Shortage of skilled workers looming as employment levels reach boom heights, warns economist
The Irish economy faces a shortage of skilled workers as employment reaches levels not seen since the boom, a leading economist has warned.
Only 217,700 people signed on to the Live Register last month, the lowest seasonally-adjusted level since June 2008. Some 2,200 fewer people signed on in July compared to the previous month.
Figures from the Central Statistics Office's labour force survey show the number of unemployed people now stands at 5.1pc, the lowest level since 2012. However, economist Jim Power says this brings its own challenges, as he warns wage inflation is inevitable.
"It is good news, but in terms of the challenges it poses, it's not good news," he said of the latest CSO figures. In Dublin alone, 13,200 new employees were added to the workforce during the second quarter of 2018.
That's the highest number of new quarterly hires in a decade, according to the Dublin Economic Monitor released by Dublin City Council yesterday.
But Mr Power said the ongoing housing and rental shortage in Dublin meant it was a double-edged sword. Residential rents have risen by almost 8pc in the last year.
They are now at the highest level since the height of the Celtic Tiger in 2007.
As a result, employers faced an uphill battle in the coming years to recruit and retain workers, Mr Power said.
But unlike the early 2000s, when there was an influx of migrant workers from Eastern Europe and elsewhere, "it's hard to say where migration will come from and labour shortages will be a big issue affecting business," he said.
This would lead to employees demanding higher wages and an increase in the cost of doing business, which would lead to a "wage-price spiral", he said.
And along with the inevitable inflation that would follow, there was already growing pressure on the ability of public services such as transportation, education and healthcare to keep up with demand, he said.
"To me, these are the three big challenges we face," he said.
The record level of employment has already led to congestion on public transport, the roads network and even footpaths in the capital, he said.
The number of people using public transport - including Dublin Bus, Luas, Irish Rail and Bus Éireann - grew by just under 7pc last year over 2016 while the number of motorists using the M50 alone increased by 6pc last year to 420,000 trips per day on the busy motorway.
The latest figures from the National Transport Authority released yesterday reveal the number of rail passengers using the Dart, commuter and inter-city services has increased by more than a third (35pc) since 2012.
The solution lies in regional development outside of the Greater Dublin Area, Mr Power said. "Employers need to think about relocating to places like Wexford, Waterford and Limerick," he said.
"Policymakers need to ramp up the delivery of houses and public services and focus on regional growth," he said.
Meanwhile, fellow economist Ciara Morley of EY-DKM Economic Advisory, said that while the Dublin Economic Monitor showed the capital's economy is "firmly set on an upward trend" and Dublin's "position internationally is also strong" challenges remain despite an otherwise 'positive' outlook for the Dublin economy this year.
"There is little doubt though that challenges persist and housing issues remain top of the list," she said.
"While house price growth has stabilised, rents continue to rise and we are a long way off achieving the level of supply required to meet demand," she said.