Business sentiment remains largely positive despite tight labour market, survey shows

Elsewhere, smaller firms in the Republic were boosted as incoming Taoiseach Simon Harris pledged to provide support to assist with rising business costs

The International Business Report published by professional services firm Grant Thornton showed 41% Irish medium sized businesses surveyed expected to recruit this year amid record low unemployment and wage demands fuelled by inflation and a cost-of-living crisis.

Employers in the Republic reported an overall optimistic economic outlook as energy bills decline, but some said the stubbornly tight labour market has prevented expansion.

The International Business Report published by professional services firm Grant Thornton showed 41% Irish medium sized businesses surveyed expected to recruit this year amid record low unemployment and wage demands fuelled by inflation and a cost-of-living crisis.

“Employers are increasingly paying a premium to recruit and retain skilled talent, and this has been exasperated by the cost-of-living crisis with workers seeing their purchasing power impacted,” said Grant Thornton Ireland chief economist Andrew Webb.

Mr Webb said employers are increasingly likely will to use artificial intelligence (AI) relieve “some of the pressures on constrained workforces in the process.” 

Nearly 25% of businesses said they plan to invest in AI over the next year, with almost half (48%) that had not stating that it remains a potential investment area for the future.

Meanwhile, falling utility bills have boosted sentiment, according to the latest International Business Report (IBR) which provides insights into the attitudes of 10,000 mid-market businesses across 28 economies.

Falling inflation and expected interest rate cuts are expected this year which could boost sentiment further.

The European Central Bank (ECB) will meet next Thursday to further discuss monetary policy and its roadmap for interest rate reductions.

“Despite the challenges, the overall mood of the business community remains positive, with many companies seeing 2024 as an opportunity to deliver increased revenues and profitability,” said Grant Thornton Ireland head of deal advisory Patrick Dillon.

Elsewhere, smaller firms in the Republic were boosted at the weekend as incoming Taoiseach Simon Harris pledged to provide a support for these businesses to assist with rising business costs.

Small firms account for 98% of the total number of businesses in Ireland, employing nearly half of the private sector workforce, according to the Small Firms Association, a lobby group that forms a part of Ibec.