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Recovery sees average wage set to increase

AVERAGE pay is set to increase as the recovery takes hold, specialist bank Investec has forecast.

In its latest assessment of the economy, it claimed the coming quarters would bring further increases in average earnings following years of pay restraint, with wages being pushed up on average 0.5pc this year and 1pc in 2015. But it also warned that while the jobless rate is in decline, long-term unemployment remains "worryingly high".

It comes just a day after stockbroker Davy said that a raft of indicators suggested Ireland's economy was expanding at an "exceptionally rapid pace" and is the fastest growing in Europe.

Investec economist Philip O'Sullivan said the domestic economy has been a particular driver of growth, although exports are still playing an "integral part".

"The labour market, retail sales and Exchequer Returns data all reflect the improving health of the domestic economy," Mr O'Sullivan said.

"The economy has added jobs for six successive quarters. The consumer has made a comeback, with retail sales posting eight successive months of annual gains in both volume and value terms, led by 'big ticket' items.

"Tax revenues are rising while expenditure, on the whole, is contained, which reduces the quantum of incremental fiscal consolidation needed to achieve deficit targets."

Investec said there have already been signs of pay increases in some sectors of the economy, pointing out that average economy-wide weekly earnings rose 1.1pc in the first three months of the year to €689.88. But the Bank pointed out that there were wide variances from sector to sector, with seven sectors recording wage growth and six were lower.