend (Carryover Impact)

Source: DEASP Admin data & Author’s own calculations

Method 2: Upward Trend Drift Method

Method 2 shown in Figure 11 below, takes into account the increase in the underlying LR (LR minus

education sector) which was discussed earlier. It estimates an end year 2020 figure of 191,758 and an

average LR for 2020 of 191,406, an average year on year reduction of 1,496 or 0.8%.

186,763 188,345

191,460

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

2018 2019 2019* 2020*

Average LR 2020 = 190,784

24

Figure 11: Method 2 Upward Drift Method

Source: DEASP Admin data & Author’s own calculations

Method 3: Inflows and Outflows Trend Analysis

Method 3 uses the trend inflows and outflows from 2018 and 2019 data. This method accounts for a

reduced number of LR exits but also a reduced number of inflows into the LR. This is based upon

average percentage changes in the LR flows between 2018 and 2019 year to date. Additional detail

can be found on this in the Appendix 10. It estimates an end year 2020 figure of 184,464 and average

LR for 2020 of 188,680, an average year on year reduction of 4,222 or 2.1%.

186,763 187,706

191,758

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

2018 2019 2019* 2020*

Average LR 2020 = 191,406

25

Figure 12: Method 3 Trend Inflows and Outflows

Source: DEASP Admin data & Author’s own calculations

Method 4: Conversion Rate Method

Method 4, the conversion method is conducted using the Department and Finance and Central Bank

most recent unemployment rate forecasts for 202016. The method captures the change in the

unemployment rate and applies this change to the LR estimate for 2020 on a monthly basis. Using this

method, the end year 2020 figure is estimated to be 176,698, with an average LR for 2020 of 185,364,

an average year on year reduction of 7,538 or 3.9%.

16 2020 forecasts from the Department of Finance are from the 2019 Summer Economic Statement and are estimated at 5.2%, which is a 0.2% reduction from 2019 estimate of 5.4%. The Central Bank forecast is from the Quarterly Bulletin Q3 2019 which estimates an unemployment rate for 2020 of 4.5%, a 0.2% reduction from 2019 forecast of 4.7%.

186,763

188,523

184,464

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

2018 2019 2019* 2020*

Average LR 2020 = 188,680

26

Figure 13: Method 4 Conversion Rate Method

Source: DEASP Admin data & Author’s own calculations

Method 5: Average Method with No Seasonality (ARIMA17 model)

Method 5 is the Average Method (ARIMA model) and uses monthly seasonally adjusted LR data and

by extension produces monthly seasonally adjusted forecast estimates for 2019 outturn and 2020. It

estimates an average LR of 190,874 for 2019, a lower average LR than the trend forecast due to no

seasonality. The 2020 end year figure is estimated at 184,190 and an average LR for 2020 of 183,689.

This would mean an average year on year reduction of 9,213 or 4.7%. This method is indicating an LR

lower bound of approximately 184,000.

17 Auto-Regressive, Integrated, Moving Average Model. The forecast was estimated using Eviews software which ran 600 models and specification tests to ensure the most appropriate model was applied to the LR data.

176,698

183,100

120,000

140,000

160,000

180,000

200,000

220,000

240,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2020* 2019* 2019 2018

Average LR 2020 = 185,364

27

Figure 14: Method 5 Average Method, Seasonally Adjusted (ARIMA Model)

Source: CSO data & Author’s own calculations

c. Average costs

As discussed earlier, average costs are influenced by many factors, including the actual LR number

itself given the non-linear negative relationship between LR number and average cost. It is also

influenced by the percentage share of the LR number in payment, as not all those on the LR receive a

payment18.

The number of persons in payment has increased on average by 2% in 2019 compared to the same

period in 2018, increasing from an average of 90% to 92%. In 2016 and 2017, the average pay share

was 89%19.

A regression analysis was conducted to establish the elasticity between the average cost per 1,000 on

the LR and the percentage share of the LR that are in payment. This found a positive statistically

significant relationship, with every 1% increase in the percentage share of the LR in payment

increasing the average cost by 1.21%. Regression analysis results on average costs can be found in

Appendix 4.

