The largest contributor to Ireland’s rising Overall Index score is the sharp increase in wage growth this year.
Ireland’s industry wage gaps have increased. Wage growth in high-skill industries such as financial and scientific activities has outpaced that in low-skill ones.
Ireland’s flexible labour market and mobile workforce eased pressure on its Overall Index score this year.
Ireland’s economy experienced rapid growth in 2017, boosting the demand for labour and causing the unemployment rate to fall to its lowest level since the financial crisis of 2008. The year also saw a sharp increase in wage growth, particularly in highly-skilled industries. While the early phases of the economic recovery primarily benefitted Dublin, other cities such as Cork and Limerick are attracting increased investment, both private and public. Staff shortages remain an issue across many sectors, and companies are increasingly looking overseas to fi ll vacancies. While Ireland’s net inward migration is at its highest level since 2008, the labour market participation rate is below its pre-crisis peak, suggesting the potential for further workforce growth, including through initiatives to attract more overseas workers.
Mike McDonagh, Managing Director, Hays Ireland
The Irish economy expanded rapidly in 2017, growing by over 7%. The IMF forecast growth will slow to 4.5% in 2018 and 4% in 2019. This is well above the forecast for the Euro area as a whole at 2.4 and 2%, respectively.
This increase in output boosted the demand for labour, causing the unemployment rate to fall by 1.7 percentage points in 2017 to 6.7%.
Looking further out, Ireland is less likely than other European countries to experience significant labour supply constraints, as the UN expect working age populations to increase notably over the medium term. This is in contrast to Western Europe overall, where labour supply is expected to shrink. In addition, Ireland’s labour force participation rate is relatively low both compared to other EU countries and Ireland’s own rate before the financial crisis; suggesting a further potential source of workers to ease skill shortages.