Access to a skilled workforce is a significant constraint to growth for Irish businesses over the next 12 months, according to the latest Grant Thornton International Business Report (IBR) research, as Ireland heads towards full employment.
The issue has been driven by the Covid-19 pandemic and the knock-on effect it has had on the labour market, with labour shortages and access to talent a challenge amid visa delays and regulatory red-tape.
The research carried out in the second half of 2021 found almost two-thirds (63 per cent) of Irish businesses reported access to talent as a significant constraint to the development of their business – up from 37 per cent 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, Grant Thornton said staff shortages are becoming an increasingly prevalent issue for businesses.
Although globalisation allows for a larger pool of potential employees for Irish companies, 23 per cent of businesses said their growth over the next 12 months will be hindered as a result of difficulties in securing work permits, while 23 per cent also pointed to the lengthening processing time for non-resident employees.
In addition to this, the pandemic has had a significant impact on businesses, with 29 per cent reporting a significant loss of staff who returned to their home countries during the pandemic.
Competition and salary expectations
Irish businesses are also anticipating challenges over the next 12 months due to the decreasing pool of skilled workers available and high salary expectations of employees as inflation increases globally.
A fifth of businesses (21 per cent) have noted challenges in accessing skilled workers due to salary expectations.
As the market becomes more competitive, over half of Irish businesses (55 per cent) are looking to invest in staff skills over the next year, a jump on the 35 per cent investing in staff skills in the first half of 2021.
Owing to this tightening labour market, 56 per cent of businesses now see labour costs as a constraint to growth.
Irish businesses are facing mounting pressures in sourcing and keeping skilled workers across 2022
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 12 months, in turn allowing them to grow and develop their enterprises, and nearly half of Irish businesses (45 per cent) expect to grow their teams and increase employment over the coming year.”
The research found that 45 per cent 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 12 months.
The research is based a survey of 62 Irish businesses for Grant Thornton Ireland.
