News on wage and non-wage labour costs - Ireland
Labour costs and productivity are high by international standards / Torsten Pauly (GTAI) and Patrick Bamming (German-Irish Chamber of Industry and Commerce - Labour Law) (July 2019)
Dublin (GTAI) - With the rising shortage of skilled workers, Irish wages are rising. In the 1st quarter of 2019, average earnings amounted to 3,337 euros, 3.4 per cent more than a year ago.
General information on the labour market
In May 2019, 108,200 persons were registered as jobseekers in Ireland, corresponding to a rate of 4.4 per cent (May 2018: 5.9 per cent). These figures are seasonally adjusted and refer to all persons of working age between 15 and 74 years. Of those in employment, one fifth worked part-time in the 4th quarter of 2018.
The rate of long-term unemployed who are unemployed for at least twelve months was 2.1 per cent in 2018, below the European Union (EU) average. Despite significant declines, young people are particularly affected by unemployment. In May 2019, 10 percent of all 15 to 24-year-olds were unemployed (May 2018: 14.7 percent). The German-Irish Chamber of Industry and Commerce (AHK) is supporting the Irish government in developing a dual training system based on the German model.
The Irish labour market is also expected to develop positively in the medium term. The EU Commission expects the economy to grow by 3.8 percent in real terms in 2019 and by 3.4 percent in 2020. With the good economy, employment will increase by 2 percent in 2019 and by 1.8 percent in 2020. The unemployment rate is expected to average 5 percent in 2020 (2019: 5.4 percent).
With the declining number of job seekers, the shortage of skilled workers is becoming noticeably worse. Many job vacancies can only be filled with applicants from abroad. Between 2015 and 2018, 75,900 people moved to Ireland, more than the number who moved away. The European Statistical Office Eurostat expects a further population increase of 7 percent between 2018 and 2028. Nevertheless, some investors have been desperately looking for German-speaking employees for some time.
In the Irish job market, there are major sectoral differences in economic strength and employment. Traditional industries such as the food and beverage industry are dominated by purely Irish companies, many of which are geared to the small domestic market or the neighbouring United Kingdom. In the recession years of 2008 and 2009, the gross value added of such domestic companies collapsed by a total of 18.5 percent, resulting in sharp declines in employment and wages.
Multinational companies producing products for the world market in Ireland dominate the Irish chemical, pharmaceutical, electronics and medical technology industries as well as the information and communication technology (ICT) and financial sectors. Even during the crisis and from 2007 to 2017, their gross value added rose by a total of 218 percent. As a result, these employers have generally not cut jobs, but have steadily increased them, and wages are usually well above the average.
The planned Brexit could further exacerbate the shortage of skilled workers in Ireland, particularly in the sectors and centres dominated by international investors, as Dublin and other larger cities are very attractive EU alternatives to British locations. On the other hand, companies that supply the UK to a large extent may be forced to rationalise and lay off workers.
For more information and support, please contact
Patrick Bamming/German-Irish Chamber of Industry & Commerce
AITI Chartered Tax Adviser (CTA)/ Diplom Kaufmann/ Datenschutzbeauftragter (TUEV) (data protection officer)/TMITI with Irish Tax Institute
Tel: +353 (0)860478222, +353(01)6424381