Work permit changes to alleviate staff shortages in sectors

More chefs from outside the country will be eligible for employment permits allowing them to work in Ireland, as a result of changes announced by Minister for Business, Enterprise and Innovation Heather Humphreys today.

The move, which follows a review of labour market requirements, is aimed at addressing staff shortages in the hospitality sector.

Other modifications to the system are also being made to increase the supply of workers from outside Ireland coming to work in construction, health and road haulage.

“A strong economy and full employment present their own challenges as labour shortages in certain sectors demonstrate,” said Ms Humphreys.

“I am pleased to announce these changes, which will fill immediate gaps in businesses across a range of sectors.”

At present, in order for workers from outside the European Economic Area to work legally here, they must have employment permits.

These occupational permits are managed through lists that both define critical skills and rule out certain occupations as ineligible.

Twice a year, the Government reviews these lists by reviewing evidence and submissions from interested parties, before adding and removing occupations as labour market supply and demand dynamics require it.

The latest review, which comes into effect from 1 January next, has proposed changes to address immediate labour shortages in key sectors of growth, including health, construction, hospitality and road haulage.

Chefs will no longer have a quota of 650 permits and all grades including commis chefs, who had previously been restricted, will be eligible for permits.

The move will provide a boost to the hospitality sector, which employs 152,000 people, and is struggling to attract and retain sufficient numbers of kitchen staff.

All nurses, not just those with a degree, will also be able to qualify for a Critical Skills Employment Permit.

This system allows permit holders the right to immediately bring their family with them and gives them a right to work.

It also offers a fast-track route to long-term residency after two years.

Until now, nurses from outside the EEA with a diploma rather than a degree could only access a General Employment Permit, which carries fewer benefits.

The Government has also decided to add further professional occupations in the construction sector to the Critical Skills Employment Permit list, and remove roles such as foreman, architectural technician and construction safety officer from the ineligible list.

A further 200 permits will also be made available for heavy goods vehicle drivers, to address shortages in the transport and logistics sectors.

“The sectors involved have had to prove that they are making every effort to recruit staff domestically and train up workers,” Ms Humphreys said.

“Ultimately this is the primary way of dealing with labour shortages in the longer term.”

The chief executive of the Restaurants Association of Ireland has welcomed the moves by Ms Humphreys.

Speaking on RTÉ’s Morning Ireland, Adrian Cummins said it was a good news story for the hospitality industry and that the RAI has been lobbying for it for some time.

He said around 5,000 chefs are needed each year but only around 1,800 are trained in Ireland each year, so there is a shortfall.

He said a cap on two work permits per premises was lifted which was welcome.

The RAI would now turn their attention, Mr Cummins said, to addressing a shortage of front-of-house staff, as an overall skills shortage still remained.

He said it wanted to address the fact that not enough young people are interested in going into work in the hospitality sector.

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Planning permissions for apartments soar over 80% – CSO

New figures from the Central Statistics Office show that planning permissions for apartments jumped by 80.2% in the third quarter of this year compared to the same time last year.

The CSO said the number of planning permissions granted for homes in the third quarter stood 10,590 – 5,656 of these were for apartments and 4,934 were for houses – an increase of 1.1%.

Today’s figures show that one-off houses accounted for 30.7% of all new homes granted planning permission in the three months from July to September. 

They also show that 340 planning permissions were granted for new buildings for agricultural purposes, down from 364 the same time last year.

Meanwhile, total floor area planned for commercial buildings reached 364,000 square metres in the third quarter of 2019, an annual increase of over 73%.

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European new car registrations up 4.5% in November – ACEA

European passenger car registrations rose 4.5% in November, marking the third consecutive month of growth this year, thanks to robust demand in Germany and France and a rebound in demand for VW, Audi and Porsche. 

Registrations rose to 1,210,860 million cars in the countries of the European Union and the European Free Trade Agreement (EFTA), statistics published by the European Auto industry association ACEA showed. 

Carmakers recovered lost ground from November last year, when registrations were depressed by the introduction of tough anti-emission rules, known as the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).

These new rules forced some brands to re-certify their vehicles. 

As a result Volkswagen Group saw registrations of the VW brand jump 9.3%, outpacing rivals Opel/Vauxhall which saw sales fall 22.1% and Peugeot, which saw registrations drop 1.2% in the same period. 

