Buoyant economy driving surge in recruitment

Today’s Irish labour market remains strong by historical standards as we enter the next decade, but of course, sustaining the growth story will not be easy.

Buoyant economy driving surge in recruitment

Today’s Irish labour market remains strong by historical standards as we enter the next decade, but of course, sustaining the growth story will not be easy.

I believe that if someone had told you back in 2010 that more than 2.3 million people would be back at work a short few years after the worst financial crash in the country’s history, I would have questioned their sanity.

Even more to the point, these are real as opposed to the sort of temporary jobs created by a tidal wave of borrowing. This remarkable performance has been driven by foreign direct investment; the state coffers have been boosted by large inflows of corporate taxes.

The Irish Fiscal Council under the leadership of the Cork-based economist, Professor Seamus Coffey, has questioned whether those inflows can be sustained given likely reforms of the international corporation tax system being driven by the OECD. A sudden downturn in corporation tax revenues could expose large fiscal gaps which could have spill over effects on personal consumption and on the labour market.

In the short term, barring a global business meltdown or disorderly Brexit ( a possible scenario pushed to the end of 2020 ) jobs growth looks set to continue, with around forty thousand extra posts due to be added in 2020.

The latest data suggest that for the jobs market, it is steady as she goes. According to the CSO, average weekly earnings in the private sector have risen by just under 4% in the year to the end of September (from €743 to €768).

The increase is well in excess of the rise in the consumer price index. This suggests that those at work — not exposed to overheating rental markets — are actually enjoying an increase in take home pay, one that has been sustained over a number of years.

The CSO does note, however, that the average hours worked on a weekly basis actually fell slightly in the past year, a suggestion that in the manufacturing sector parts of the economy are coming off the boil.

The Brexit story, of course, has yet to be fully told. However, the three and a half year-long saga has impacted on the Irish economy and jobs market in a number of ways. The uncertainties created in the process has hit many indigenous firms with jobs cut and plans for investment put on hold.

Enterprise Ireland states that over half of its clients (53%) have been impacted with one in ten of exporters hit with an added cost in excess of €100,000 each.

There have been job losses particularly in the Border region along with gains, many of them in the IT sector where Dublin, in particular, has managed to bag investments that would otherwise have located to the UK. The Brexit factor may well have had a positive effect in boosting savings and limiting the return to the high price, bubble economy that became such a feature of Ireland in the Noughties.

Earlier this year, Austin Hughes, Chief Economist at KBC in Ireland, pointed to data from the Central Statistics Office suggesting that while Dublin and the South West region have been adding jobs ‘at a fast clip’, there has been a fall in employment in some areas of the Mid West and Border area.

The fall in Sterling and drop off in the number of visitors from the UK has hit tourism hard in many peripheral parts of the country.

In recent months, job losses have been announced at ESB and Bord na Mona plants in the Midlands.

We are also witnessing a resurgence in militancy among farmers as downward pressure on prices pushes to the forefront strains between suppliers and the large meat plants. We should never forget about the spin off effects on the wider rural and small-town economy when the spending power of farmers and workers in traditional industries is curtailed.

On the plus side, new markets are being opened up while demand from Asia — and China, in particular — for Irish food products is surging. This may result in more openings for marketing and sales professionals.

Some organisations are tackling the challenges posed. Engineers Ireland, for example, has signed a deal with its UK counterpart to ensure mutual recognition of qualifications beyond the date of Britain’s departure from the EU.

The Chief Justice Frank Clarke, has been working hard with colleagues to promote Ireland as a centre for legal activity after Brexit.

At the same time, IT and professional firms in Ireland are continuing to create job openings at a fast pace. Professional legal and accounting firms have announced big hires while regions such as the South East have emerged as hubs for high growth activities such as Fin Tech.

The Brexit process combined with new EU regulations such as GDPR ( general data protection ) are resulting in a higher demand for skills in the area of legal compliance.

At the recent Ibec HR conference at Croke Park, it was clear that what is concerning employers most is the issue of skills shortages. Top managers were advised to pay much more attention to fostering talent within their own organisations rather than relying exclusively on external recruitment.

According to David Collings, Associate Dean of research at Dublin City University, organisations should look to develop apprenticeships in house so as to increase skill levels and boost employee loyalty. Certainly, the number and variety of apprenticeships has expanded greatly beyond the traditional heartlands of construction and crafts into areas such as banking , insurance and logistics.

Buoyant recruitment

On the recruitment front, the picture remains pretty buoyant at the upper and middle ends of the economy.

In his recent end of year forecast, Mike McDonagh, head of recruitment firm Hays Ireland, points out that while employers running professional firms remain optimistic and hiring intentions are strong, employers are being challenged by an intensifying skill shortage and competition for talent.

Almost 80% of Irish professional firms remain in hiring mode.

Skills sets most in demand include operations and technical skills (at 56%) along with management/ leadership (at 38%) of firms.

At the same time, Millennials tend to look for a commitment to work life balance with over 40% of professionals looking for improvements in working hours. Some organisations such as AIB are now encouraging employees to work from home at least one day a week, while satellite offices have been established.

As the issue of climate change moves up the agenda and as peoples’ tolerance of long hours of commuting diminishes, we can expect more companies to move to facilitate those who wish to work from home, or at least closer to home.

Increasingly, firms are offering flexible hours while some employees are willing to accept a lower salary in return for such benefits.

The future of work is an issue which is preoccupying policymakers, employers, trade unionists and workers themselves. The threat to existing jobs posed by the rise of artificial intelligence has been at the heart of the debate in recent times.

The Department of Business & Enterprise has concluded that more needs to be done to promote digital skills across the workforce.

In Ireland, just under 50% of workers have at least basic digital skills.

This compares with an average of almost 60% across the European Union.

This implies that more resources will have to be put into retooling those already at work, including older people.

It is worth noting that while 92% of employers have encountered skill shortages in the past year, the total employment rate in Ireland — despite much job creation — still lags behind that of many EU countries.

In Sweden, the participation rate is 7.5% higher. More must be done to encourage people — particularly women — back into the workforce.

We can, of course, overestimate the threats posed by technology. Leading consultancies McKinsey and Deloitte have revised down their estimates as to the likely number of jobs threatened by AI ( artificial intelligence ). In their 2017 survey, Deloitte reported that 76% of respondents believed that AI would transform their industry within three years. Last year, the corresponding figure was 56%.

No doubt about it, digitisation is transforming both the workplace and the recruitment process, freeing up people for non routine tasks and greatly enhancing peoples’ ability to target their efforts.

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