Dr. Robert Kelly:

I am happy to start and then maybe Dr. O'Brien or Mr. Madouros will comment further. I will bring us back to where we were pre pandemic. As the Cathaoirleach said, we had quite a tight labour market at that stage. What we have seen since is an increase in the demand for labour. What happened as we went into the pandemic was that consumption shifted from a lot of services which were closed because of the restrictions towards consumable goods. That actually moved quite a lot of labour and we have seen quite a lot of movement across sectors, particularly towards ICT services. There was a big increase in that sector through the pandemic. We also saw quite a big increase in participation rates, particularly among the younger cohort but also among females aged from 35 to their mid-50s. I spoke earlier about growth in employment and the increased participation rate allowed the labour market to grow without wages also growing. That is almost like the perfect recipe for growth.

When we look towards the future, there may be some capacity to see further participation rate growth and some potential for growth from migration, but, to be honest, it seems more limited. Therefore, as the labour market tightens and we have a continued demand for labour, wages will start to be affected. Our wage projections are up compared with where they were late last year. Most sectors have recovered and are now back to where they were pre pandemic. Overall, employment levels are well above what they were but areas like accommodation and services still have labour shortages. In terms of the point I made earlier about investment, when we talk to firms about growth, the main impediments they reference are finding labour and finding somewhere for that labour to live. When we talk to firms we find there is a big drive vis-à-visaccommodation. They are renting parts of hotels, for example, and thinking about ways to provide accommodation. It really is a challenge for growth in the context of labour. Increased participation in the labour market comes with a housing demand.