18 This may be due to payment sanction and suspension and people who are signing on LR for PRSI credits only.

19 Further detail on the components of the pay share is outlined in Appendix 6.

184,724

184,342 184,190

150,000

160,000

170,000

180,000

190,000

200,000

210,000

220,000

230,000

240,000

250,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2018 2019 2019* 2020*

Average LR 2020 = 183,689

28

Between 2018 and 2019, there was a 2% increase in the pay share which was equivalent to a 28,421

average year on year reduction. Based on these figures, it is assumed that a 1% change in the LR pay

share relates to 14,210 decrease in the LR number. This relationship is used to estimate the average

cost per 1,000 on the LR for each method outlined in the paper. The breakdown of these components

to the average cost for 2020 can be seen in Table 13 below. It is expected that the percentage share

in payment will remain relatively flat on 2019 levels given that minimal further decreases are expected

on the LR in 2020.

In addition, the introduction of the Jobseekers Benefit for the self-employed is estimated to have an

annual cost additional cost of €15m. The extra pay day20 for Jobseeker’s Benefit is estimated to cost

€2.91m in 2020 and will result in a higher cost for 2020 on a one off basis. The carryover cost of the

payment rate increases from March 2019 has an estimated cost €10m in 2020, and this will also

increase the average cost. It is estimated that collectively these components will increase average

costs by €0.18m per 1,000 in 2020.

Table 13: Breakdown of Average Cost per 1,000 on 2020 Forecasts Method 1 2 3 4 5 Forecast

Average

LR Average Reduction 2,118 1,496 4,222 7,538 9,213 4,918

Increase in Pay Share (%)

0.15% 0.11% 0.30% 0.53% 0.65% 0.35%

Increase in Average Cost (%)

0.1509% 0.1166% 0.3007% 0.5369% 0.6562% 0.3502%

Average Cost per 1,000 €m

10.16 10.15 10.17 10.19 10.21 10.18

Average Cost per 1,000 with Carryover €m

10.34 10.33 10.35 10.37 10.39 10.36

Source: DEASP Admin Data and Author’s own Calculations

Table 14 below outlines the five 2020 estimates which take into consideration the potential

trajectories of the LR in 2020.

1. The Flat Carryover method estimates an average LR for 2020 of 190,784, with an expenditure

requirement of €1,972m, which is €19m above the 2019 REV allocation.

2. The Trend Upward Drift method estimates an average LR of 191,406 with a cost of €1,977m,

which would result in €24m above 2019 REV allocation.

3. The Trend Flows method estimates an average LR of 188,680 with an expenditure

requirement of €1,953m which would result in no change on the 2019 REV allocation.

20 2020 is a leap year and as a result of the extra day in the calendar year payments made on Wednesdays and Thursdays will receive an additional payment i.e. 53 payments instead of 52 payments normally.

29

4. The Conversion Rate method estimates an average LR for 2020 of 185,364, with an

expenditure requirement of €1,923m resulting in savings of €30m.

5. The ARIMA method estimates an average LR in 2020 of 183,689 with an expenditure

requirement of €1,908m which would result in a savings of €45m.

The forecast average of the five methods combined estimates an average LR of 187,984 with an

expenditure requirement of €1,947m, which would yield a savings of €6m on the 2019 REV allocation.

Table 14: Estimates for 2020 Live Register Number and Expenditure

Method Description Average LR 2020

Number

Average Cost Per 1,000 €m

Jobseeker Expenditure

€m

Difference from REV

€m

1 Flat Carryover 190,784 10.34 1,972 19

2 Trend, Upward Drift

191,406 10.33 1,977 24

3 Trend, Flows 188,680 10.35 1,953 0

4 Conversion Method

185,364 10.37 1,923 - 30

5 ARIMA 183,689 10.39 1,908 - 45

Forecast Average

187,984 10.36 1,947 - 6

Carryover

The end 2019 figure has a significant influence on the 2020 LR positon and expenditure requirement.

The 2019 estimated end year LR is 186,763. In previous years, the lower LR number in the previous

year resulted in a significant amount of savings from this carryover effect alone. However, this year

the carryover impact is estimated to result in an additional expenditure requirement of €19m above

the 2019 REV allocation, despite a lower LR number. This is primarily as a result of increased average

costs and declines in the rate of reduction on the LR. Because the carryover impact is positive, this

means that for any actual LR savings to occur in 2020 it would require to be greater than €19m to be

realised at aggregate level.

