Labour shortage forecast to put the brakes on job creation from next year
The number of jobs being created in Ireland will slow from next year as labour shortages start to bite, according to a report from professional services firm EY.
The growth in job creation is expected to moderate from 2.8pc this year to 1.8pc and 1.6pc in 2020 and 2021 respectively.
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"It is very difficult to continue to create jobs at the current pace," Professor Neil Gibson, chief economist at EY Ireland, said.
"When we talk about the rate of job creation slowing down, it is slowing down to a rate that would still be the envy of most developed economies."
While the strong labour market is fuelling growth in consumer spending, businesses are struggling to recruit affordable talent.
And firms will soon face even higher costs as a result of rising inflation, the report finds. However, EY cautions that any fall in sterling as Brexit approaches may temper this.
Overall, more than 81,000 net new jobs were created in the first three months of this year, exceeding expectations.
Employment in 12 of the 14 main sectors of the economy grew, placing Ireland in a balanced position to withstand any future headwinds, according to the report. The two areas which did not experience a growth in employment were agriculture and "other services" which includes sport, leisure, repairs and personal services.
Meanwhile, the industries set to experience the most significant employment growth between 2018 and 2023 are forecast to be construction, followed by accommodation and food. "Half a million jobs have been created in Ireland across six years - the shortage in the labour market is a price of success," said Prof Gibson.
"We will need to look to external markets to increase labour or encourage people who are currently not working back into the market."
This comes after a report from the Central Statistics Office (CSO) last week showed that from 2012 to 2017, jobs at multinationals in Ireland grew by 7pc to 318,000, representing 14.3pc of all employment and what the CSO report called "modest growth on a significant base".
Five years before, at the height of Ireland's economic crisis and joblessness, that contribution had been 15.7pc of employment.
Elsewhere, the country's gross domestic product growth has been revised up to 4.1pc for 2019 due to corporate tax receipts and positive jobs data from the first three months of this year.
The report also highlights a divergence between economists, who are far more cautious about the global economic outlook, and business leaders who, based on EY's research, would appear to be more positive.
Of the 2,900 executives surveyed across 47 countries, just over nine in 10 view the global outlook as improving.