Unemployment remained at a 14-year low of 4.5 per cent in June, unchanged from the previous month, according to the latest official figures. This is down from a rate of nearly 6 per cent a year ago. The last time unemployment was at this level was October 2005.
The Central Statistics Office said the seasonally adjusted number of people classified as unemployed was 109,700 in June compared to 109,400 the previous month. This equated to an annual decrease of 30,500.
The rapid turnaround in employment has been the defining feature of the Republic’s recovery from the 2008 financial crisis. Economists believe a 4 per cent rate here is tantamount to full employment.
Minister for Finance Paschal Donohoe recently warned that the economy may soon face overheating pressures as a result of the return to near full employment.
One of the most obvious signs of overheating is rising wages, and the Economic and Social Research Institute (ESRI) calculates that average hourly earnings grew by over 4 per cent last year and will grow by 4.5 per cent this year. This is nearly twice the rate of growth seen in previous years.
The overheating risk could be quickly overtaken by a disorderly Brexit, which poses a serious threat to the Republic’s export trade.
The Department of Finance estimates that up to 55,000 jobs could be lost in the first two years of a crash-out Brexit, and as many as 85,000 jobs over the longer term. Overall employment is still expected to grow during this period, just not by as much.
"This stark warning is a reminder that the downward trajectory for unemployment that Ireland has experienced could be reversed by external events largely beyond Ireland's control," said Pawel Adrjan, an economist at recruitment website Indeed.
Chief economist at Grant Thornton Ireland Andrew Webb said the Republic's employment success brought talent attraction and housing shortages into sharper focus.
“Although this monthly increase is important to note, there are many signs of continued job creation and a tightening labour market. Of particular note this past month was LinkedIn’s announcement that it plans to recruit 800 more employees by next summer.”
