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Things are finally looking better for jobs AND wages

The Central Bank’s latest forecasts are all pretty good.

Taoiseach Enda Kenny and Jobs Minister Richard Bruton
Taoiseach Enda Kenny and Jobs Minister Richard Bruton
Image: Mark Stedman/Photocall Ireland

Updated at 13.53

WAGES ARE PREDICTED to start rising this year as the latest unemployment data showed thousands of people left the dole queue.

The jobless rate fell to 10% last month as 6,448 fewer people signed on the Live Register, according to Central Statistics Office figures out today.

That was down from 10.1% last month and 11.9% a year earlier, based on seasonally-adjusted numbers.

There has also been a big decrease in those aged under 25 on the register, with the number listed as unemployed falling over 20% since the start of the year.

Live Register Source: CSO

Wages finally rising

Meanwhile, the Central Bank’s latest quarterly bulletin, out today, predicted the average pay per worker would go up 2.3% both this year and the next.

It said the drop in public-sector employment was slowing and the overall number of jobs went up in the last three months of 2014 because of “strong growth” in private businesses.

Compensation continues to outstrip employment growth, generating upward pressure on compensation per employee,” the bulletin said.

Average earnings per week hit their highest level since late 2009 in the last three months of last year, putting the mean annual wage at €36,726.

The weekly rate was 5% up on the previous quarter, when average weekly earnings reached their lowest point since the recession started.

The Central Bank also predicted 28,000 people would leave the ranks of the unemployed this year, while 12,000 workers were expected to join the labour force – which previously shrunk between 2013 and 2014.

Labour Force Source: Central Bank

It forecast the unemployment rate would average 9.8% this year and 8.7% in 2016 – significantly lower levels than predicted in its last bulletin from January.

Emigration “pressures” would also “continue to ease” over the next two years, it said.

No squandering…

Jobs Minister Richard Bruton said the government was aiming for “sustainable full employment” by 2018.

“Twice in my lifetime I have seen full employment achieved, only to be squandered through poorly planned, boom-bust policies,” he said.

I am determined to put in place plans to ensure that doesn’t happen again.”

Fine Gael Conferences Source: Sam Boal/Photocall Ireland

The government estimated every person off the Live Register and into a job saved the Exchequer an average €20,000 a year through paying out less benefits and increasing its tax take.

But business groups seized on the news to continue calls for wage rises to be kept in check until the unemployment rate came down further.

Chambers Ireland policy and communications director Mark O’Mahoney said the drop in youth unemployment was “particularly encouraging” as those under 25 would be the next generation of leaders and innovators.

While today’s labour market figures are positive, businesses need to be encouraged to take on more employees and this will only be possible if they have certainty that future wage expectations will be realistic,” he said.

…And no giveaway budget

Elsewhere, the Central Bank predicted the economy would grow even faster than previously flagged this year.

It said gross domestic product (GDP) would grow 3.8% in 2015 – up on its last forecast – and then 3.7% in 2016.

Cental Bank Source: Central Bank

The Fiscal Advisory Council earlier warned the government would have little room to deliver on much-anticipated tax cuts ahead of the next election despite the stellar growth because of strict EU budget rules.

First published 11.17am

READ: The best way to boost Europe’s economy? ‘Give everyone €175 each month’ >

READ: Saying jobs are only being created in Dublin is ‘highly misleading’ >

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About the author:

Peter Bodkin  / Editor, Fora

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