In this week’s public policy bulletin, we take a look at the Government’s Annual Employment Survey for 2022 as well as the latest inflation statistics for both Ireland and the wider Euro zone. In addition, we examine current gender pay gap trends, the latest Oireachtas Committee hearing on the effect of housing shortages on SME’s and work quality statistics from Northern Ireland. Record employment levels in companies supported by Enterprise Ireland, IDA Ireland and Údarás na Gaeltachta This week the Government released both its Annual Employment Survey for 2022 which found that jobs in client companies of Enterprise Ireland, the IDA and Údarás na Gaeltachta were now at their highest ever level, at over 529,144 jobs (up 7.3 percent on 2021 figures). According to the report, overall employment in FDI firms increased by 8.2 percent since 2021, with an additional 23,854 new jobs created. Meanwhile, employment in Irish-owned firms rose by 6 percent, recording an increase of 12,137 in new jobs since 2021. ICT services was the fastest growing sector with over a third (36.1 percent) of FDI companies operating in this space while Irish owned firms also saw the strongest growth in ICT with a 7.9 percent increase since 2021, or 2,082 full time jobs. Irish rate of inflation increases in February while Euro zone inflation falls less than expected The annual rate of inflation in Ireland is estimated to have risen to 8 percent in the year to February 2023 – an increase of approximately 1.4 percent since January. According to the CSO’s latest Flash Estimate for the Harmonised Index of Consumer Prices, while energy prices are estimated to have decreased by 0.2 percent in February, food and transport costs both rose in the same period by 1.2 percent and 3.6 percent respectively. Meanwhile, the annual rate of inflation across the euro area slowed marginally to 8.5 percent in February from 8.6 percent in January, according to an initial estimate from Eurostat. According to the findings, sectors across the Euro-zone with the highest prices currently include food, energy and services. Report finds gender pay gap of 12.6 percent across 500 companies An analysis of up to 500 firms based in Ireland that published gender pay gap reports in December has found that a mean gender pay gap of 12.6 percent exists. As set out in a report published this week by PwC Ireland, while the reasons for the gap vary, a key factor appears to be the higher number of men working in certain sectors. Specifically, the proportion of women to men tends to be lowest in the engineering, construction, manufacturing and technology sectors. By contrast, the lowest gaps were recorded in retail, health and charity organisations. The full report is available here. Housing shortages labelled the “greatest challenge” currently facing SME’s at Oireachtas hearing In its opening statement at a hearing of the Joint Oireachtas Committee on Enterprise, Trade and Employment this week, Chambers Ireland asserted that the “greatest challenge” facing small and medium enterprises this year is the lack of available talent which is driven by affordable and appropriate housing being unavailable across most of the country. Noting how the domestic market has been fundamentally constrained by this lack of housing, the organisation outlined how “although we are growing as an economy, we are not growing at the pace we could grow” if the housing supply issue was to be adequately addressed. Chartered Accountants Ireland last week launched a joint paper with housing charity Focus Ireland on how to improve supply in the private rental sector. Latest work quality in Northern Ireland statistics released  The latest statistics on work quality in Northern Ireland was published this week by the Northern Ireland Statistics and Research Agency. The publication provides statistics for eight work quality indicators: earnings, secure employment, neither under/over employed, job satisfaction, meaningful work, career progression, employee involvement in decision-making and flexible working. Finding that five of the eight work quality indicators have had significant increases since 2020, notable differences however emerged when analysing by age and sex. For example, while career progression has been consistently higher for employees aged 18 to 39 than those aged 40 and over, meaningful work has also been consistently higher for female employees than for male employees with the difference increasing from two percentage points in 2020 to eight percentage points in 2022. 

