Accepting the new normal

Thankfully we are not going to see a new economic boom, writes Fionnuala Carolan, on the grounds that what goes up, must come down


Blog - Fionnuala Carolan

11 February 2015

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The recently released IBEC Q1 Retail Monitor predicts that there will be growth of 2.7% in the economy this year. There is no doubt that this is good news. The problem is that when we hear about growth, it’s easy to assume that our fortunes will revert to how they were during the boom years. What is important to remember is that the boom years were an extraordinary time and that type of growth will probably never be repeated in our lifetimes. So when the government and economists speak of a recovery, it will not manifest itself in the form of a new boom and we should be thankful for that. No one should want to see that kind of consumer behaviour repeated because it is not sustainable and it is wise to remember that what goes up must come down. The new normal, as Dan White writes about on page 12, is what we need to get our heads around. Slow growth of a few percent a year is healthy, realistic and sustainable.

IBEC was keen to warn employers about reacting too quickly to the news of growth by increasing wages or other controllable expenses. This is irritating for employees who have taken a massive hit on their take-home pay throughout the recession. However if wages begin to rise too quickly again, it will put considerable pressure on small businesses to compete. Many SMEs are only finding their feet again after surviving the recessionary years and are still being subjected to high rents, rates and PRSI charges.

IBEC’s group director Tom Burke warns employers that certain unions are suggesting considerable pay increases and creating unrealistic expectations for employees, which he says will only result in “harmful discord in workplaces and could force companies to rethink recruitment plans”.

Over 50,000 retail workers lost their jobs since 2007 and retail sales fell by a quarter. Retail has been one of the last sectors to see any recovery and it would be a shame to jeopardise this slow growth by promising too much too soon.

If employers want to be fair to their loyal employees, they should consider mirroring the growth percentage of the business, with similar percentage wage increases. Although these increases may seem paltry, the action itself speaks volumes. A small token goes a long way towards improving employee morale. It will also be an incentive for employees to stay motivated and help you grow the business. Barry Whelan of Excel Recruitment offers tips on how employees can negotiate a pay increase on page 62.

Our cover story in this issue, is Gillian Hamill’s interview with the Junior Finance Minister, Simon Harris. He speaks about the government’s plans to make life easier for SMEs by offering them increased access to credit and by looking at reforming the tax system for the self-employed. He also discusses the plans to completely abolish unemployment by 2018. To read the article in full turn to page 16.

Talk of increased consumer sentiment, growth in the economy and with a grand stretch in the evenings, there is definitely an air of optimism creeping in and I’m sure you’ll agree, it’s been a long time coming!

Fionnuala Carolan,






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