November registrations of Renault branded cars were up 11.3% with Fiat registrations increasing by 3.1%, ACEA statistics showed. 

Among the premium brands, demand for Audi increased by 39.4% and Porsche’s new registrations jumped 282.9%, ACEA said. 

A 9.7% overall rise in Germany and an 0.7% increase in France helped to outweigh a 1.3% drop in registrations in Britain, ACEA statistics showed.

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European new car registrations up 4.5% in November – ACEA

European passenger car registrations rose 4.5% in November, marking the third consecutive month of growth this year, thanks to robust demand in Germany and France and a rebound in demand for VW, Audi and Porsche. 

Registrations rose to 1,210,860 million cars in the countries of the European Union and the European Free Trade Agreement (EFTA), statistics published by the European Auto industry association ACEA showed. 

Carmakers recovered lost ground from November last year, when registrations were depressed by the introduction of tough anti-emission rules, known as the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).

These new rules forced some brands to re-certify their vehicles. 

As a result Volkswagen Group saw registrations of the VW brand jump 9.3%, outpacing rivals Opel/Vauxhall which saw sales fall 22.1% and Peugeot, which saw registrations drop 1.2% in the same period. 

November registrations of Renault branded cars were up 11.3% with Fiat registrations increasing by 3.1%, ACEA statistics showed. 

Among the premium brands, demand for Audi increased by 39.4% and Porsche’s new registrations jumped 282.9%, ACEA said. 

A 9.7% overall rise in Germany and an 0.7% increase in France helped to outweigh a 1.3% drop in registrations in Britain, ACEA statistics showed.

€6 billion of land sales recorded in the last decade

New figures from property consultants CBRE Ireland show that a total of 73 land sales were completed here during 2019.

Those 73 sales totalled more than €1.2 billion.

This was down on last year’s record result of almost €1.5 billion from 125 deals.

CBRE said the 2019 figures still represented a strong result for the property market, especially given the fact that land prices have stabilised during the last 12 months. 

CBRE said its research shows that almost €6 billion of land sales have been completed in the Irish market in the last decade.

45% of these occurred in the last two-year period alone.

Peter Garrigan, Director in the Development Land team at CBRE, said that activity in the development land market during 2019 has been steady with a number of large sales having completed in the last quarter bringing total spend during the year to more than €1.2 billion. 

He also said that a number of land sales will now not complete until the New Year, meaning there will be a carryover into 2020. 

“We continue to witness strong demand for well-located sites although there have been clear signs of stabilisation emerging in terms of land prices during the last year,” he added.

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Credit unions facing challenges despite strong reserves

A new report on credit unions show that they continue to face financial challenges in terms of income generation and return on assets due to the low interest rate environment and high cost metrics. 

But the report from the Central Bank said that on a positive note, the credit union sector continues to demonstrate a strong overall reserves position. 

The report shows that credit unions’ total investments increased by 58% from 2011 to 2019 to €12.5 billion, mainly due to increased member savings. 

But average returns on investments have been in steady decline, decreasing from 3.1% in September 2012 to 0.9% by September 2019.

The number of credit unions overall has reduced since 2011, falling from 406 to 241 this year.

The Central Bank said that according to credit union sourced data, combined membership totals about 3.4 million. 

The credit unions’ total assets also continue to expand, growing by 31% from €14 billion in 2011 to €18.3 billion this year. 

Today’s report also shows signs of a change in loan portfolio profiles, with increased levels of longer-term lending and a net increase in the total value of new loans advanced since late 2015. 

It noted that the current sector loan to asset (LTA) ratio averages 28%, while the sector’s cost-income ratio has risen from 46% to 86% between 2011 and 2019.

Registrar of Credit Unions Patrick Casey said the trends highlighted in the Central Bank’s latest financial conditions statistical release reflect the significant challenges that credit unions have faced over the 2011 to 2019 period, due to a changing nature of retail financial services and the low interest rate environment. 

“Going forward, as those challenges will likely persist, credit unions need to take greater ownership of their business model development in order to achieve sustainability for members,” Mr Casey said. 

“Irish credit unions continue to enjoy the loyal trust of members. This trust, coupled with the sector’s co-operative member-centric ethos, remains a competitive difference upon which to evolve business models and meet ongoing commercial and competitive challenges,” he added.