30

5. Potential Brexit Impact

Overview of LR Trends in Previous Unemployment Crises

The most recent unemployment crisis began at the end of 2007. This resulted in a 308,562 or 191%

increase in numbers on the Live Register over a three and half year period before the LR numbers

began to decline. The scale and speed of this increase was the largest in state history, however the

duration of the unemployment crisis in the 1980’s recession was longer, lasting over six and a half

years, almost twice the duration of the 2008 crisis.

Table 15 below demonstrates the differences in scale and duration of the different unemployment

crises since the 1980’s. It should be noted that these different points in time are not necessarily

directly comparable21 however it can provide context and insights into the developments of the LR

under various unemployment crises.

Table 15: Historical Overview of Unemployment Crises

Start of LR Increase Date

Peak before Decline

Date

Cumulative Increase in

LR Number

Increase in LR

%

Duration of Increase

Time

Change in Average LR in First Year of

Crisis

1980 M04 1987 M01 162,493 177% 6 years 6 months

26,392

1990 M11 1993 M01 79,235 35% 1 year 1 month

29,238

2001 M06 2003 M08 52,862 39% 2 years 2 months

20,212

2007 M11 2011 M07 308,562 191% 3 years 6 months

64,426

Source: CSO Live Register

The annual change to the average LR during the first year of each unemployment crisis is also shown

in Table 15. These have ranged from an average LR increase of 26,392 between 1980 and 1981 to an

average LR increase of 64,426 between 2007 and 2008. Further detail on the average LR changes since

the 1980’s can be seen in Appendix 8.

21 The different points in time are not directly comparable as the changes in the LR are also a function of the overall working age population and reforms to the eligibility of social welfare schemes.

31

These changes as a proportion of the Labour Force are shown below in Figure 15 from 1988 to 2019.

It shows that the LR increase of 29,238 in 1991 was the equivalent of 2.2% of the Labour Force at that

time. Comparatively, the 64,426 increase in 2008 was equivalent to 2.8% of the Labour Force at that

time, demonstrating that while the increase in the LR numbers were almost three times larger in 2008,

the proportions of the increase were comparatively similar during the first year of these

unemployment crises.

Figure 15: Changes in the Average LR as Proportion of Labour Force, 1988 - 2018

Source: CSO Live Register and LFS (1988 -1997 series; 1998 – 2019 series)

Potential Brexit Impact on the Live Register in 2020

The Department of Finance (DoF) have forecast projections for a No Deal Brexit impact on

unemployment from 2019 to 2024, outlined in Table 16. These 2020 forecasts estimate an

unemployment rate of 5.7%, representing a 0.5 percentage point increase on the 2019 unemployment

rate of 5.2%. The number of persons classified as unemployed under the ILO definition of

unemployment22 which is used in the Labour Force Survey (LFS) is expected to rise from 125,000 in

2019 to 140,000 in 2020, an increase of 15,000.

22 The ILO defines the economic status of unemployment as all those of working age who were not in employment, carried out activities to seek employment in a recent period (comprising the previous 4 weeks or month) and were currently available to take up employment (in the reference period or within a short subsequent period not exceeding two weeks in total).

2.2% 2.1%

1.0%0.5%

2.8%

7.5%

-2.2%

-0.2%

1.8%

3.8%

5.8%

7.8%

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

An

nu

al C

han

ges

to A

vera

ge L

R a

s %

of

LF

32

Table 16: Department of Finance Labour Market Forecasts, 2018-2024

2018 2019 2020 2021 2022 2023 2024

No. Unemployed 137,000 125,000 140,000 147,000 149,000 147,000 142,000

Change No.

Unemployed - 12,000 +15,000 + 7,000 + 2,000 - 2,000 - 5,000

Unemployment rate % 5.8 5.2 5.7 5.9 5.9 5.7 5.5

Change UE Rate + 0.5 + 0.2 + 0.2 + 0.2 + 0.2

The DoF forecasts are used to estimate the expected increase in the average LR figure and related

expenditure in a No Deal Brexit scenario in 2020.

Method 1: Conversion Rate

The conversion rate method is used to translate increases in the unemployment rate to numbers on

the LR. The current conversion rate estimates that every 1% in the unemployment rate corresponds

to 38,238 persons on the LR.

