FORGET all the nonsense about stag hunting and dog breeding. The most important developments last week, in terms of people's lives, were in the economic sphere.

There was good news and bad news. The good news is that we are finally out of recession.The bad news of course was that the unemployment rate had risen to 13.4% – three times its level at the last general election. And it's clear that the situation is going to get worse before it gets better.

So what can the government do to address the crisis? The straight answer – as opposed to the political, point-scoring one – is that direct options are limited.

The most important factor in getting people back to work is economic growth. Economic growth is not simply a prerequisite for falling unemployment, it is a guarantee of falling unemployment. The problem is that it is not an immediate guarantee. There is a lag between economic growth and falling unemployment.

The reasons for that are pretty obvious: businesses need to be sure the recovery in sales is permanent and sustained and even then they will recruit extra staff only when they have exhausted all other options with their existing staff (reverting to five-day weeks, overtime, etc).

Traditionally, the time lag between economic and employment growth was around six months, but in recent global recessions – most notably the dotcom bubble burst of 2001 – it took up to 18 months for employment to follow economic growth.

It's not just a global experience. In the 1990s, unemployment here remained stubbornly high – it was still at around 10% in 1997 – despite the economy having performed well for several years. That suggests it could be well into next year before we see jobless numbers falling.

Is it possible to shorten that lag? There has been no shortage of seductive arguments suggesting it is possible, but they don't really stand up to much scrutiny.

What is clear is that economic growth has to be the starting point. Firms simply won't hire extra people if those people have nothing to do. So beware the trite argument that, rather than focusing on economic growth, the government has to concentrate on employment growth. It is amazing how frequently this argument is made because it simply doesn't make sense. Governments don't create jobs. We can't and won't have jobs growth without economic growth.

That doesn't mean there isn't a role, for example, for retraining programmes; there certainly is. But it would be naïve to ignore the, at best, very mixed performance of training programmes globally and in Ireland. They cost a huge amount of money and often don't deliver very much.

The experience of Scandinavian countries after their property bubble burst in the early 1990s offers us some lessons. They spent a lot of money retraining professionals such as architects and engineers before realising this was a bad use of taxpayers' money. Highly-educated people tend to have the resources to reinvent themselves. So the focus of training schemes must be on those who left school early.

There are 130,000 fewer people working in construction now than there were a couple of years ago. And regardless of how the economy performs, there is no way that we are going to get back to the job numbers that used to exist in construction. So there is a big job to be done in retraining many of the young men who once worked in that sector. But perhaps the focus here should be on getting people to go back to school or go on to college rather than more prescriptive attempts to reskill.

The trade unions are also very big on the idea of increased capital spending by the government as a way of stimulating employment. It's another seductive argument but it ignores the reality that the government is already spending over €6 billion a year on infrastructure. That's 5% of GNP – around twice the EU average – which is huge money for a country borrowing €20 billion a year to pay the bills. It's not like the 1980s, when successive governments simply stopped capital spending completely rather than taking tough decisions to cut current spending.

The argument that we could spend more on capital spending if we put back our schedule for restoring order to the public finances by a couple of years is a dangerous one. Any slippage would quickly draw comparisons with Greece and everyone now knows where that leads.

And speaking of comparisons, the warning about how Ireland risks repeating the mistakes of Japan, which stagnated for years in the 1990s, is a case of chalk and cheese. Firstly, Japan was too slow to fix and recapitalise its banking system. It is also quite a closed economy – exports account for around 10% of GDP compared to 90% in Ireland – so it got no real boost from deflation, whereas the increased competitiveness of our exports can seriously drive the Irish economy.

The unpalatable reality is we can't spend or train our way out of the unemployment crisis. It would be irresponsible not to look at innovative ideas such as PRSI holidays, new training programmes etc. They can help. But there are no quick-fix solutions. The only way to shorten the dole queues is by restoring order to the public finances and putting in place the conditions – particularly in relation to competitiveness – to allow the economy to grow.

scoleman@tribune.ie