The latest report on private sector wages from the trade union-backed Nevin Economic Research Institute (NERI) has identified significant prospects for medium-term wage growth of 3.5% or more a year.
The study says the Republic of Ireland labour market is tightening - in pay and employment terms - against a backdrop of steady, if declining, growth.
NERI says global economic growth has weakened over the last year with slowdowns in the Euro area, the United Kingdom and the USA, with the OECD downgrading its 2020 and 2021 forecasts to just 3%.
NERI finds little firm evidence to suggest that “over-heating” is currently an issue in the Irish economy, particularly in light of relatively average labour market performance along many indicators. Joblessness rates in Germany, the UK and the US are all close to historic lows, whereas France and Italy have stubbornly high levels of unemployment.
NERI reports that wages and labour costs have been increasing, but that this varies significantly by sector and occupational type.
On the Irish economy, the report says the domestic Irish economy’s long cyclical upswing appears to be slowing down, although labour market conditions continue to improve.
The Central Statistics Office estimates that the unemployment rate fell to 4.8% in November 2019, with unemployment down over 17,600 compared to the previous year. Long-term unemployment is down to 1.4%, while annual employment growth was a healthy 2.4% in the third quarter of 2019.
Headline real annual GDP grew by 6.6% in the first half of 2019. However, the outsize impact of a small number of large multinationals continues to distort the headline GDP data.
The report says the more useful ‘modified domestic demand’ indicator, which strips out intellectual property investment and purchases of aircraft by leasing companies, grew by a more modest 2.3% in the first half of 2019.
Download the full report - NERI Report Series, No 1 - Private Sector Wages: Trends, Prospects and Issues – HERE.