Em­ploy­ment now higher than pre-cri­sis peak

Con­struc­tion lags be­hind but econ­omy head­ing to­wards full em­ploy­ment

The Irish Times - Business - - NEWS - EOIN BURKE-KENNEDY

Out­side of con­struc­tion, em­ploy­ment is now higher than its pre-cri­sis peak, ac­cord­ing to the Cen­tral Bank.

In its lat­est quar­terly bul­letin, the bank said the num­ber of peo­ple em­ployed in non-con­struc­tion ac­tiv­i­ties here had risen to 1.92 mil­lion, which sur­passed the level achieved in 2008 just prior to the crash. While ex­ports drove the ini­tial phase of re­cov­ery, the bank said strong em­ploy­ment growth has been the defin­ing fea­ture of the re­cent turn­around.

On the ba­sis of cur­rent trends, it pre­dicted an ad­di­tional 90,000 new jobs would be cre­ated this year and next as the econ­omy con­verged on full em­ploy­ment. The bank also noted there was an on­go­ing sur­plus of jobs in the fi­nance and IT sec­tors, where wages were grow­ing by an av­er­age of 4 per cent per an­num.

While em­ploy­ment in con­struc­tion is grow­ing strongly, the to­tal num­ber of work­ers em­ployed in the sec­tor was 150,000, which is barely half of where it was dur­ing the boom.

In its re­port, the bank pre­dicted head­line un­em­ploy­ment would av­er­age 6.2 per cent this year be­fore fall­ing to 5.6 per cent next year, and close to 5 per cent by the end of 2018.

At this level of un­em­ploy­ment, there was a risk of over­heat­ing, the Cen­tral Bank’s Gabriel Fa­gan, in his fi­nal out­ing as the bank’s chief econ­o­mist, warned. “How­ever, at this point in time, and tak­ing into ac­count the next year hori­zon, we’re not at a point where we can say the labour mar­ket is over­heat­ing,” he said. Dr Fa­gan also noted that the his­tor­i­cal re­la­tion­ship be­tween em­ploy­ment and wage growth had been frac­tured since the crash, with high lev­els of em­ploy­ment not ex­ert­ing the same pres­sure on wages as it has done in the past.

Growth fore­casts

The Cen­tral Bank up­graded its growth fore­casts for the econ­omy, cit­ing strong growth in full-time em­ploy­ment, in­comes and con­sumer spend­ing.

The bank said it now ex­pected the econ­omy to grow by 4.9 per cent in gross do­mes­tic prod­uct (GDP) terms this year, up from a pre­vi­ous es­ti­mate of 4.5 per cent, and by 3.9 per cent next year. “The eco­nomic out­look for Ire­land re­mains strong, boosted by em­ploy­ment, wage growth and con­sumer spend­ing,” Dr Fa­gan said.

“The growth in full-time em­ploy­ment is par­tic­u­larly no­table and out­paces over­all em­ploy­ment growth as part-time work in­creas­ingly be­comes full-time,” he said.

How­ever, the bank said ex­ter­nal un­cer­tainty in the form of Brexit, volatile ex­change rates and pos­si­ble changes to the global trad­ing en­vi­ron­ment con­tin­ued to pose se­ri­ous risks.

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