The economy has firmly moved into a ‘post-recovery’ stage with both employment and consumption comfortably passing their pre-crisis peaks. This is according to the latest Ibec Quarterly Economic Outlook for the second quarter of 2018.
However, Ibec has also warned against complacency on competitiveness at a time when external threats are increasingly likely to materially impact on Ireland's growth. As the economy comes close to capacity, Ibec say it is important the government makes the right decisions to protect its indigenous industry.
Last year, 19% of Ireland’s workforce either changed job or started working. This is up from 13.4% in 2010 and is a sign of the health of the labour market. As a result, the first quarter of 2018 saw the fastest wage growth in the economy since the crisis with average wage growth reaching 2.5% year-on-year. Ibec say that the economy is now firmly in a ‘post-recovery’ phase.
Speaking this week, Ibec's Head of Tax and Fiscal Policy, Gerard Brady said, "With the economy approaching full employment the biggest challenge facing the Irish labour market will be finding workers to fill vacancies. Feedback from Ibec member companies suggests that firms are now finding it increasingly difficult to attract and retain talent. We have pointed out in previous editions of this publication that the outlook for net migration is not as strong as it was in the mid-2000s. There must be a greater emphasis on funding the higher and further education sectors to upskill existing staff."
He added, "The next downturn is likely to be different than the last. It is crucial we put ourselves in a strong competitive position while we still benefit from global tailwinds. US tax reform, the prospect of a retreat of global trade, and Brexit, will pose challenges for our economy over the coming years. At the same time, business costs are rising and undermining our competitiveness. Budget 2019 should tackle these issues by adopting a renewed focus on competitiveness and indigenous business. Doing this, and investing wisely in infrastructure, education and innovation will be the most effective way to protect the economy from any future downturn."
Source: www.businessworld.ie