In this week’s public policy bulletin, we take a look at the latest statistics on employment levels and pension coverage in the State. We also examine the UK government’s launch of a new investment in Northern Ireland’s cyber security industry as well as the latest Labour Force Survey results for the region. In addition, we review inflation levels across the Eurozone as reported this week by Eurostat. Record employment levels reported in fourth quarter of 2022 According to the latest Labour Force Survey statistics released by the CSO, 68,600 new jobs were created in Ireland in the 12 months to quarter 4 2022. Total employment currently stands at 2.57 million – representing the highest number of persons employed in the State since the CSO’s Labour Force Survey began in 1998. The latest survey also outlines how the regions have largely driven the current jobs growth - with employment outside of Dublin increasing by 61,500 in the year to quarter 4 2022. While most economic sectors had greater numbers in employment in Q4 2022 than when compared to pre-pandemic levels, some sectors saw decreases in employment such as education (down 3.2 percent) and agriculture (down 5.7 percent). Two thirds of workers have some form of pension coverage outside of State pension Two thirds of people aged between 20 and 69 have some form of private pension on top of the State Pension, according to a new report from the CSO. Of this cohort, 73 percent have an occupational pension only, 10 percent have a personal pension only while approximately 17 percent report having both. Of the occupational schemes, 62 percent were defined contribution, 32 percent were defined benefit and 6 percent were hybrid (i.e. a combination of defined benefit and defined contribution type schemes). Overall levels of pension coverage however remain largely unchanged from 2021, with the greatest level of coverage being seen amongst workers aged 45-54 (77 percent) and the lowest degree of coverage reported amongst workers aged 20-24 (31 percent). UK government announces £18.9 million investment in Northern Ireland’s cyber security industry The UK Government has announced an £18.9 million investment in NI’s Cyber Security industry, including £11 million Government funding through the New Deal for Northern Ireland, to develop a pipeline of cyber security professionals in NI as well helping businesses and start-ups develop new opportunities. The investment will see the creation of a new Cyber-AI Hub at the Centre for Secure Information Technologies (CSIT) in Belfast designed to create jobs and support the research and development of AI-enabled cyber security projects in the region. In addition, the programme of investment will involve the creation of a Doctoral training programme and Masters degree bursaries designed to deliver on the Government’s pledge of creating 5,000 cyber professionals in NI by 2030. Latest Northern Ireland NEET statistics released (young people who are not in education employment or training)   According to the latest Labour Force Survey released by the NI Statistics and Research Agency, there were an estimated 18,000 young people aged 16 to 24 years in Northern Ireland who were not in education, employment or training (NEET) in October to December 2022. This was equivalent to 9 percent of all those aged 16 to 24 years in the region. By comparison, the proportion of young people who were NEET in the UK during the same period was 11.6 percent. In October to December 2022 there were an estimated 13,000 young people aged 16 to 24 years in Northern Ireland who were NEET and who were not looking for work and/or not available to start work (economically inactive). Rate of inflation reduces across Euro zone in January Inflation in the Euro area stood at 8.6 percent in January 2023, down from 9.2 percent in December according to Eurostat, the statistical office of the European Union. Overall, annual inflation fell in eighteen Member States while rising in nine. The lowest rates were registered in Luxembourg (5.8 percent), Spain (5.9 percent), Cyprus and Malta (both 6.8 percent) while the highest rates were recorded in Hungary (26.2 percent), Latvia (21.4 percent) and the Czech Republic (19.1 percent). According to the Eurostat findings, inflation in Ireland (as measured by the Harmonised Index of Consumer Prices which allows for comparisons across the EU) stood at 7.5 percent. The full report can be accessed here.

Paper has been submitted to Government and calls for accelerated delivery of social, affordable, and cost rental housing   Immediate short term tax measures vital to stem the flow of a record numbers of families becoming homeless  23 February 2023 – Focus Ireland and Chartered Accountants Ireland have today launched a briefing paper which calls on the Government to introduce targeted measures to keep small-scale landlords in the private rented market to help ease the housing crisis.   The new paper gives further credence to the report by the National Economic and Social Council (NESC) at the end of last week which recommended the Government consider further action to improve the tax treatment of landlords.   While Focus Ireland and the Institute agree that the long-term government objective of increasing the delivery of social, affordable, and cost rental housing is the correct course of action, the joint briefing paper highlights the short-term challenge presented by the large-scale departure of private landlords now taking place.   The paper calls for urgent measures to address this mismatch in supply. It sets out seven fully costed proposals primarily using tax policy as a lever to encourage small-scale landlords to remain in the residential rental market in the medium to long term and help to prevent homelessness.   Commenting Pat Dennigan, CEO of Focus Ireland said:  “One of the biggest causes for families becoming homeless in recent times is that they are losing their homes in the private rented market as landlords are selling up and leaving the market. Focus Ireland believes that the Government must take action to encourage small-scale landlords to stay in the market as this would help to cut the record number of households becoming homeless. Urgent policy responses are required which should be targeted at landlords who are considering evicting their tenants to sell over the next number years, convincing them it is in their interest to stay, or not to evict when they are selling.”   Commenting Dr Brian Keegan, Director of Public Policy, Chartered Accountants Ireland said: “Small landlords are an essential feature of a fully functioning residential property market, and properties owned by these landlords are more likely to be in regional, less densely populated parts of the country, providing much needed rental stock in areas that are not as attractive to institutional investors. Renting as an investment is becoming less attractive for these smaller landlords however. Increased regulation in recent years has been driven by efforts to provide greater security for tenants in the face of a shortage of rental accommodation, but in many cases, these have increased the likelihood of small landlords leaving the market, exacerbating problems they were intended to remedy.”   “Small-scale landlords cite the restrictive taxation obligations on any rental profits accruing to them. After settling taxes on any profits, some small landlords face a current loss on rental income. We are asking for Government and its agencies to consider our proposals for the small-scale private landlord to encourage their continued involvement in the market to ensure tenants are protected.”   The proposals outlined in the joint briefing paper include:  Increase wear and tear rates from 12.5 percent to 25 percent per annum to facilitate investment in the maintenance of properties and encourage better standards where renovations do not result in the termination of an existing tenancy under section 34 and the property remains in the private rental market for the following five years.  100 percent capital allowances for retrofitting costs in the year of work where landlords retrofit a property to improve its energy rating, where renovations do not result in the termination of an existing tenancy under section 34 and the property remains in the private rental market for the following five years.  Parity in taxation of corporate and individual landlords: a flat rate of 25 percent on Case V income for small landlords who opted to become ‘professional landlords’ by waiving their rights under section 34 of the Residential Tenancy Act (2014), giving additional security to their tenants.   Deduction for LPT: allow local property tax as a deduction against rental income.   Align allowable rental expenses with normal trading deductions: expenses available for deduction against rental income should become less prescriptive and more in line with normal trading deductions. In the context of taxing rental profits earned by an active class of professional landlords, the broader based deduction for financing costs under Case I principles should apply.   Succession reliefs: Professional landlords should be given access to succession reliefs, such as CGT retirement relief available to other business owners, to improve the long term investment proposition of the residential rental business.   CGT relief for rental properties acquired with tenants-in-situ: CGT relief of four percent per annum would accrue on an annual basis for the length of time the asset remains as a rental property.  Download the paper here.  ENDS     

In this week’s public policy bulletin, we examine the rise in consumer prices recorded by the CSO together with the latest statistics on the Irish rental market. We also take a look at the recommendations to Government made by the National Economic and Social Council on the potential for improving the tax treatment of landlords. In addition, we review the latest labour market statistics for Northern Ireland as well as taking a look at the European Commission’s 2023 Winter Economic Forecast. Consumer prices rose by 7.8 percent over the 12 months to January 2023 According to the CSO’s latest Consumer Price Index released this week, prices for consumer goods and services in January 2023 increased by 7.8 percent on average when compared with January 2022. However this was down from 8.2 percent recorded in the 12 months to December 2022. While prices have been rising on an annual basis since April 2021 (with annual inflation of 5 percent or more recorded in each month since October 2021) this is the third straight month where the annual rate of inflation has fallen. The most significant increases in the year were seen in Housing, Water, Electricity, Gas & Other Fuels while price decreases were recorded in education. You can read the full statistical release here. Rents increased 13.7 percent nationwide during 2022 Rents nationwide have increased by 13.7 percent in the past year according to findings produced in the latest Daft.ie Rental Price Report to Quarter 4 2022. In what the report labels a “grim” rental market starved by a lack of supply, the total number of rental properties available in Ireland stood at below 1,100 as of 1 February. This is down 22 percent on the same date last year and represents approximately one quarter of the average level of availability seen during 2015 to 2019. At €1,733 per month, the average rent at the end of last year was 126 percent higher than the low point of €765 recorded in late 2011. The full report may be accessed here. National Economic and Social Council (NESC) advises reform of the tax treatment of landlords This week the NESC published a report into the private rental sector in which it argued that there may be a case for providing ‘a more favourable tax treatment for landlords’ to tackle the current shortage of supply in the market. Noting that ‘a targeted response beyond seeking to increase total supply of all kinds of housing’ is required to address current rental property shortages, the report suggests that any new tax measures could be linked to an improved security of tenure for tenants. Moreover, the report recommends that efforts to bring vacant properties back into use should be 'stepped up' and offers the best way to alleviate the rental crisis in the short term. Latest Northern Ireland labour market statistics released The latest labour market statistics release for Northern Ireland showed that payrolled employee numbers and earnings have both increased over the past year. The number of employees receiving pay through HMRC PAYE in NI in January 2023 was 785,400, a 0.1 percent increase over the month and a 2.0 percent increase over the year. Earnings from HMRC PAYE indicated that NI employees had a median monthly pay of £2,012 in January 2023, an increase of £4 (0.2 percent) over the month and an increase of £76 (3.9 percent) over the year. Meanwhile, the claimant count rate remained unchanged for the ninth consecutive month with the seasonally adjusted number of people on the claimant count standing at 35,900 (3.8 percent of the workforce) as of January 2023. EU economy set to avoid recession according to Winter 2023 Economic Forecast According to the European Commission’s Winter Economic Forecast released this week, the bloc will ‘narrowly avoid the technical recession that was anticipated at the turn of the year’. Noting how despite exceptional adverse shocks, the EU economy avoided the fourth-quarter contraction projected in its previous Autumn Forecast, the Commission’s current projections have now lifted the growth outlook for this year to 0.8 percent in the EU and 0.9 percent in the euro area. Moreover, the forecast also slightly lowers the projections for inflation in the EU for both 2023 and 2024 with inflation now expected to fall to 6.4 percent in 2023 (down from 9.2 percent in 2022) and to 2.8 percent in 2024. In the euro area, it is projected to decelerate from 8.4 percent in 2022 to 5.6 percent in 2023 and to 2.5 percent in 2024.