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Economy sees GDP growth of 1.7% in third quarter

The economy – as measured by gross domestic product – grew by 1.7% in the third quarter of this year from the second quarter.

GDP stood 5% higher than it was a year ago, new figures from the Central Statistics Office show today. 

The CSO also said that quarterly GDP growth for the second quarter was revised to -0.1% from an initial estimate of 0.7% with the annual figure amended to 4.9% from 5.8%. 

That meant that GDP was growing at a rate of 5.9% for the first nine months as a whole, the CSO said.

The CSO also said that the country’s GNP grew by 8.9% in the three months from July to September. 

It said that the financial and insurance services sector and the professional and administrative services sector saw growth in the three months from July to September.

But the agriculture, forestry and fisheries sector as well as the distribution, transport, hotels and restaurants sectors experienced declines.

Today’s figures also reveal that personal consumption expenditure (PCE) rose by 0.9%, while exports of goods and services grew by 2.4% in the quarter.

The economy here has outperformed everywhere in the EU each year since 2014 and the European Commission expects it to do so again this year with growth of 5.6%, signalling that the economy has brushed off uncertainties arising from Brexit. 

The Department of Finance has forecast that the economy could grow as little as 0.7% next year if Britain crashed out of the European Union or 3.1% in an orderly withdrawal, a course it looked set for after British Prime Minister Boris Johnson’s re-election overnight. 

Many economists prefer to use other indicators such as the labour market as the most accurate barometer of how Ireland’s export-focussed economy is doing.

The relevance of using GDP diminished when 2015 growth was adjusted up to 26% after a massive revision to the stock of capital assets. 

Such distortions, related to Ireland’s large cluster of multinational companies, prompted the CSO has begun to phase in new measures which strip out some of those globalised activities. 

One such data point, modified total domestic demand, rose by 3.6% on the quarter and increased by 3.5% on an annual basis. Ireland’s labour market is also close to capacity with unemployment at 4.8%.

Separate figures from the CSO show that the country recorded a current account surplus of €11.2 billion in the third quarter.

This compared with a surplus of €11.4 billion the same time last year and a deficit of €26.5 billion in the second quarter of 2019. 

Today’s figures also show that the country had a surplus of €2.3 billion for trade in goods and services with the UK in the third quarter of 2019. 

The trade surplus was offset by a deficit of €4.1 billion for income flows, which gave an overall current account deficit of €1.7 billion with the UK in the quarter, compared to a deficit of €0.7 billion in the same time last year.

Finance Minister Paschal Donohoe said today’s CSO figures confirmed the momentum in the Irish economy that have seen in other recent data releases, despite significant external headwinds, including global growth and Brexit related uncertainty.

Mr Donohoe said that overall growth in the economy continues to be broad-based, with positive contributions from both the domestic and multinational sectors. 

Noting that exports reached a record level of €110 billion – the fourth successive quarter above €100 billion- he said this shows the resilience of the country’s economic model in the face of external headwinds. 

“On the domestic side, household consumption was up 3.3% year-on-year, supported by jobs growth and pay increases, while investment in new housing increased by 22%, reflecting a much needed pick-up in supply,” he added.

But the Finance Minister said we must remain conscious of the risks of over-heating in the years ahead, adding that careful management of the economy and the public finances is needed now more than ever. 

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US and China strike deal to ease growing trade tensions

The US and China agreed to the first phase of a broader trade agreement that will see the US reduce tariffs, and at least temporarily calm fears of an escalating trade war between the world’s two largest economies.

The deal announced hinges on China increasing purchases of American farm goods such as soybeans and pork, and making new commitments on intellectual property, forced technology transfer and currency.

Speaking to reporters in Washington, President Donald Trump said he expects China’s agriculture buying to hit $50bn (€45bn) annually “pretty soon”.

The US will also suspend new import taxes covering $160bn of products such as smartphones and toys, US Trade Representative Robert Lighthizer told reporters.

China committed to increase imports of US goods and services by no less than $200bn more than the 2017 level over the next two years, he said.

Motor premiums rise 42% despite cost of claims falling – Central Bank research

Average motor insurance premiums in Ireland rose 42% between 2009 and 2018, despite a decrease of 2.5% in the average cost of claims per policy over the same period, new data has revealed.

