Ibec warns further employment growth could lead to labour shortages

Ibec warns further employment growth could lead to labour shortages

Ibec has welcomed the increase in the number of people at work but warned further employment growth could lead to labour shortages here with policy changes needed to address that.

New CSO figures show that the number of people employed in the third quarter of the year rose by 3%, or 66,700, to 2,273,200 - a new record high.

Employment levels have now grown for 25 consecutive quarters.

The CSO's Labour Force Survey - the official source of data for employment and unemployment - also showed that the seasonally adjusted number of people who were unemployed fell by 2,900 to 136,100 in the three-month period.

The figures also show that the seasonally adjusted unemployment rate stood at 5.7% in the third quarter of this year, down from 5.8% in the previous quarter. But the CSO revised upwards the provisional October unemployment rate to 5.5% from its initial reading of 5.3% - a 10 year low.

Alison Wrynn, economist with employers' body Ibec, welcomed the overall figures.

"The positive numbers released today show that employment continues to grow at a steady pace," she said.

"However, the tight labour market is now being experienced by employers, with employee turnover back at 2007 levels.

"For the past few years, skills shortages within certain sectors were the main challenges facing the Irish labour market.

However, with unemployment now close to pre-crisis levels, these skills shortages will soon turn into labour shortages. This will cause employment growth to slow as firms will find it harder to fill vacancies.

She said there were two ways to satisfy the labour demand.

"The first is by increasing participation rates, which are still lower than the UK," she said. "If Irish participation rates converged to these levels it would bring an extra 143,000 people into the labour market. Achieving this would be difficult and would require policy changes such as more affordable childcare.

“The second way is through inward migration. However, attracting these workers will be more difficult than it was during the boom due to the current challenges in the housing market."

However, Pawel Adrjan, economist at global job site Indeed, said the latest data shows that migrants are once again viewing Ireland as an attractive destination, in spite of the cost of housing, particularly in the Dublin area.

“Non-Irish nationals in employment increased by 26,200 compared to a year ago. These non-Irish entrants to the workforce will help employers who are struggling to recruit talent,” he said.

“Over the course of last year, almost 40% of the increase in employment has come from non-Irish nationals, and the pace of growth of inward migration has been accelerating.

"One factor that is likely proving a challenge for inward migrants is the availability and cost of accommodation, particularly in the greater Dublin area."


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