Using the conversion rate method and the DoF forecast for 2020 of a 0.5 percentage point increase in

the unemployment rate, the corresponding increase in the LR is estimated to be 19,119. This method

estimates an average LR of 207,103 in 2020 and would require additional expenditure of €164m over

the baseline (no change) position. See Method 1 in Table 17 for the impact of a 0.5 percentage point

increase in the unemployment rate in 2020 using the conversion method.

A sensitivity analysis is also set out in Table 17 which shows the impact of further increases in the

unemployment rate above the DoF forecasts in 2020 using the conversion rate method, see A to D.

Table 17: Conversion Rate Method and Sensitivity Analysis of Brexit Impact on LR in 2020.

Method Increase

in UE rate %

Additional LR Number

Average LR in 2020 Number

Average Cost €m

Expenditure €m

Additional Expenditure

€m

1 0.5% 19,119 207,103 10.19 2,111 + 164

Sensitivity Increase

in UE rate %

Additional LR Number

Average LR in 2020 Number

Average Cost €m

Expenditure €m

Additional Expenditure

€m

A 0.7% 27,149 215,133 10.12 2,178 + 231

B 1% 38,238 226,222 10.02 2,268 + 321

C 2% 74,947 262,931 9.72 2,557 + 610

D 3% 114,715 302,699 9.43 2,855 + 908

Source: Department of Finance Labour Market Projections and Author’s own calculations

33

The sensitivity analysis shows that:

A. 0.7% increase in the unemployment rate would result in an additional 27,149 persons on the

LR and an additional funding requirement of €231m in 2020.

B. 1% increase in the unemployment rate would result in an additional 38,238 persons on the

LR and an additional funding requirement of €321m in 2020.

C. 2% increase in the unemployment rate would result in an increase of 74,947 on the LR and

additional funding of €610m in 2020.

D. 3% increase in the unemployment rate would result in an additional 114,715 people on the

LR and require additional funding of €908m in 2020.

The expenditure impact initially will be primarily on Jobseekers Benefit and the Jobseeker’s Benefit

for the Self-Employed, which is funded from the Social Insurance Fund (SIF).

Method 2: Difference between LR and LFS Unemployment

The LR and number unemployed (ILO and LFS definition) are two different metrics and there is

difference between them given that they are responsible for measuring different things. A contributor

to this difference is that the LR includes people who are working part-time, or on a temporary basis.

While the conversion rate method is used to link the developments in the unemployment rate to the

LR, it does not allow for changes in the relationship between the two measures23.

Historically, the difference between the LR figure and the ILO and LFS definition of number

unemployed increases in periods of rising unemployment. This can be seen by comparing the average

difference between the LR and UE number from 1988 to 2019. The average annual difference between

the LR and LFS UE numbers fell to a low of 62,795 in 2001, however, during the dotcom crisis this

difference increased significantly to 76,614 by 2003 an average annual increase of 10%.

In 2007, the difference between the two metrics was again at a low of 45,885, however this rose

sharply reaching 114,056 in 2010, a 38% annual average increase. As the labour market improved in

recent years, the difference between the metrics has gradually reduced with an average difference of

23 The conversion rate method will not capture the potential increases in temporary and part-time underemployment which is likely to occur in periods of rising unemployment. Increased numbers of JA and JB casuals and the systematic short-time work scheme.

34

78,644 in 2019. The difference between the two metrics from 1988 and 2019 is outlined in Figure 16

below.

Figure 16: Average Annual Difference between Live Register and LFS Unemployment, 198824 – 2019

Source: CSO Live Register and LFS (1988-1997 series and 1998-2019 series)

In order to account for the structural change between the LR and LFS in times of rising

unemployment25, the difference between the LR figure and LFS UE number is used to estimate the LR

number in a No Deal Brexit under Scenario 2 and Scenario 3. These are based on assumptions from

historical observations26.

Baseline Position

The baseline difference is 67,902. This is the difference between the 2019 LR Average of 192,902 and

the 2019 unemployed number of 125,000. See Table 18 below.

24 It should be noted that there is a structural break in the data presented. The unemployment data from 1988 - 1997 is from an older version of the Labour Force Survey (LFS) and the data from 1998 and 2019 is from the current LFS.

25 A contributor to the difference is the rise in part-time and temporary unemployment, however this does not account for the full differential.

