With the cost of living rising, wage increases are under the spotlight
While January 2022 saw the first modest fall in the consumer price index since February 2021, at 5% the rate of inflation indicates a continuation in the soaring cost of living.
With the highest rate of inflation being seen in transport (+14.1%), as well as housing, water, electricity, gas & other fuels (+12.0%), there are increasing calls across a range of sectors for wage increases to keep pace with this significant rise in day-to-day living costs.
The Government has recently heard calls by People Before Profit for the minimum wage to be increased to €15 per hour to mitigate what they describe as a “cost of survival crisis”, according to the Irish Times.
Likewise, in the private sector, The Irish Congress of Trade Unions (ICTU) has called for wage increases to mitigate soaring inflation, with guidance that employees should seek pay increases of between 2.5% and 4.5% during 2022.
Bank of Ireland’s latest economic pulse survey, published in January 2022, reported that around half of employers and employees are expecting pay rises this year — although, according to the Bank of Ireland chief economist, this expectation may have been about talent shortages in some sectors, rather than a reflection of the cost of living. In addition, data by the Central Statistics Office show that average weekly earnings increased by 6.3% across the public sector and by 5.5% across the private sector in the year to Q3 2021.
The Financial Services Union has been vocal in seeking a pay increase for staff in the industry to keep up with rising living costs. Bank of Ireland has recently agreed to a package of pay increases with unions that would see a total increase of 7% over the next two years. The bank is also to increase entry-level salaries by 6%, which is reported to keep salaries in line with the living wage.
In The Market
Irish job creation continues to be robust
IBM to create 200 new jobs across its existing Irish offices
With more than 3,000 people already employed by the tech company in Ireland, these new roles will be in its research, development and innovation operations and are on top of 400 roles created since 2020.
New jobs for Dublin headquarters of LearnUpon
The cloud-based learning management systems provider is hiring for roles in engineering, marketing, operations, finance, support, customer success and sales. In total, the company is hiring 130 people in Dublin as well as internationally, with hybrid working a key element of all roles.
Telus to create 300 new jobs based out of Cork, Dublin and Mayo
The digital IT solutions provider's roles are said to span tech and customer support, shared services, cloud infrastructure, BI analytics, AI and data annotation. Recruitment is reported to be underway for the new roles, which will include onsite, remote, and hybrid working opportunities.
Specialist boutique broker, McGill and Partners continues to grow after the opening of the Dublin office in October 2021
With the broker expecting to handle $1 billion (€820 million) of premiums through the Dublin office over the next five years, they plan to grow the existing team from 14 to 25 people.
Recent market news
Shake up in corporate restructuring landscape
It was reported recently that 5 restructuring partners in KPMG and Deloitte Ireland have joined forces in opening the Irish arm of Interpath Advisory, a restructuring advisory created in the UK in May of last year.
Calls for the location of Dublin Port to be moved to create more housing and office space
The Docklands Business Forum, which includes Google and Accenture, wants to see Dublin Port moved from its current location at the mouth of the Liffey so that the land (c. 200 hectares) could be put to better use for housing and offices.
The impact of inflation and spiralling house prices on the Irish employment landscape
With inflation a key theme in this month’s newsletter, we’re looking at the impact of the housing crisis on Ireland’s ability to attract and retain talent
Despite a small “drop” in the rate of inflation from the 20-year high of 5.5% in December 2021 to 5% in January 2022, it’s clear that substantial inflation will remain a feature of the Irish economy for some time to come, with the European Commission recently upgrading its forecast for Irish price rises to average 4.6% in 2022.
An Oireachtas report highlights that the COVID-19 lockdowns resulted in a general reduction in consumer prices in 2020, with subsequent high inflation towards the end of 2021. However, the elevated inflation rate is also largely driven by energy commodity price inflation — the fact that Ireland is a “price taker” when it comes to the international energy market means that the country has limited options to control energy prices. A situation, with the worsening geopolitical climate, is unlikely to see significant improvements over the short term.
Whilst the rising cost of petrol, electricity and the increasing price of goods in shopping baskets is starting to bite for the average Irish consumer, an area of life which has seen sustained price rises for many years is, of course, the housing market.
In fact, since 2011, house prices in Ireland have increased by over 85%, while rents have approximately doubled. Since 2013, house price growth has exceeded household income growth by more than 30% and as of February 2022, the “average” Dublin house price is now €500,000.
According to the Irish Examiner, the ESRI has identified the persistence of high inflation - particularly in housing costs - as a key risk to the economy. Many employers cannot get workers for vital parts of the economy, in part because with prohibitive rents and unaffordable house prices many workers are unable to afford to live in Ireland, particularly Dublin. In its Budget presubmission in late 2021, KPMG warned that the housing crisis is hindering Ireland’s competitiveness for the location of mobile talent and the ongoing attractiveness of Ireland as a foreign direct investment location.
Could remote work be one solution to the employment impact of the housing crisis?
With remote work now high on the agenda for job seekers, with more than 50% saying they wouldn’t consider a new position that doesn’t offer hybrid or remote working, this does theoretically provide more freedom in where people need to be based for work.
A recent poll showed that almost half of people in employment in Dublin would consider a house move if they could work remotely, and a quarter would move county. Given the housing crisis is “biting” most significantly in the Capital, such moves may allow Dublin employers to attract talent who live in areas with a lower cost of living.
However, the housing crisis isn’t just a Dublin issue and, with a shift to remote working and people relocating out of the Capital, house prices are surging around the rest of the country — particularly in Munster, Connacht and Ulster.
Therefore, whilst remote work - at least on a hybrid basis - is set to remain a feature of the Irish workplace, alone it’s not enough to help alleviate the pressure being felt country-wide, but particularly in Dublin with spiralling living and housing costs.