State jobs the key driver of employment jump this year

The Bank of Ireland’s Economic Outlook for Ireland 2024/2025, published recently, presents an overall positive picture of the jobs market with a record average of 2.45 million people employed in the first four months of 2024. However, the report reveals that public-sector dominated areas accounted for over 50% of jobs gains, with sectors such as public administration, education, and human health/social work experiencing strong growth. Conversely, multinational-sector employment saw a slight decrease (0.3%) to 300,583 in 2023, marking the first fall since 2009. Indigenous sectors like construction, transportation and storage, and wholesale and retail saw solid gains.

Unemployment is expected to remain low this year, despite a slowdown in new jobs. The report also predicts that housing completions will reach 40,000 next year and surpass 45,000 in 2026. This exceeds the ESRI’s estimated structural demand for homes between now and 2030, given migration levels and other factors.

Despite a revised downward estimate for gross domestic product (GDP) growth for this year and next, the bank anticipates economic conditions to improve this year, thanks to a boost for consumers as wages now outstrip inflation, lifting real incomes. However, the report warns of potential “overheating” due to pressures in areas such as housing, infrastructure bottlenecks, and labor shortages.

Inflation and wage gains in Ireland have not yet stood out from the rest of Europe, according to the report, suggesting little threat to competitiveness at this point. However, it is crucial to monitor this trend to prevent potential competitiveness issues in the future.

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