26 The increases to the baseline differences are based upon historical observations and the average percentage increase in the LR/UE difference that occurred in the 1991 and 2008 unemployment crises.

100,367

62,795

114,056 116,002

78,644

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Pe

rce

nta

ge C

han

ge in

th

eA

nn

ual

Dif

fere

nce

%

An

nu

al D

iffe

ren

ce

Annual Difference % Change

avg. 10%avg. 38%

35

Table 18: Brexit 2020 Estimate for Number Unemployed (LFS)

Number

2019 Estimated Average LR Figure 192,902

2019 DoF LFS UE Forecast 125,000

Difference 67,902

DoF forecast the number unemployed in a No Deal Brexit scenario in 2020 to be 140,000, this is an

increase of 15,000 persons from 2019 levels.

Method 2 – Assumption based on 10% increase in difference between LR and UE number

The baseline difference of 67,902 is estimated to increase by 10%. The 10% increase is based on

the historical annual average increase experienced in the unemployment crisis from 2001 to 2003.

This results in an average LR for 2020 of 214,692.

Method 3 - Assumption based on 38% increase in difference between LR and UE number

The baseline difference of 67,902 is estimated to increase by 38%. The 38% increase is based on

the historical annual average increase experienced in the unemployment crisis from 2007 to 2010.

This results in an average LR of 233,705 in 2020.

Table 19 below outlines the three methods for the 2020 LR estimates.

Method 1 using the conversion rate method discussed above, estimates an LR increase of

19,119 and an additional funding requirement of €164m in 2020.

Method 2 estimates an additional LR of 26,708 in 2020 and an additional funding requirement

of €227m.

Method 3 estimates an additional LR of 45,721 and an additional funding requirement of

€347m.

These indicate the range of LR estimates for 2020 in a No Deal Brexit scenario using DoF forecasts.

36

Table 19: 2020 LR Estimate and Expenditure Method Description LR

Additional Number

Average LR 2020

Number

Average Cost €m

Total Expenditure

€m

Additional Expenditure

over Baseline

€m

1

Conversion Rate Method

19,119

207,103

10.19

2,111

+ 164

2

Difference Method (10% increase)

26,708

214,692

10.125

2,174

+ 227

3

Difference Method (38% increase)

45,721

233,705

9.82

2,294

+ 347

In addition, other areas of DEASP expenditure are expected to increase as part of the automatic

stabiliser effect from increased numbers on the LR and weaker labour market performance. It is

expected there will be increased demand for employment supports and activation schemes and in-

work supports such as the Working Family Payment and Part Time Job Incentive scheme. Other

payments are also expected to have increased demand, these include Fuel Allowance, Redundancy

and Insolvency payments, the Back to School Clothing and Footwear payment, Exceptional and Urgent

Needs payment and Basic Supplementary Allowance.

6. Conclusions

The Live Register has fallen to its lowest level since January 2008 at 183,783 as of end September

2019. However, despite this lower LR number various data and trends reviewed in the paper are

indicating that the LR is reaching its lower bound and there are signs of tightening, with less people

entering the LR, and those already on the LR not moving off as readily compared to previous years. As

a result, further reductions in the LR will be minimal in 2020. This means that the significant decline

in jobseeker expenditure seen in previous years will not continue in 2020.

A number of different methodologies were used to forecast the potential trajectories of the LR for the

remainder of 2019 and 2020. These provide a range of average LR estimates for 2020, the lowest being

the ARIMA method estimating an average LR number of 183,689 and yielding LR savings of €45m. The

highest is the Trend Upward Drift method estimating an LR number of 191,406, and an expenditure

requirement of €1,977m for 2020, an additional €24m on 2019 REV allocation.

37

The carryover method estimates a lower LR number for 2020 compared to 2019, however it will

require an additional €19m over the 2019 REV allocation. This is a result of increases costs and full

year impact of 2019 rate increases.

The higher average costs expected in 2020 mean that even relatively small differences in LR numbers

result in large differences in expenditure requirements across each method. The forecast average is

intended to capture the range of potential trajectories for the LR into 2020. This is estimating an

average LR of 187,984 with an expenditure requirement of €1,947m, a savings of €6m on 2019 REV.

The impact of a potential Brexit shock on the LR is estimated to result in increases in the LR number.

