A dramatic increase in job vacancies reported to FAS, the lowest unemployment figures for 14 years and wage increases running at double the rate of inflation are the latest warning signs that labour shortages could undermine economic growth.
FAS expects to receive notification of 70,000 job vacancies by the end of this year, compared with 52,000 in 1997, an increase of 34.6 per cent. It cites this as further evidence of the dramatic tightening in the labour market.
Yesterday, the Department of Social, Community and Family Affairs announced a drop of 6,715 (3 per cent) signing on the Live Register - 31,502 fewer than the same time last year - which brings the unemployment rate down to 8.1 per cent.
Central Statistics Office figures show average hourly industrial earnings rose by 6.8 per cent in the year ending June 1998. IBEC's director general, Mr John Dunne, said the trend had to be viewed with deep concern.
Banker and industrialist Dr Paddy Galvin warned of increasing job shortages in the information technology sector. He told the International Brewers' Guild in Cork last night that over 70 per cent of IT companies are experiencing difficulty recruiting staff. He estimated the current shortfall at 3,000 people and predicted that it would rise to 8,000 by 2003.
Earlier, the Minister for Finance, Mr McCreevy, also expressed concern at the CSO figures. They "highlighted the need for continuing wage moderation in public and private sectors to maintain competitiveness, particularly in the light of EMU". The Department of Finance said the 6.8 per cent rise was more than double the rate of inflation.
However, SIPTU vice-president Mr Des Geraghty described Mr McCreevy's reaction to the figures as "alarmist nonsense". He said that Partnership 2000 had provided for increases worth 4.25 per cent in the period covered by the CSO figures.
Over the same period Mr Geraghty said that manufacturing output had risen by 18 per cent, although the numbers working in the sector had risen by only 5 per cent. This meant that overall productivity in manufacturing had risen by at least 12.5 per cent.
"There are no inflationary threats," he said. "The actual costs of production are falling. You can only measure earnings meaningfully against output, and that includes overtime earnings."
He admitted his own union had concluded gain-sharing agreements, which allow for financial and other rewards over and above the terms of Partnership 2000, with more than 100 companies. "We make no apology for concluding such agreements and will continue to negotiate them on the basis of workplace reorganisation, increased productivity and co-operating with new technology."
The Minister had only himself to blame if he felt the pay rises were excessive, Mr Geraghty said, because the Minister was the one who had boosted the incomes of high earners in the last Budget. "Some of those high earners work in manufacturing," he added.
However, industrial workers comprise less than 20 per cent of the workforce and other trade union leaders cast doubt on the figures' validity within their own sectors. Mandate national industrial secretary, Mr John Douglas, who represents over 30,000 workers in the retail trade, said his members were strictly bound by national pay agreements.
"The CSO increases are certainly not reflected in our figures. We've fared particularly badly under Partnership 2000," he said. "We're tied into Partnership 2000 and haven't been able to break out of it, while other special interest groups, especially in the public service, have been able to secure increases over and above the national agreements."