Irish Economy Set to Grow but Gaps Remain

According to finance minister Michael Noonan, Ireland’s economy may grow over 4.0 percent for 2015. The Irish economy expanded 4.8 percent in 2014, which was the nation’s best performance in eight years.

According to finance minister Michael Noonan, Ireland’s economy may grow over 4.0 percent for 2015. The Irish economy expanded 4.8 percent in 2014, which was the nation’s best performance in eight years.

Ireland continues to impress by having the fastest growth rate in the EU, according to the country’s finance minister, and various indicators allowed the government to upgrade growth forecasts for the year. Consumer confidence is at a nine-year high, and the retail sector saw massive gains. Many nations are concerned about the Greek effect, but Ireland has little direct contact with the southern European nation, and the Irish government has a sizeable amount of cash reserves as a buffer against world economic shocks, notes the International Monetary Fund. Ireland may be riding high, but certain issues linger.

First, the IMF warned that Ireland’s deficit reduction goals are far too low compared to overall public debt. The government plans to bring down the deficit 1.7 percent of GDP for 2016. Further, the economy itself still suffers from minor hiccups. Many Irish people believe there is not enough growth taking place outside of urban areas. According to a recent survey, seven out of ten rural Irish citizens believe not enough is being done to foster job creation.

On the plus side, Ireland’s unemployment rate shot down from 10 percent, and youth unemployment fell by 8.7 percent. The economy is contending with a skill shortage, especially in logistics and transportation. Many employers highlight the lack of employees with foreign language requirements, particularly Chinese, which would give companies greater access to emerging markets. French and German are other priority languages that Irish employers need. Ireland still has one of the largest job gaps in the EU, coming in at 9.6 percent, and Ireland’s gap remains in league with two other nations hit hard by economic downturn, Spain and Greece. With that being said, the skills gap does not explain the wage gap when compared to other countries, such as Austria and Norway. In the case of Ireland, minimum pay is falling behind median wages.

Such factors as gender and nationality play heavy roles in the Irish wage gap. For example, when comparing native and foreign workers, over 70 percent of the wage gap is attributed to different skill sets. Many businesses, most notably the Restaurants Association of Ireland, stated that the business community cannot afford any more minimum wage increases. Whether businesses can afford a wage increase is up for debate, but the IMF cautioned against the government’s intention of raising public sector wages next year.