The two main topics of conversation in global business right now are inflation, and its knock-on risks for the economy, and the scarcity of workers. The Great Resignation is a very real phenomenon in the US, and a factor which has significantly curtailed the economy’s post-Covid bounce-back.
While many of those quitting US workplaces have since found new employment, the overall rate of employment recovery has been lower than expected. In the UK, Brexit and Covid factors have resulted in a crippling shortage of workers and anaemic employment growth. Ireland, however, has completely bucked this global trend and over the past two years has recorded the strongest jobs growth of any EU country.
The number of jobs has surged right across our economy and total employment in the first quarter of this year reached more than 2.5 million, some 160,000 ahead of the pre-Covid level. The public coffers have benefited substantially from this jobs bonanza as income tax receipts are now running one-third above the pre-Covid level. In a world where everyone is asking “where have all the workers gone?” Ireland has clearly found them. This leaves us well placed to both withstand the growing economic headwinds better than most and to continue to make the case for new mobile business investment.
Ireland’s standout post-Covid labour market recovery is evident across a broad range of economic sectors, with just a few notable exceptions. Technology workers are desperately sought after internationally and most tech companies have large numbers of unfilled vacancies. The number of people working in the Irish tech sector, however, has jumped by one-third since the first quarter of 2020.
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Similarly strong jobs growth was also seen in financial services, up 13 per cent, manufacturing up 10 per cent and professional services employment is 9 per cent higher. A common thread in these sectors is that they successfully navigated Covid, either through working from home or in the case of manufacturing, continuing to operate as an essential activity. The most severely Covid impacted sectors, such as retail, construction and the experience economy, have fared less well but are also now in recovery phase.
It is clear, however, that Covid has changed the composition of employment globally. The economy now has a greater share of employment in high-tech sectors and labour shortages are most acute for front-line workers. This churn in employment has clearly been a factor in the buoyant income tax receipts as many workers have traded-up. For many in the experience economy, employment has recovered in line with the removal of restrictions, with hospitality employment regaining about 95 per cent of the 70,000 jobs lost during Covid.
A notable development during Covid was the growth in youth employment (15 to 24-year-olds), which jumped 20 per cent in two years, three times the growth rate for the overall population.
Another emerging feature of the post-Covid labour market landscape is the rapid jump in woman labour force participation, with the State narrowing the gap against the top performing countries such as the Nordics. Covid turbocharged this improvement with the woman participation rate jumping 3.5 percentage points in just two years. Almost two-thirds of all the additional jobs created in this period were filled by women.
More flexible ways of working have most likely been a significant factor in attracting women back into the labour force and at a time of chronic housing shortages, which is limiting our ability to attract new workers into the country, it is more important than ever that further progress is made in growing the participation rate of those already living here. This can be done by investing further in childcare and removing more people from the top rate of tax, which particularly penalises second earners.
Favourable demographics and an ability to attract mobile talent have been key drivers of Ireland’s economic success in recent decades, and our growing workforce has been the envy of other EU member states. We have again outperformed other countries during Covid and have created net new jobs at a spectacular pace. Business, stakeholders and government will need to collaboratively address a range of issues, however, if we are to achieve continued success in a world of slowing labour supply.
Investment in training and upskilling needs to be significantly ramped up. Lifelong learning needs to become the norm, and much more needs to be done to address technical and trade skill shortages across manufacturing, construction and the experience economy.
Research on the Great Resignation in the US has shown that workers have left their jobs in search of improved career prospects in terms of reward and progression opportunities. In Ireland,business and government both need to invest more to provide workers in sectors such as the experience economy with the skills necessary to deliver fulfilling career opportunities rather than just employment.
The global economy is clearly slowing and we are entering an uncertain economic period during which Ireland will not be immune to international trends. We have come out of the Covid crisis in great shape, however, and our success in job-creation, while others have floundered, bodes well for our capacity to withstand the challenges ahead.
Fergal O’Brien is director of lobbying and influence at Ibec
