AmCham survey reveals 64% of firms to increase Irish headcount over next year

Talent attraction and the skills gap are among the top factors globally driving where companies choose to locate and expand. Ireland ranks first in the world for attracting and retaining talent and, according to a recent survey by the American Chamber of Commerce Ireland (AmCham), 64 per cent of firms expect to increase their headcount in Ireland over the next 12 months.

However, according to the same survey, 69 per cent of respondents said they were experiencing a skills gap in Ireland with the biggest gaps being seen in areas including engineering, digital and data, as well as machine learning and AI. We look at how Ireland’s talented workforce has influenced the decision of companies to locate here and how Ireland can remain a top location of choice in this regard.

US companies directly employ more than 209,000 people in Ireland with a further 167,000 indirectly, and each year US multinationals invest €14.1billion on payroll, €8.7 billion on goods and services, and €7.9 billion on capital expenditure.

With one out of every three US multinationals in Ireland having been here for more than 20 years and the fact that Ireland is home to nine of the global top 10 US technology companies, all 10 of the world’s leading pharma companies, and 14 of the world’s top medtech companies, it’s clear that the Irish-US relationship is as strong as ever.

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Ireland’s attractions

Wage growth in Ireland is relatively strong as illustrated in the recent figures from the Central Statistics Office (CSO). The average weekly earnings in the Irish economy rose by 4.3 per cent in the 12 months to the first quarter of this year, says Anne Kelleher, head of reward services, Deloitte.

“Given the current inflationary environment companies are balancing supporting helping employees with the cost of living while also managing overall company cost competitiveness.”

One-third of all income tax receipts are accounted for by foreign-owned multinationals, according to the Annual Taxation Report published by the Department of Finance in September 2022, says Ian Prenty, partner in tax and legal in the global employer Services (GES) division, Deloitte. “This is a direct result of high-paid jobs created by, in particular, US investment into Ireland. This highlights the importance to the Irish economy of retaining these positions in Ireland.

“Companies relocating to Ireland often require senior leaders to also relocate here. Ireland must, therefore, remain competitive from a personal taxation perspective to attract that talent here. Our top rate of tax for employees of 52 per cent is high and the entry point to that top rate of tax is low when compared with other countries.”

This creates a barrier to relocating talent here for companies, particularly when international remote working arrangements are now more common, says Prenty.

Accommodating staff

For many companies, remote working arrangements are here to stay, Prenty says. “In the context of the ongoing accommodation crisis, that is particularly acute in our larger urban areas, more can be done to facilitate such arrangements.

“Tax relief for the cost of broadband, electricity and heating is available, but its euro value is often quite low. A tax credit might be a more preferable approach, prorated according to the percentage of time an individual works from home.”

Mind the skills gap

Skills gaps exist in Ireland as they do in most developed growing economies, says Martin Shanahan, partner and head of industry and FDI, Grant Thornton. “Having said that, Ireland has done a better job than most at aligning the output of its education system, particularly at the higher education and further education level. This combined with the fact that Ireland has one of the highest participation rates in third-level education in the OECD makes the relative availability of skills more positive. Ireland has also operated a flexible system in relation to work permits and visas.”

Graham Murray, director of projects Ireland, at Schneider Electric, says the company is seeing a skills gap increasingly in the construction, manufacturing, building management, facilities and estates management across Ireland, that is threatening progress at an industrial level, slowing down building development and affecting the building sector’s ability to implement energy efficiencies and lower carbon emissions.

“It has also affected the sector’s ability to respond to new technological advances that can address contemporary and future challenges.”

Balancing the scales

There are policy initiatives that have been introduced to bridge the skills gap in Ireland, says Murray. “For example, the National Skills Strategy outlines a blueprint to bolster Ireland’s position as an increasingly competitive and developed arena for business and innovation. Due to the small size of Ireland and limited access to talent, this can only be possible by upskilling the workforce and active inclusion.

“But ultimately, seeing is believing so we have been involved in upskilling projects on a grassroots level, mentoring female electrical and engineering undergraduates as part of the Esteem programme with Technical University Dublin to reduce and eliminate a knowledge and skills gap from the start.”

Investing in talent

Ireland’s investment in and promotion of science and engineering-related university programmes has produced generations of highly skilled and highly employable graduates, says Kelleher. “This investment in world-class research institutes and skilled labour has led to Ireland becoming a strategic location for many of the world’s top companies, especially in the life sciences and technology sectors.

“This talent pool was further advanced by enabling the ability of refugees and asylum seekers to be employed after six months of living in Ireland if they have applied for work permission. In addition, the Department of Justice introduced a temporary protection directive offering immediate access to the labour market for Ukrainian nationals seeking safety in Ireland. This has broadened the access to a diverse range of skills and talent within the Irish market.”