Friday 14 December 2018

Anne-Marie Walsh: Economy may be hot, but there is still room to get it to heat up further

Some economists feel the focus should be on getting more people to join the workforce as well as upskilling those already in it. Stock image
Some economists feel the focus should be on getting more people to join the workforce as well as upskilling those already in it. Stock image

Anne-Marie Walsh

The latest jobs figures show things are hot in our economy. But there is a view among experts they should get even hotter.

It is natural most of us would not greet signs of dramatic economic growth like a big spending high roller at Cheltenham when their horse came in during the Celtic Tiger years.

Given the lessons of history, alarm bells may start to ring when we discover we are anywhere near where we were on the eve of the crash.

The latest employment figures point to the fact that we may already have gone beyond the peak we were at back in 2007.

But economists are advising there is no need to panic, it is sustainable and there is even room for more growth.

Some even suggest the unemployment rate could fall as low as 5pc without everything going belly-up.

And all will be well once we don't encounter the factors that, with hindsight, indicated things were about to go awry in the past - excessive borrowing, high inflation and wage growth. And as long as we are not badly shaken by Brexit or a transatlantic trade war.

They feel the focus should be on getting more people to join the workforce as well as upskilling those already in it.

Austin Hughes of KBC Bank said he expects employment will rise by about 3pc this year before growth falls to around 1pc.

"It is running fairly hot at the moment, there's no question about that," he said. "But when you look at unemployment rates of 4pc in the US and UK and the fact that there are 14 countries in the EU 28 running lower than us, there is scope to do a little bit more."

He said there needs to be upskilling in areas like IT, social services, health and education where there is strong demand for services.

Some sectors like retail, transport and construction are unlikely to see the volume of jobs that were there 10 years ago. But he sees scope to tap into new workers among the under-25s, whose unemployment rate is still high at 12pc or emigrants who built up skills abroad.

Economist Dan O'Brien said the need to up our game was shown in a recent OECD report that found gaps in Irish companies' management skills, compared with foreign-owned companies like Pfizer and Google.

He said there is considerable "hidden unemployment" among those who don't work but are not members of the labour force or unemployed, particularly in single parent households.

As a result, we have room for a lot more jobs before we would reach Britain's 75pc employment rate. Ours is about 68pc.

Chambers Ireland chief executive Ian Talbot feels we're at a turning point where the Government should start pumping some money used for job creation to upskill workers and provide better childcare to expand the workforce. Before the crash the Government spent the same on upskilling workers as getting people back to work - now most of it goes to the unemployed.

With Brexit around the corner, he said businesses desperately need skills in areas like tariffs and customs to develop new markets. "We need to start training to make sure those with a job can hang on to it," he said.

Irish Independent

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