Workers can expect pay to rise 7pc over next two years despite Brexit chaos, says Central Bank
- Hikes of 3.4pc expected this year
- Calls for return of SSIA scheme
Workers are line for pay increases of up to 7pc over the next two years, Central Bank forecasts predict.
Despite the uncertainty created by Brexit, the Central Bank has outlined that as the country heads towards full employment "a further pick-up in wages" is expected. This combined with "modest inflation" should translate to more money in real terms in people's pockets and an increase in household spending power, according to the bank.
The regulator is predicting the average increase in wages per employee will be 3.4pc this year and 3.6pc next year. It comes as the latest figures from the Central Statistics Office show wages rose by an average of €30 a week in the space of a year with an increases across all sectors.
Mark Cassidy, director of economics and statistics at the Central Bank, is due before the Oireachtas Budgetary Committee today to discuss the bank's latest forecasts and to outline the potential impact of a no-deal Brexit. Overall, the economy is expected to grow over the coming years, although at a slower rate than previously thought.
The outcome of Brexit will also have a defining impact on how much growth Ireland can expect to see over the coming years.
The latest models show that the economy will grow 3.4pc this year and 3.6pc next year, with uncertainty internationally contributing to the slowdown, on top of the Brexit effect.
Domestic issues such as the "tightening" of the labour market as the country approaches full employment will also effect our growth rate, as well as a slowdown in investment and domestic demand.
An orderly Brexit will see that growth slow but the outlook in the coming years would remain "broadly positive".
Mr Cassidy said a no-deal "would have very severe and immediate disruptive effects, which would permeate almost all areas of economic activity". Certain areas such as agri-food and regions along the Border will feel the effects more acutely than others, however.
A crash-out Brexit could see the projected growth rate drop by up to 4pc - down to just 1pc. New trade arrangements and the breakdown of existing processes, on top of infrastructure issues and legal uncertainties will have damaging consequences on trade and supply chains.
The Central Bank has outlined that Brexit is not the only risk to the economic outlook, warning as the country moves to full employment "there is a need to continue to guard against the risk that strong cyclical conditions give rise to overheating dynamics".
Other international risks relating to trade and tax also persist, according to the banking chief.