The latest earnings data released today shows that average weekly earnings grew by 1.8% in the year to second quarter 2015 and by 2.3% in the private sector.
The positive wage growth figures were relatively broad- based across wholesale & retail (+2.2%), transportation & storage (+1.2%), ICT services (+4.4%), finance & insurance (+0.7%) and admin & support (+8.8%).
Davy Stockbrokers indicate that a key feature so far in Ireland’s recovery has been the lack of reflationary pressures, evident not only in weak CPI inflation but also in on-going falls in the stock of bank lending, and means that rising house prices have stretched affordability.
They beleive that the return of positive wage growth will help reflationary pressures and bank lending to recover in nominal terms and allow house prices to rise over the medium term without stretching affordability further.
According to Davy, "This is the third consecutive quarter than private sector earnings growth has been in positive territory – suggesting that wage growth is now returning to the Irish economy.
"This is consistent with evidence from a recent IBEC survey suggesting that 60% of Irish companies were planning a 2% median wage increase in 2015. Also, PMI surveys have started to point to wage growth.
"The emergence of positive wage growth is also consistent with the strong 5.6% growth in income tax and 8.8% in PRSRI receipts, over and above the 3% annual growth in employment recorded in the year to Q2."
Source: www.businessworld.ie