Despite being recognised as the fastest growing economy in Europe, Ireland has been warned by a new report that pay rises could lead to fewer jobs and a higher unemployment rate.

The European Commission recently released its economic forecast for this year and the next. The report states that it expects Ireland to retain its place as the fastest growing economy in the eurozone for this year and next. The European Union in general is predicted to experience growth and a high rate of job productions.

However, the reports warns that if wage increases in Ireland are not met with an increase in productivity then the nation would lose its competitiveness. The commission has previously warned against the Irish Government channelling the unexpected rise in tax intake towards increased wages and spending.

The Government has to reduce the amount of money it has to borrow to pay for the running costs of the country. The report states that one the main risks towards achieving this goal is a possible increase in public sector pay.

Unemployment figures are decreasing slowly towards single-digit figures. The number of people out of work is expected to fall at a faster rate next year but isn’t expected to get any lower than the European average of 9.2%.

However the European Trade Union Confederation (ETUC) has urged the commission’s conclusions to be ignored. Bernadette Ségol, the ETUC General Secretary, said: “If the same policies of austerity and wage devaluation are repeated, the same results will follow, and the recovery will falter again.”

“Europe needs a sustainable recovery, not just a temporary bounce,” she added. “Europe still needs a substantial investment plan to transform the recovery into a robust process.”

Currently it is estimated that jobs are being created in Ireland at twice the rate of the population growth. If you’re jobhunting make sure to take a look at our Jobs Boards while we also offer numerous services to employers.