In this week’s public policy bulletin, we review a report on the current state of the residential rental market as well as the findings from the latest Personal Loans Report issued by the Banking and Payments Federation Ireland. In addition, we take a look at the Government’s transfer of further Exchequer revenues into the National Reserve Fund, the launch of a government consultation on cryptoasset regulation in the UK, and the latest statistical report on real household income from the OECD. Up to 21,000 property transactions linked to landlords exiting rental market in past year According to a new report from Sherry Fitzgerald, approximately 21,000 property transactions last year involved investors exiting the rental market. Publishing the findings of its latest Residential Market Review, the estate agent outlined how for every investor entering the rental sector during 2022, another three investors left. The report sets out how this trend is having a perilous impact in terms of rental supply, and “without significant Government intervention we can expect to see even lower stock levels in the rental market in the year ahead”. You can access the full report here. €1.6 billion in personal loan drawdowns made in 2022 The Banking & Payments Federation Ireland (BPFI) this week published its Personal Loans Report for Quarter 4 2022 which showed a total of €1.6 billion in personal loan drawdowns having been made in Ireland during 2022. This figure marks an almost 19 percent increase on the previous year and the highest figure since the data series began in 2020. In terms of loan types, some €126 million was drawn down in home improvement loans in Q4 2022, 8.7 percent more than in the same period of 2021. The value of personal loan drawdowns for car or auto finance rose by 18 percent year on year to €126 million while the value of loans for other purposes which includes loans for education, holidays and weddings increased by 16.8 percent year on year to €142 million.  Government transfers €4 billion to National Reserve Fund Following a decision made as part of Budget 2023 last September, the Government this week announced the transfer of €4 billion of Exchequer funds into the National Reserve Fund. The move follows the transfer of €2 billion last year and brings to €6 billion the total amount of cash now sitting in the so-called rainy-day fund. The approach of capitalising the reserve fund is endorsed by the Department of Finance in its analysis entitled “De-Risking the Public Finances – Assessing Corporation Tax Receipts” published in September 2022. It is also supported by the Irish Fiscal Advisory Council and all other institutions that provide economic advice to Government. Launch of government crypto-asset consultation The UK government has this week launched a consultation paper on its proposals to regulate cryptoassets.  According to the paper, the proposals seek to deliver on the ambition to place the UK’s financial services sector at the forefront of cryptoasset technology whilst managing potential consumer and stability risks. The government’s proposals intend to include the regulation of cryptoassets within the overall regulatory framework established by the UK’s Financial Services and Markets Act 2000 (FSMA) thereby “taking advantage of the confidence, credibility and regulatory clarity” that this existing system affords. Stakeholders are invited to submit responses to the consultation before the process closes at 9am on 30 April. Real household income increased for first time since 2021 across OECD Real household income per capita grew by 0.2 percent in the OECD in the third quarter of 2022, the first rise in real household income since the first quarter of 2021. However, household income results were mixed on a country-by-country basis according to the latest OECD Growth and Economic Wellbeing Report. Of the 21 countries for which data is available, nine recorded an increase in real household income per capita whilst twelve recorded a fall. Austria had the largest increase (10.1 percent) as payments associated with the government’s environmental tax reform and cost-of-living assistance boosted household incomes. Of the G7 economies for which estimates are available, France, Germany and Italy all recorded growth in the third quarter of 2022, with France seeing the highest increase at 0.8 percent. By contrast, real household income per capita fell in Canada and the United Kingdom and was flat in the United States.

