Wednesday 21 August 2019

David Chance: Does a booming jobs market mean we're all in for a hefty pay hike?

 

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David Chance

DOES a booming jobs market mean we're all in for a hefty pay hike? Wages are rising, and big rises are being seen in areas where skills shortages are most intense.

The jobs data is positive. Record numbers of people now have jobs and the rising economic tide has seen job gains for 26 successive quarters now.

That tight labour market should keep upwards pressure on wages. However, Brexit remains a risk and given the State's flexible labour market there's a ready supply of workers from overseas.

The population is also rising. The demographic effect has been positive since 2014 and in the final quarter of last year contributed a rise of 26,200 to the overall change in the labour force. The Irish labour pool is constantly being replenished.

The Central Bank is forecasting that wages will grow 3.3pc this year and 3.4pc in 2020 - unless there is a hard Brexit.

And the numbers in the latest Labour Force Survey will do little to dampen those expectations, even though there was a slowdown in employment growth as the year progressed.

"Where the market is at the moment, the trend for wage growth is 2.5-3.5pc," said Alison Wrynn, economist at employers group Ibec.

While the data overall was positive, it also highlighted some of the growing disparities in the workforce and the potential for growing economic insecurity.

While there are almost 2.3 million people in work, the scars from the recession, especially for men of working age, are still raw.

Twenty years ago, the male participation in the labour force rate was 72.8pc, and it peaked at 77.1pc in 2007 before the recession. Well over a decade later the share of men in work is down at the same level as it was in the fourth quarter of 1998 - pre Celtic Tiger - at 68.3pc.

The latest data also indicates a greater number of people in so-called 'precarious' work. Part-time jobs can reflect greater flexibility and ease re-entry to the workforce for some, but for others it can also be a recipe for poverty.

The number of people in part-time jobs was equivalent to 20pc of all workers last year, versus 16.65pc at the end of 1998.

Irish Independent

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