In this week’s public policy bulletin we take a look at the latest economic forecasts for Ireland from both the OECD and the ESRI. We also examine the latest economic output statistics from the Northern Ireland Statistics and Research Agency, and the final economic report for Northern Ireland for 2022 from Danske Bank. In addition, we review the latest on pay transparency measures agreed this week between the European Council and European Parliament.
OECD publishes 2022 Economic Survey of Ireland
The OECD has this week published its latest ‘Economic Survey of Ireland’ in which it analysed the State’s structural policies and their potential to improve the economy’s long-term performance and people’s overall living standards. Noting how the economy weathered the worst of the Covid-19 pandemic and is “coping well” with the economic repercussions from the Russian invasion of Ukraine, the report commends the Government for reacting “forcefully to shield households and businesses from both shocks”.
However, the report notes that Irish fiscal policy “is facing a number of pressures in the short run and on its longer-term sustainability” with high inflation putting pressure on Government to increase spending and the recent multilateral agreement on corporate tax likely to “reduce the buoyancy of tax receipts”. Moreover, on housing policy, the report notes that while the Government’s Housing for All strategy is ambitious, its “near-term effects might be limited” due to high construction costs, labour shortages and complex regulations.
ESRI forecasts reduced economic growth for 2023
In its final Quarterly Economic Commentary for 2022, the ESRI forecasts that the Irish economy is set to grow “at a significantly reduced pace” in the near term due to recessionary risks facing the State’s main trading partners, persistent cost of living pressures and increases in monetary policy interest rates.
Anticipating that inflation will average 7.1 percent in 2023, the ESRI estimates that economic growth will likely contract from 8.4 percent in 2022 to 2.2. percent in 2023. Moreover, in assessing the potential prospect of a global economic downturn next year, the report states that the impact of any such downturn in Ireland will largely depend on how the ICT and pharmaceutical sectors are affected as these have been “the main engine of growth” in Irish trade to date.
Northern Ireland Economic Output Statistics published as Danske Bank forecasts recession
The Northern Ireland Statistics and Research Agency (NISRA) has this week published its latest statistics on Northern Ireland economic output. According to the data, output in the services sector increased by 0.1 percent in real terms over the third quarter of 2022 and increased by 0.4 percent over the year. Production sector output increased by 0.5 per cent over the third quarter of 2022 and by 1.9 per cent over the year. By contrast, retail output in NI saw a quarterly decrease of 1.7 per cent in Quarter 3 2022 and a decrease of 5.3 per cent over the year.
When comparing current output with the pre-Coronavirus pandemic levels seen in Quarter 4 2019, Northern Ireland production output is 5.6 percent above its pre-pandemic level and Northern Ireland service output is 4.8 percent above its pre-pandemic level. In contrast, Northern Ireland Retail output remains 6.2 percent below the pre-pandemic level seen in Quarter 4 2019.
Alongside the publication of these statistics however came the latest quarterly report from Danske Bank in which it suggested that Northern Ireland “is likely to experience a recession” in 2023 due to high inflation, low consumer confidence and tighter monetary policy. As a result of this anticipated downturn, the bank estimates that unemployment in Northern Ireland will likely increase from 2.9 percent in 2022 to an average of 3.9 percent in 2023.
European Council and EU Parliament reach agreement on pay transparency measures
According to the agreement reached by European Parliament and EU countries’ negotiators on Thursday, EU companies will be required to disclose information that makes it easier to compare salaries for those working for the same employer.
Welcoming the agreement, the EU Commission voiced its support for the measures which it maintains will provide for more transparency and effective enforcement of the equal pay principle between women and men as well as improve access to justice for victims of pay discrimination.
Originally proposed by the Commission in March 2021, this week’s agreement marked the end to the fifth round of negotiations to agree a common text on the proposal, with some of the key measures agreed including:
- a requirement of employers to provide information about the initial pay level for a role or its range in the job vacancy notice or before the job interview, and
- an entitlement for employees to request information from their employer on their individual pay level and on the average pay levels, broken down by sex, for categories of workers doing the same work or work of equal value
Following this week’s agreement, EU member states ambassadors will have to endorse the agreement which will be followed by the usual adoption process in the Council and European Parliament.