March, as the proverb goes, “comes in like a lion and goes out like a lamb”. However, while this may be a useful way of describing the weather in Ireland this time of year, it may not apply to the Irish jobs market this month.
With Brexit confusion continuing to thicken as the March 29 deadline looms closer, it appears that we are all involved in a guessing game to predict what will happen next. That said, there are many positives that auger well for the Irish jobs market regardless of how Brexit unfolds. This month’s Moving2Ireland Irish Jobs Report will focus on these positives, as well as the Brexit-shaped elephant in the room.
As we can see from the graph above, in the final quarter of 2018 the average weekly earnings in Ireland stood at €761.65. This represented a 4.1 percent increase from one year earlier, meaning that workers’ wages are growing at a comfortably faster rate than inflation, which is currently hovering at less than one percent annually.
In the same period, the average hourly earnings of workers in Ireland increased by 3.8 percent. Wage growth in Ireland is above the EU average, which as of Q3 2018 was running at 2.7 percent.
As we enter March, it is clear that many of the positive trends that we detected through the end of 2018 and into the new year are being replicated and added to. A recent report from IDA Ireland indicates the rude health of Ireland’s labour market in the first two months of the year. Over 2.28 million people are now employed in the country, representing the highest total since 2008. For every 10 jobs that were lost during the recession, nine have now been replaced. These jobs are being created by indigenous SME businesses as well as global giants, but the one thing that all employers have in common is access to a skilled and productive workforce.
Ireland workers deemed most productive in the world
A February 2019 report from the Organisation for Economic Co-operation and Development (OECD) has placed the Irish workforce at the top of the global productivity table. The Paris-based agency made the calculation based on the fact that Irish workers add an average of €87 (nearly $100 USD) to the value of the economy for every hour they work.
Value added to the economy for every hour worked
While the report was released in February 2019, Ireland’s workforce productivity has been on an upward trajectory since 2000. A recent report from the Central Statistics Office (CSO) points to the fact that the Irish labour force increased by 4.5 percent in the productivity stakes from 2000 to 2016, with a particular increase detected in 2015.
Speaking on the recent report and the implications for the Irish labour force post-Brexit, Cantor Fitzgerald economist Alan McQuaid had this to say:
“Any business owner looking at moving out of Britain because of Brexit or any other country for that matter, and seeing those productivity figures, would be encouraged to come to Ireland, all other things, such as tax liability, property costs or internet access, being equal.”
There is no doubt that the positivity of Mr. McQuaid is shared by other economists who feel that the Irish economy is robust enough to withstand even the most ‘pear-shaped’ of Brexits. However, while the Republic of Ireland might be doing its utmost to protect itself from a ‘No Deal Brexit’, the stakes and challenges are higher in Northern Ireland.
Impact of ‘No Deal Brexit’ would be severe in Northern Ireland
A document from the UK’s Department for Exiting the European Union has stated that businesses in the North may not have sufficient time to prepare for a ‘No Deal Brexit’, which could see business failure, job losses and relocation to the Republic of Ireland.
The briefing also highlights that the economic consequences of a ‘No Deal Brexit’ will be more severe and longer-lasting in Northern Ireland than the rest of the UK because of the region’s land border with the Republic of Ireland as well as the ongoing political stalemate in the North. The fact that Northern Ireland voted by 56 percent to 44 percent to remain part of the EU only further highlights the disconnect between the UK government and the workers and the small business owners that will be most adversely affected by a ‘No Deal Brexit’.
On a more positive note for the North’s economy is the fact that as of December 2018, the unemployment rate in the region was 3.8 percent — lower than the UK average of 4 percent. Speaking to these positive figures in light of a challenging political and economic climate, Roger Pollen of the Federation of Small Businesses had this to say:
“Today’s figures show what the private sector can do for the economy, which underlines the need to ensure it is not carelessly damaged. However, while today’s employment figures are welcome, we should not lose sight of the fact that the local business environment is currently far from ideal.”