Pay rises kick in as 62 new companies set up every day
Weekly earnings are now rising by 2pc
Minister for Finance Paschal Donohoe has urged employers to reward workers with pay increases to spread the benefits of rapid economic growth.
Speaking exclusively to the Sunday Independent, Mr Donohoe said there are already signs that employers are rewarding employees by increasing salaries as the economy booms.
That assessment of our economic performance was backed by Ajai Chopra, the former senior official at the International Monetary Fund (IMF), who played a central role in the 2010 bailout. He described current growth as "impressive".
Mr Chopra, now an independent consultant, told the Sunday Independent: "As with the global economy, Ireland is enjoying strong growth momentum and has been for some years now. What is most impressive about the Irish case is that this growth is not only in the volatile multinational sector. The strong performance is benefiting the people directly as employment continues to grow smartly and many people have more money to spend."
An analysis by economist and Sunday Independent columnist Dan O'Brien shows that households have more money in their pockets as weekly earnings rose by an average of 2pc last year.
And the chair of the Fiscal Council, economist Seamus Coffey, has given an upbeat appraisal of the economy, signalling that household income grew by up to 6pc last year.
Finance Minister Donohoe was adamant that workers should benefit from improved economic performance and be rewarded for their restraint.
"I would encourage employers to take a steady approach to wage growth," the minister said.
"When you see employers moving wages now at approximately 2pc across the year, it is a sign that employers realise the difficulties we've all gone through.
"They also recognise the need to support their employees to give them a good standard of living in return for the contribution they have made to their businesses.
"If we can keep at that approach for a number of years it gives us the opportunity to balance our books and invest in public services while maintaining competitiveness."
However, he warned against overheating the economy.
"The last time we were at this place in our economy government spending grew too quickly, wages grew at a rate that proved to be unaffordable and we ended up ruining our economy and we all have a duty to ensure that does not happen again," Mr Donohoe said.
Economist Dan O'Brien said: "Pay last year finally began to grow at a rate that people will feel in their pockets."
He added: "After years of near stagnation, quarterly figures on average hourly and weekly earnings suggest that growth of both measures was around three times faster in 2017 than in 2016."
He calculated that weekly earnings increased by more than 2pc last year while hourly pay rose by just under 2pc.
Average earnings were almost €18 higher in the final three months of last year compared to the previous year.
This is particularly welcome news as it was five times the rate at which consumer prices increased. This means purchasing power among consumers is on the rise.
Further evidence of improved confidence came with new figures showing an average of 62 new companies being established every day in Ireland in the first three months of this year.
More than 5,000 companies were formed in the first quarter of 2018 - more than 500 in the buoyant construction sector.
Seamus Coffey, the economist who chairs the Fiscal Council, said in his blog last Thursday that the growth in household income was "pretty strong".
He was encouraged by the Institutional Sector Accounts published by the CSO this month.
A snapshot of the household sector in the fourth quarter of 2017 also showed a general improvement.
"We see that gross national income, largely the sum of self-employed, employee and property income, is estimated to have increased by 6pc in 2017. Once we account for taxes and transfers, we get an annual increase in gross disposable income of 5.1pc," Coffey wrote.
"All sources of income are growing rapidly, current spending is growing but not as quickly, while capital spending is growing a bit faster. All in all, it paints a very positive picture," he stated, adding "nominal household income grew by between 5pc and 6pc in 2017. That is pretty strong".
By the end of summer, Ireland is expected to have the highest ever number of people at work in modern times.
Meanwhile, Taoiseach Leo Varadkar is planning a special Cabinet meeting next month where ministers will be asked to discuss the Government's objectives for the next three years.
Ministers will set out proposals for implementing the entire Programme for Government with a view to remaining in power for the full Dail term.
The move will incense many Fianna Fail TDs anxious to ensure the confidence and supply deal is not renewed after the next Budget. However, a senior source yesterday insisted voters do not want an election and would prefer to see the Government run until 2021.
"The view across Government is that it must remain focused on tackling the big problems and set out its agenda for the next three years," the source said.
"Fianna Fail is taking an aggressive tone at the moment, but the message on the doors is clear - the public want the Government to continue working and delivering. And that is what we are determined to do," he added.
Government priorities over the next three years include Brexit, delivering Project Ireland 2040, reforming the justice system, increasing broadband access and overhauling the health service through implementation of the Slaintecare programme.
The special Cabinet meeting will coincide with the two-year anniversary of the Government's formation and is being held near the Border to signify the importance of the Brexit negotiations.