Employment and productivity data published on Wednesday by the Central Statistics Office (CSO) contains mixed messages on the economy.
On the jobs front, the economy remains close to full employment. The seasonally adjusted unemployment rate in December was 4.2 per cent. That was up marginally from 4.1 per cent in November but down from 4.5 per cent in December 2023. Over the year, 3,900 fewer people were out of work
Grant Thornton chief economist Andrew Webb noted that the rate has not been above 5 per cent for three years now, calling it “a remarkable achievement when we consider the headwinds the economy has faced”.
The downside of that is that there is little capacity to deliver a dramatic increase in much-needed housing or wider infrastructure without importing the labour required. And that raises its own challenges and the outgoing Government discovered in the latter part of its term.
As Jack Kennedy, economist at online recruitment platform Indeed noted, the strength of the Irish labour market in recent times has been supported by an increase in labour supply, largely due to high net inward migration and increased labour market participation by women.
The Government issued a record 38,189 employment permits in 2024, up almost a quarter on the previous year, with close to a third of those for people to staff the health sector.
Immigration remains contentious which leaves the State in something of a Catch-22 in terms of delivering on what all polls indicate are the electorate’s priorities.
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Of course, it would help if productivity in the construction sector was not falling. A separate CSO release showed productivity in the sector dipping 1.9 per cent in the three months to end-September and more or less static with the same time last year.
At €37.30, the output per hour in construction is among the lowest in the economy.
More broadly, although productivity in the State rose in the third quarter of last year — by 6.9 per cent — all of that increase was accounted for by the foreign multinational sector where productivity grew by 15.8 per cent. Strip that out, and productivity in the indigenous business sector fell again, by 0.4 per cent.
The gap in output is stark, with the domestic economy delivering output of €61.50 per hour compared to €391.70 an hour in foreign-dominated sectors, such as pharmaceuticals and IT. And with Mr Trump returning to power, there will be understandable concern about that imbalance.
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