Ireland to see wage increases in 2024 as inflation falls

Ireland is bucking many global economic trends with rising employment and wages and falling levels of inflation. However, housing shortages and interest rates remain a cause for concern.

This morning’s (24 January) Bank of Ireland Corporate & Commercial Banking Business Outlook 2024 event at the Westbury Hotel in Dublin captured the opportunities and threats the local Irish and global economy can expect in the year ahead.

Bank of Ireland’s Chief Economist Conall Mac Coille noted the potentially positive outlook for Ireland as inflation continues to fall while wages are increasing.

“Wages will be growing faster than inflation in 2024 and that should help consumer spending”

Mac Coille said that Ireland demonstrated considerable momentum coming out of the pandemic. “We saw consumer spending hold up far better than expected, an element of which households were using those savings built up during the pandemic to keep spending.”

Keeping momentum

That momentum dulled somewhat in the second half of 2023 as higher interest rates and energy costs.

“The good news for 2024 is that the real wage squeeze is starting to reverse. Forecasts for inflation are coming down sharply. Wages are starting to increase more sharply than inflation in most economies.”

He warned, however, that the enduring high interest rate environment may yet temper momentum not to mention ongoing issues such as the war in Ukraine which may impact food prices as well as events in the Red Sea.

“But ultimately wages will be growing faster than inflation in 2024 and that should help consumer spending.”

He said that all eyes are on the European Central Bank and whether it will cut interest rates before the summer.

More good news can be seen on the employment and job creation front where the level of employment is 13% above pre-pandemic levels, a phenomenon that he said is just not happening in other countries.

He said that employment grew at breakneck speed in the final quarter of 2023. “When we look at the labour market it really screams labour shortages. The vacancy rate is still extremely high by historical standards. We see employment growing by 1.5% in 2024. That is a slowdown from the rate of 3% per annum we had seen but that is not sustainable. We can see labour shortages becoming a bigger and bigger issue.”

The real elephant in the room of the Irish economy is housing and Mac Coille said that Ireland will need to build 40,000 to 50,000 more houses. “We are not there by any means.”

Global Markets

Global Markets’ Head of Execution Desk Daragh Fitzgerald said that 2023 ended with strong bond and equity markets and indications that inflation is continuing on a downward path.

In terms of foreign exchange (FX)) markets Fitzgerald said there was little volatility in 2023 although the Swiss Franc benefited as it is seen as a safe haven currency during times of geopolitical upheaval as did the US dollar. All eyes are on the US and how the Treasury there will deal with Federal debt which is likely to grow to $50trn from $34trn today, he said.

Fitzgerald noted how globally an uncertain political environment may present risks as many countries have elections amidst a clear shift to the hard right in some countries. Our nearest neighbour the UK is also struggling with the enduring effects of Brexit and continued low growth levels has it teetering on the brink of recession.


Bank of Ireland Director of Sustainability Colette Shirley outlined how Bank of Ireland is committed both at group and commercial level to its own sustainability transition as well as developing tools and products for customers, including the Enviroflex product to help dairy farmers transition to a more climate-friendly future.

“We here at Bank of Ireland are very keen to be at the centre of financing sustainability initiatives and investments,” Shirley said. “We’ve developed a suite of sustainable products that will can be used for all of our customers. We have a green business loan and the GSLS (SCBCI) loan for business and SME customers. And then for our corporate customers, we tend to look at sustainability linked loans and the green capex loan. And we also have a green bond framework, which is pivotal in funding green infrastructure within Ireland, such as green property development and renewables. We’re very keen to, as I say, be part of the sustainability ecosystem. And that’s not just to support our customers in decarbonising their own footprint, but also how they can help to decarbonise their supply chain footprint.”

Food and drinks 

Bank of Ireland Head of Food & Drinks Sector Lucy Ryan indicated there are signs that food inflation is beginning to ease in the EU, but that this could be affected in Ireland by rising wage costs and staffing. “The increase in minimum wage from €12 to €15 represents a massive burden for some operators to factor in as well as the whole value chain.”

She said that it is encouraging to see more and more Irish food businesses pursuing export opportunities as well as innovating and using routes such as e-commerce to get product into the hands of consumers.

Ryan said that this has brought a lot of innovation and creativity into the market.

However, she said that there is still considerable food waste in Ireland – 30% gets wasted globally and of that 60% is wasted by consumers and food service, the rest through manufacturing and distribution. But rather than being a negative this is an opportunity insofar that using quality local ingredients we can repurpose food waste to make other foods.


Head of Agriculture Eoin Lowry warned that a lack of clarity in terms of environmental policy is, however, affecting confidence and investment by farmers in sustainability. He outlined how farmers themselves are very conscious of the environment because they live and work in it, are very mindful of their industry’s impact on achieving carbon reduction targets and are committed to reducing their sector’s impact.

“Agriculture is a hugely important sector for the Irish economy. It’s the oldest sector and it’s the largest sector. It’s a sector that is exposed to many of the things we discussed today from currency to inflation.”

Lowry said that Irish farmers are doing quite well at present from a farm output perspective and they are getting strong prices for their products. “However, when we look at the input costs we have seen significant cost inflation over the past couple of years aligned to what we’ve seen in the wider economy. The key costs with farmers are fertiliser and feed and those have been predominantly driven by energy prices.”


Head of Retail Sector at Bank of Ireland Owen Clifford said how after meeting more than 150 Irish retailers around Ireland in the past year it is clear retailers are cautiously optimistic for the future.

He said Irish retailers are mindful of cost inflation and it is clear that physical retail stores are still important to consumers. As well as this he noted that Ireland is still a very attractive location for international retailers, with notable expansions by LEGO, Mont Blanc, Decathlon, IKEA and Lululemon in recent months.

With new brands creating competition, Irish retailers are grasping the nettle when it comes to improving their physical offering and getting it to work in concert with their omnichannel strategy.

“We’re seeing a diversity of retailers come into the city centre, which is good for the consumer,” Clifford said. “And that’s having a domino effect, it means that there’s more footfall coming into into the high street and other retailers want to have a place in that in the high street, as well.

“And I think on an overall basis, there is an acceptance there that that combination of online and physical store is a really, really important strategy. It’s something that when I discuss with retailers around the country it’s something that they really need to focus on integrating the online and the physical store. Because post-Covid and during Covid, a lot of retailers just had to go online by necessity, but there was actually no integration between the physical store network and the online, they were in silos. So it was actually driving inefficiencies within their business.

“So that’s a real focus for retailers in the next 12 months is integrating that that online and physical store operation.”

Main image at top: Bank of Ireland chief economist Conall Mac Coille

John Kennedy
Award-winning editor John Kennedy is one of Ireland's most experienced business and technology journalists.



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