Unemployment figures confirm a robust recovery is in progress

As the jobs market tightens and income expectations grow, the economy runs the risk of overheating

 

The economy is returning to good health, based on a March unemployment figure of 6.4 per cent provided by the Central Statistics Office. It reflects a robust, broadly-based performance, with recovery taking place much more quickly than had been expected.

The hope is that, by the end of this year – notwithstanding Brexit – unemployment may dip below 6 per cent

From the depths of recession five years ago, the unemployment level has been reduced from 15.2 per cent to the current figure, some three percentage points below the EU average. The hope is that, by the end of this year – notwithstanding Brexit – unemployment may dip below 6 per cent.

Problems persist in terms of uneven growth, with the greater Dublin area enjoying a high percentage of inward investment and an expansion of existing services. Some rebalancing is required to address regional concerns and political decisions are needed to ensure the implementation of a fair and focussed spatial strategy. Ireland remains the most attractive EU location for inward investment, according to a recent survey of UK and international companies, and care should be taken to protect that perception.

Excessively generous awards that were not affordable in 2008 remain in that category today

The creation of almost 40,000 jobs during the past year brings its own concerns. The Economic and Social Research Institute has warned that as the jobs market tightens and income expectations grow, the economy will run the risk of overheating.

That message will not be welcomed by trade unions that are seeking an accelerated reversal of the emergency pay and pension cuts imposed on public servants at the height of the recession. But excessively generous awards that were not affordable in 2008 remain in that category today. The same situation applies to house prices.

A gradual restoration of previous working conditions for these employees is being considered by the Public Service Pay Commission under the terms of the Lansdowne Road Agreement. That is only proper as the economy recovers. A preliminary award was made this week. Care must now be taken to ensure that improved public services involving housing, education and health are not put at risk by unaffordable trade union demands and Government weakness.

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