The statistics also show that the average legal costs for motor insurance injury claims settled through litigation between 2015 and 2018 were €23,031.

This compares to just €1,385 for claims settled directly and €753 for those settled through the Personal Injury Assessment Board (PIAB).

The data is contained in the Central Bank’s First Private Motor Insurance Report of the National Claims Information Database.

It was set up following a recommendation made in 2017 by the Cost of Insurance Working Group.

“The Central Bank is focused on ensuring that the insurance sector sustainably serves the needs of the economy and its customers,” said Mark Cassidy, Director of Economics & Statistics at the Central Bank. 

“This includes ensuring that claimants can have confidence that insurance claims will be paid when required and that consumers have clear information to allow them to make informed decisions.” 

The statistics provide evidence of the known six-nine year cyclical nature of the insurance industry, although the data also shows a higher level of volatility in Ireland than elsewhere.

The research shows that last year motor insurers made an operating profit of 9% of their total income.

Cost of claims increased by 64% between 2009 and 2018, the database shows, driven by a 54% rise in injury claims. But during the same period the number of claims fell by 40%.

As a result the cost of claims per policy actually fell by 2.5% over the decade, falling by 14% to €375 per policy from 2009 to 2013, but rising again by 14% to €426 last year.

Yet the data shows that premiums per policy rose over the ten years by 42% on average, from €498 in 2009 to €706 in 2018, although they appear to have fallen again in 2019 as the peak of the cycle is passed.

Initially during the period between 2009 and 2013, average premiums fell 13% to €435, before rising dramatically by 62% to €706 in 2018.

Claims made up on average 75% of premiums received by motor insurers, with the figure peaking in 2014 at 94%, before dropping to 59% in 2017. 

Last year it sat at 60%, indicating a favourable environment for the industry, leading to high profitability and consistent with the peak of the market cycle being reached.

The database also provides valuable new data on how motor claims are settled.

More than half (53%) of claims between 2015 and 2018 were settled directly between the insurer and the claimant, with 31% settled through litigation and the remaining 16% through PIAB.

Directly settled claims led to an average compensation payout of €11,674, with legal costs of €1,385 and a settlement time of 1.7 years.

Claims that were settled though PIAB led to average compensation payments of €22,631, with much lower average legal costs of €753 and a settlement time of 2.5 years on average.

However, claims settled using litigation led to average compensation of €45,390, with considerably higher average legal costs of €23,031 and average settlement time of 4.4 years.

But when settlements of less than €100,000, which make up 85% of all litigated claims, are examined in isolation, the data shows claimants only received €23,199 on average in compensation from litigation, similar to the figure from the PIAB settlements.

Legal costs though, in this scenario, were considerably lower at €14,684.

“While the Central Bank does not have a mandate to fix prices in the insurance sector, today’s report will assist the Cost of Insurance Working Group, Government, Oireachtas and wider stakeholders in their consideration of the relevant issues,” Mr Cassidy said.

Gerry Hassett, the interim CEO of Insurance Ireland, said the findings of the National Claims Information Database are clear – claims costs are the key cost in the motor insurance market.

Mr Hassett said the policy focus on reforming the country’s personal injury award levels is critically important to address these costs.

In addition, the legal fees of 63% of compensation in litigated cases under €100,000 is a significant concern and underlines the need for these costs to be tackled,” he added.

“The largest cost in motor insurance is the cost of claims and this database definitively shows claims costs are the key challenge in the market. New guidelines for compensation awards are urgently needed in 2020 to address these costs,” Mr Hassett urged.

Meanwhile, the Alliance for Insurance Reform has reacted with anger to today’s report from the Central Bank and said its members are demanding immediate reductions in motor insurance premiums to sustainable levels.

“Today’s motor insurance data lays bare the scale of the greed that has driven the current insurance crisis, enriching insurance companies and lawyers at the expense of Irish motorists struggling to make ends meet,” said Peter Boland, a director of the alliance.

“This situation has been enabled by a Government too slow to react to the crisis and too weak to take on the big vested interests in order to make a difference,” he stated.

