An increase in employment and pay rises forecasted by business leaders

An increase in employment and pay rises forecasted by business leaders

Joblessness is set to drop to less than nine in every 100 people while workers across the country can expect pay rises, business leaders have forecast.

Ibec, which represents employers, said the value of the economy should grow by 5.4% this year.

This would make Ireland the best performing economy in Europe.

In its latest economic outlook report, the business representative organisation said this would lead to unemployment dropping below 9%.

Latest figures show the unemployment rate at just over 10%, with more than 355,000 people signing on the dole.

Ibec credits favourable exchange rates, quantitative easing - releasing more money into the economy - and lower oil prices for what it predicts will be impressively strong growth this year and next.

But Fergal O'Brien, chief economist at Ibec, said the knock on effects will be felt by different workers at different times.

"Economic growth will in time translate into pay increases across the economy, but different sectors and companies are recovering at different rates," he said.

"Two-thirds of domestic services companies and half of traditional manufacturing companies are unable to afford pay increases this year."

A dramatic fall in the value of the euro against other currencies remains a "major bonus" for Irish businesses exporting goods overseas, the report notes. 

"Ireland will benefit more than any other eurozone country because of the high level of trade with the UK and US, but the increased cost of some imports will offset a portion of the benefits," said Mr O'Brien. 

"These higher import costs are also likely to feed through to consumer prices over the coming months."

In its quarterly forecast, Ibec is calling on the Government to prioritise cuts to the marginal tax rate for all workers and "ambitious" investment in capital projects, education and innovation over the coming year.