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Employment, wages and inflation trends in Ireland

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In 2017 with the labour force growing by 1%, the unemployment rate declined to an average rate of 6.7%. 12 of the 14 sectors posted gains, with particularly strong increases in the industry (including construction) and the broad services sector.

This year, employment growth is predicted at a rate of 4.3% per annum. With labour force growth expected to average 1.2%, the unemployment rate is projected to decline to an average rate of 5.6% this year and 4.8% in 2019.

As the economy gets closer to full employment, wages are expected to rise at a faster pace.

With the labour market expected to continue performing strongly and with a positive outlook for domestic demand, wages are likely to rise at a faster pace.

Latest statistics from Central Bank predict a rise of wages by 3.3% on average this and next year. That's compared with a modest pick-up in the average hourly earnings during the second half of last year.

By the end of next year, it is predicted that 99,000 more people will be at work, and average pay is set to rise at a rate equal to around �50 a week.

Wage growth isn't even across all the sectors - ranging from gains of close to 6% last year for high-skilled workers in the sciences and professions.

Lower skilled services sector jobs, storage, and even the growing transport, and construction sectors saw average wages decline.

Central Statistics Office (CSO) data for 2017 showed average weekly earnings rose to �734.60 in the final quarter of last year - up from �716.86 at the end of 2016.

Average pay increases of 3.3% this and next year would take the average to �783.72 a week by the end of next year.

Inflation

As inflation is expected to be modest over the forecast period, at less than 1% a year, these increases will support household incomes via higher real wages.

Potential economic threats

Danny McCoy, the head of the country's main employers' group, Ibec, said that Ireland is eroding its competitiveness quicker now than during the boom. He warned that excessive wage demands and soaring rents - both commercial and residential - were threatening to unravel the State's hard-won recovery.

There are some risks to the projected growth of the Irish economy, including Brexit, uncertainty around the implications of US tax reform, possible changes to the taxation of digital services and the risk of protectionist international trading measures.

Any substantial shift in the regime governing UK-EU trade will be costly, and a further 10% drop in sterling versus the euro would mean a small fall in jobs and wages.

With a strong employment rate and wages rising, Ireland's economy is well positioned to continue on a positive growth trajectory. However, we are not immune to potential threats and need to be cautious of economic risks.