Labour shortages affect firms’ expansion plans
A TIGHTENING labour market is now “materially impacting” companies’ expansion plans, according to the latest economic outlook from business lobby group Ibec.
The problems of growing congestion in areas like transport, housing, and childcare are making it more difficult to attract and keep workers, according to the report.
It added that feedback from businesses suggests these constraints are now having a “binding effect” on their growth.
It comes at a time when record numbers are employed in Ireland, with firms increasingly looking at non-financial incentives – such as paternal leave – as a means of enticing and retaining staff.
There are currently over 2.3 million people working here, the highest number in the history of the State.
Since the start of the year, an additional 53,700 people have joined the labour force, while the unemployment rate has fallen to a pre-economic crisis low of 4.8pc.
Ibec chief economist Gerard Brady said: “Ensuring that we match record private investment
with a renewed and expanded public infrastructure will be the defining challenge of the coming years.”
The increase in employment numbers looks set to continue into the future, albeit at a slower rate, which in turn will place increased pressure on wages.
Looking to next year, the shortage of available workers will affect the pace of growth in the economy, according to Ibec.
The organisation has warned that, while the economy will continue to grow in 2020, expansion will be “more subdued than it has been in recent years”.
Following growth of around 6pc this year, the pace of economic development will fall back toward 3pc in 2020, Ibec said.
In addition, it said that external factors will weight on growth.
Global trade tensions, including Brexit, are now “significantly impacting” the economies of many of Ireland’s main export markets.
Uncertainty, Ibec said, will remain, regardless of the outcome of the UK leaving the European Union.
While future political developments will inevitably shape any trade deal, currently any post-Brexit agreement between the UK and the EU is looking like being a far looser arrangement.
This brings with it the risk of “potentially significant trade and regulatory barriers”, the lobby group warned.
Elsewhere, the total value of Irish goods exports in the first eight months of this year rose by 10.9pc, according to the economic outlook from Ibec.
The increase was driven by the food and beverage sector which reported increased exports of 6.2pc to €573m.
The pharma industry, where exports increased by over €5.5bn in the first eight months of 2019, also experienced significant growth.