Based upon DoF forecasts of LFS unemployment in 2020, the LR for 2020 is estimated to increase by

between 19,119 and 45,721, which will result in additional expenditure above the baseline of between

€164m and €347m.

In addition, other areas of DEASP expenditure are expected to increase as part of the automatic

stabiliser effect from increased numbers on the LR and weaker labour market performance. These are

expected to include increased demand for employment and activation schemes, in-work supports like

the Working Family Payment and other supplementary income supports.

38

Appendix

Appendix 1

Figure 17: Trend year on year reduction of weekly LR number and forecast reduction, 2017 - 2019

Source: DEASP Admin data and Author’s Calculations

Appendix 2

Conversion Rate

The relationship between the LFS unemployment rate and the Live Register is not perfectly linear and

therefore the conversion number varies over time.

Figure 18: Trends in Conversion Number, 2017 -2019

Source: CSO data

-14.4%

-15.8%

-11.2%

-8.2%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

We

ekl

y Y

oY

Re

du

ctio

n %

Week No.

2017 2018 2019 2019*

38,459 38,398 37,824 38,578 41,234

37,509 36,963 36,739

40,901

35,808

15,000

25,000

35,000

45,000

55,000

2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

Co

nve

rsio

n N

um

be

r U

E/LR

39

Appendix 3

Figure 19: Weekly Change in the Underlying LR

Source: DEASP Admin data & Author’s own Calculations

Appendix 4

Table 20 : Regression Output for Average Cost and Number in Payment

Source: Author’s Own calculations using Stata

-2%

-2%

-1%

-1%

0%

1%

1%

2%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

Average Past Values 2019 2019* 2020

40

Appendix 5

Figure 20: Average Cost and Pay Share Regression Fitted Values

41

Appendix 6

Table 21: Components of Average Cost per 1,000 on LR, 2015 - 2019 Year to Date

Average Cost LR 2015 2016 2017 2018 2019

August

Annual Average LR 344,234 303,749 263,876 221,323 196,714

Annual Average Number in

Payment

304,101 281,362 239,475 201,704 180,035

Annual Average Pay Share 88% 89% 89% 90% 92%

Source: DEASP Admin Data

Appendix 7

Figure 21: Number on the LR that relate to the Education Sector, 2016 - 2019 July

Source: DEASP Admin data

0

5,000

10,000

15,000

20,000

25,000

08-Jan-2016 08-Jan-2017 08-Jan-2018 08-Jan-2019

No

.of

Edu

cati

on

Se

cto

r o

n L

R

42

Appendix 8

Figure 22: Annual Changes to the Average LR, 1980 - 2018

Source: CSO Live Register

Appendix 9

Table 22: Mean Average Percentage Error MAPE Interpretation

<10 p.p. Highly Accurate Forecasting

10-20 p.p. Good forecasting

20-50 p.p. Reasonable

Source: (Athanasopoulos, 2018)

36,098 29,238 20,212

171,424

-38,516

-100,000

-50,000

-

50,000

100,000

150,000

200,000

19

80

19

82

19

84

19

86

198

8

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

20

16

20

18

An

nu

al C

han

ge in

Ave

rage

LR

43

Appendix 10

Figure 23: LR Inflows and Outflows estimates for 2020.

Source: Author’s own calculations based upon DEASP Admin data

References

Athanasopoulos, R. J. (2018). Forecasting Principles and Practice Section 3.4 . Melbourne: OTEXTS.

Clemen, R. T. (1989). Combining forecasts: A review and annotated bibliography. International

Journal of Forecasting , 559–581.

Makridakis, S. &. (2000). The M3-competition: Results, conclusions and implications. International

Journal of Forecasting , 451–476.

Timmermann, A. (2006). Forecast Combinations. Handbook of Economic Forecasting Chapter 4.

Elsevier.

-

2,000

4,000

6,000

8,000

10,000

12,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51

No

. o

f In

flo

ws/

Ou

tflo

ws

Week No.

2020 Inflows 2020 Outflows

44

Quality Assurance process To ensure accuracy and methodological rigour, the author engaged in the following quality assurance process.

Internal/Departmental Line management

Spending Review Steering group

Other divisions/sections Peer review (IGEES network, seminars, conferences etc.)

External Other Government Department

Steering group Quality Assurance Group (QAG)

Peer review (IGEES network, seminars, conferences etc.)

External expert(s)

Other (relevant details)