Almost two-thirds of Irish businesses note access to a skilled workforce as a constraint to growth
Labour costs rise in increasingly competitive job market
Irish businesses have highlighted access to a skilled workforce as a significant constraint to growth over the next 12 months, owing to challenges posed by the Covid-19 pandemic and knock effect this has had on the labour market. The latest Grant Thornton International Business Report (IBR) research carried out in the second half of 2021 has found almost two-thirds (63%) of Irish businesses report access to a skilled workforce as a significant constraint to the growth and development of their business; a notable increase on the 37% of businesses who reported the same in the first half of 2021.
As the national unemployment rate continues to fall and the Irish economy looks towards achieving full employment by 2024, staff shortages are becoming an increasingly prevalent issue for businesses.
While globalisation allows for a larger pool of potential employees for Irish companies, 23% of businesses say that their growth over the next twelve months will be hindered as a result of difficulties in securing work permits, while 23% also pointed to the lengthening processing time for non-resident employees. In addition to this, the COVID-19 pandemic has had a significant impact on businesses, with 29% reporting a significant loss of staff who returned to their home countries during the pandemic.
Irish businesses are also anticipating challenges over the next twelve months due to the decreasing pool of skilled workers available and the high salary expectations of employees as inflation increases globally. A fifth of businesses (21%) have noted challenges in accessing skilled workers as a result of salary expectations.
As the market becomes more competitive, over half of Irish businesses (55%) are looking to invest in staff skills over the next year, a jump on the 35% investing in staff skills in the first half of 2021. Owing to this
tightening labour market, 56% of businesses see labour costs as a constraint to growth, a notable increase on the 27% who reported the same in H1 2021.
Speaking on the findings of the Grant Thornton International Business Report, Grant Thornton Ireland Chief Economist Andrew Webb said, ‘Irish businesses are facing mounting pressures in sourcing and keeping skilled workers across 2022. The shrinking pool of skilled workers poses a number of challenges in terms of business growth, coupled with the challenges of inflation, supply chain issues, and rising energy prices.
Despite these issues, there is room for optimism on the current state of play in the labour market. Over half of Irish businesses are looking to invest in the upskilling of staff over the next twelve months, in turn allowing them to grow and develop their enterprises, and nearly half of Irish businesses (45%) expect to grow their teams and increase employment over the coming year.’
While the Irish labour market is navigating a particularly challenging time with visa delays and red-tape hurdles, increasing wage expectations and a shortage in skilled workers, 45% of Irish businesses expect to increase employment over the coming year, on the back of their general optimism for the state of business in Ireland over the next twelve months.
The International Business Report recently revealed that 85% of Irish businesses remain optimistic for growth in the coming 12 months.