Labour costs still on rise in Ireland

LABOUR COSTS in Ireland rose at a faster rate than the OECD and euro-zone averages in the third quarter of 2009, raising questions about whether Ireland is tackling its high labour cost base.

The OECD’s Quarterly Unit Labour Costs report shows the unit cost of labour in Ireland rose by 0.4 per cent from June to September 2009 compared with the OECD average of 0.3 per cent and a euro-zone average of 0.1 per cent. The quarterly increase follows two quarters of zero growth in Irish labour costs.

On an annual basis, the rise in Ireland’s unit cost of labour was significantly lower than the OECD and euro-zone average – 0.6 per cent compared with an OECD average of 1.8 per cent and a euro-zone average of 3.8 per cent .

A breakdown of the figures shows the unit cost of labour in the industrial sector – which includes mining and quarrying, manufacturing, electricity and gas and water supply businesses – fell by 0.6 per cent on a quarterly basis. Conversely, there was a 0.8 per cent rise in the cost of labour in the markets sector, which spans the wholesale and retail trade, hospitality, transport and communication, financial intermediation and property businesses.

Separately, State agency Fás estimates that 87,000 workers will lose their jobs in 2010, with a further 11,000 job losses taking place in 2011. In its latest labour market commentary, the agency predicts that unemployment will peak at about 13.5 per cent in late 2010.

It added that it is too early to say whether the apparent stabilisation in the national unemployment rate in recent months will persist.

The report states that labour force participation among teenagers and those in the 20-24 age-bracket reduced sharply during 2009. According to Fás, this reflects postponement of entry to the labour force.

The number of apprenticeships offered by employers fell by 59 per cent in 2009, and 69 per cent in the construction sector.

Overall, those working in manual jobs were worst affected by the deteriorating economic situation, with unemployment in the sector rising to 25 per cent or more in 2009 – again worse in the construction sector.