In this week’s public policy bulletin, we take a look at the latest ECB interest rate hike together with economic statistics for the Eurozone from Eurostat. We also examine the latest on the Government’s Ukraine Credit Guarantee Scheme as well as the CSO’s unemployment rate statistics for January. In Northern Ireland, we take a look at current enrolments in the Essential Skills programme, and in Europe we outline details of the EU Commission’s new approach to enforcing GDPR compliance across the bloc. ECB raises interest rates again The European Central Bank has again hiked its interest rates – this time by half a percentage point, raising its headline lending rate to 3 percent. Moreover, the ECB signalled its intention to raise interest rates by a further 0.5 percent next month.  In a press release issued by the bank, the Governing Council outlined its view that “keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations”. The bank confirmed its intention to “stay the course in raising interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to its 2% medium-term target”. You can read the full press release here. Eurozone economy avoids contraction as a result of Ireland’s strong performance According to Eurostat, the official statistical office of the EU, the Eurozone avoided recession last year largely thanks to a better-than-expected economic performance from Ireland. Despite growth contracting in Germany (Europe’s largest economy) by 0.2 percent, the Eurozone’s overall growth figure for last year rose to 3.5 percent – outpacing both the US and China. Without Ireland, the eurozone economy would have contracted by approximately 0.1 percent. You can read the full statistical release here. BOI announced as first official lender in Ukraine Credit Guarantee Scheme Bank of Ireland have been announced as the first official lender to the market for the Ukraine Credit Guarantee Scheme. Launched as part of the government’s strategy to assist businesses effected by the crisis in Ukraine, the Ukraine Credit Guarantee Scheme will facilitate up to €1.2 billion in lending to eligible businesses. Some of the key features of the new scheme include: no personal guarantee or collateral required for loans up to €250,000 loans of up to €1 million, for terms of up to 6 years reduced interest rates (vs standard market rates) available until 31 December 2024 and includes famers, fishers and small mid-caps The scheme is open to SMEs, primary producers and small mid-caps (defined as businesses with up to 499 employees). In order to qualify for the scheme, the borrower will have to declare that costs have increased by a minimum of 10 percent on their 2020 figures and that the loan is being sought specifically as a result of difficulties being experienced due to the Ukraine crisis. Further information on the scheme can be found om the Department of Enterprise, Trade and Employment website. Unemployment rate for January 2023 was 4.4 percent – CSO The latest statistical release from the CSO on unemployment in Ireland recorded a rate of 4.4 percent in January 2023, a drop from the rate of 4.9 percent seen in January 2022. Breaking down this figure in more detail, the seasonally adjusted number of persons unemployed totalled 118,300 in January 2023 – with 58,700 of these comprising unemployed males and 59,600 comprising unemployed females. The report also recorded an increase in youth unemployment (persons aged 15-24) which rose to 10.4 percent, a 0.2 percent rise since December of last year. The full statistical release can be found here. Enrolments in ‘Essential Skills’ courses up after several years of decline – NI Department of the Economy Enrolments in essential skills courses, funded by the Department of the Economy NI, have increased in 2021/22 following a number of years of declining registrations. Established as part of the Department’s strategy to improve adult literacy, numeracy and ICT skills, essential skills courses are delivered by accredited tutors working in Further Education (FE) Colleges, private training providers and community organisations. According to a bulletin issued by the Department this week, the previous decline in enrolments arose for a variety of reasons, including a dip in the 16-19-year-old population (the main age group taking essential skills courses), improvements in GCSE grades, as well as Covid-19 related grading arrangements/restrictions. Figures show that while the number of enrolments fell each year from 30,430 in 2017/18 to 23,825 in 2020/21, an increase of 0.5 percent was recorded in 2021/22 bringing new enrolments up to 23,932. European Commission steps up reporting requirements for data protection regulators Following a complaint from the Irish Council of Civil Liberties (ICCL) to the European Ombudsman, the EU Commission has this week committed to monitoring the progress of every large-scale GDPR case that arises across Member States. According to the Commission, it will now measure how long each procedural step in a case is taking by requesting regular reports (every 2 months) on what steps the relevant data protection authorities are taking to progress the case. While the results of the reviews will be strictly confidential, the specific kinds of data received will be published by the Commission.