He said that as well as immediate reductions in motor insurance premiums, the Alliance wants firm commitments from insurers on what reductions we will see in liability premiums from all the reforms currently in the pipeline, and “not vague commitments to some reductions, sometime”.

“We want the Judicial Council to be established as a matter of urgency to get general damages for minor injuries addressed once and for all,” Mr Boland said.

“And we want the Government to provide funding as a matter of urgency to establish an Insurance Fraud Unit. We have waited three years for substantive reforms and we cannot wait any longer,” he added.

The Minister of State with responsibility for Financial Services and Insurance said he believes the Central Bank report shows that the insurance and legal sectors are both culpable for the difficulties over the last number of years with the price of motor insurance. 

Michael D’Arcy said that while the nature or severity of the injury claims can vary significantly and there may be good reasons for pursuing litigation, he said he hopes that consumers will see that in overall terms, PIAB offers the most effective settlement channel. 

“I believe that the NCID Report also demonstrates why we must address award levels in this country if we want to see cheaper insurance premiums and an increased risk appetite from insurers,” Mr D’Arcy said. 

He said today’s report shows that personal injury claims have been driving the cost of claims in recent years – representing 75% of the ultimate claims costs over the period.  

This is not sustainable, the Minister said, adding that worryingly, the report shows that these increased costs are not being driven by a higher frequency of claims. 

Mr D’Arcy said he also suspects that figures for employer and public liability insurance may have similar characteristics with personal injury awards and legal fees representing a very high proportion of the cost of claims.

He said he believes this shows the need for the Central Bank to expand the scope of the NCID in the future to cover such claims information, recognising that these claims can often be more complex and that this may take time.  

Publication of the data has been welcomed by PIAB.

“The report highlights the enormous costs involved in litigation as a mechanism of resolving personal injury claims, particularly when there are low cost alternatives,” Chairperson Dermot Divilly said.

“It is clear that the injured party receives a higher proportion of the total cost of settlement amount (92%*) when a case is resolved through PIAB, as opposed to through litigation (67%*).” 

While Sinn Féin’s Pearse Doherty the statistics as a shocking indictment of the insurance industry.

“It should also serve as a wake-up call to the Government and Fianna Fáil, who have been the first to peddle the lines fed by the insurance industry,” he said.

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Euro zone business growth stayed weak in December – PMIs

Euro zone business growth remained weak in December, with tepid foreign demand exacerbating a contraction in manufacturing and offsetting a slight pick-up in services activity. 

IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index (PMI), seen as a good guide to economic health, stayed at 50.6 in December, a touch below a median 50.7 predicted in a Reuters poll. 

Anything above 50 indicates growth. 

The private sector business report published today suggests the risks to the euro zone outlook remain skewed to the downside, despite Christine Lagarde’s more upbeat tone in her first news conference as head of the European Central Bank. 

The euro zone’s industrial sector has struggled throughout the year, with manufacturing activity contracting for the 11th month in a row in December. 

The factory PMI fell to 45.9 from 46.9, below the 47.3 predicted in a Reuters poll. 

The bloc’s dominant service industry grew a bit faster, however, with that PMI rising to a four-month high of 52.4 from 51.9, above the 52 predicted in a Reuters poll.

“The big picture is of an economy showing some stabilisation in activity – but today’s drop in the manufacturing PMI is yet another useful reminder that the bloc’s manufacturing sector is far from being out of the woods,” wrote Nicola Nobile, economist at Oxford Economics.

She added that the data are consistent with just 0.1% economic growth in the fourth quarter. 

“While there are some tentative signs of improvement in new orders, the euro zone labour market is slowing down, with job creation that has almost ground to a halt at its lowest levels for over five years,” Nobile wrote. 

There was no reaction to the data in financial markets, which were instead focused on news of a preliminary trade deal agreed between the US and China. 

Among the euro zone’s two largest economies, Germany’s business activity contracted for a fourth month in a row while in France, it grew at a steady pace so far in December despite a nationwide strike. 

An index measuring output, which feeds into the composite PMI, fell to 45.9 from 47.4, also marking the 11th month of contraction. 

New factory export orders were still shrinking, but showed a slowing in the rate of decline. 

“We project gradual acceleration from next year, with the ECB on hold, supporting the recovery,” noted economists at Morgan Stanley who called the PMI data “weak, but hopeful.”

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