Ireland set for net jobs growth of over 230,000 by 2022

After a decade of economic turbulence resulting from the global recession, Ireland’s employment rate has finally pushed past the figure of 2008. While the improvement points toward a fast growing economy, however, a tightening labour market in line with those of the rest of the developed world could see this trajectory stifled.

Professional services giant EY has authored a report anticipating a net jobs growth of 236,700 across the whole of Ireland between 2017 and 2022. The Economic Eye Summer Forecast 2018 shows that after 10 years of slow recovery from the 2008 financial crisis, Ireland’s employment has finally surpassed its levels of a decade ago. Further to this, the Republic of Ireland specifically can expect GDP growth of 4.9% in 2018 and 3.8% in 2019. This is more than three times the rate that those in Northern Ireland is forecast to see, at 1.1% in 2018 and 1.2% in 2019, likely resulting from the North’s remaining ties to Brexit-stricken Britain.

However, according to EY, some of the Republic’s impressive growth has also been buoyed by opportunities offered by Brexit. Recently, EY’s Brexit Tracker revealed that since the day of the infamous referendum result, 21 financial services firms have confirmed that they will move some or all of their UK operations to Dublin, surprisingly making Dublin the most popular post-Brexit location, exceeding the number of institutions headed for Frankfurt (12), Luxembourg (11) and Paris (8).

Brexit planning has also helped many firms build an overarching approach to ensure an ability to trade in both the UK and EU post-Brexit, which has led to a few new partnerships and a slight uptick in M&A activity, EY found. However, while this activity, along with Dublin’s top-table position as a preferred Brexit destination could be seen as a cause for celebration, the Big Four firm’s study also warned that this state of play is a long way from being a return to the Celtic Tiger era, particularly as – despite the benefits of planning – the majority of firms have left their future in a cloud of uncertainty.

5% of firms in the Republic have Brexit plans in place, while an even sparser 3% are similarly prepared in Northern Ireland. The researchers believe that this is partly a reflection of the dominance of small firms – which may not rely on cross-border trade – in the total business population on the island, although even less than one fifth of the larger businesses they analysed had a dedicated strategy in place. Even more strikingly, considering once Brexit becomes a reality, in whatever shape it takes, these firms will need to develop a plan, and yet the vast majority of businesses are not engaging with advisory experts in order to prepare for this. Instead, a staggering 85% rely on television and 80% on newspapers to deliver intelligence on the Brexit process, compared to the 15% willing to look to business support organisations and agencies.

Without a plan for post-EU life, Northern Irish firms in particular will likely not have a backup mechanism in place for tightened restrictions on the flow of talent from the continent; while businesses in the Republic could also see the creation of a hard border suddenly restrict access to talent from the UK. Amid a growing shortage of labour in the developing world, this could notably set Irish growth back.

Michael Hall, Head of Markets, EY Ireland, said, “Although growth remains sluggish in Northern Ireland, the overall corporate mood is much more positive than might have been expected, just one year out from Brexit and with little sign of clarity of the final terms of the UK’s exit from the EU. This reflects the ‘here and now’ of doing business, and the need to make ‘no-regrets’ decisions, regardless of the uncertainty that Brexit, or fears over global trade wars, bring.”

EY Chief Economist Neil Gibson was quick to warn against becoming overly delirious about the potential growth of Ireland in this context, however. He said, “Ireland’s impressive growth may be somewhat overstated by headline GDP figures, but data on job creation levels and tax receipts all point to a fast-growing economy. The forecast is for headline growth rates to fall back from current levels and job creation will also moderate as a tighter labour market begins to impact.”

Bringing in and keeping the best labour is top of the corporate agenda for the majority of firms across the whole of Ireland.  64% of executives polled by EY in the region noted a concern at bringing in the next generation of leaders, while a further 60% were worried about a failure to attract and retain talent more generally. Along with an ageing population, which is making it harder to replace staff reaching retirement age, having the ‘right’ people is vital as it can help companies navigate almost any challenge in a rapidly changing business environment.

“In a modern, knowledge-driven economy, talent is key to growth,” Neil Gibson stated. He added, “Refreshing talent strategies is essential for businesses looking to compete effectively. This is more than simply looking at recruitment practices; the talent journey starts before businesses even know they need to hire, and continues long after staff leave.”

Related: British CEO positivity falls, but 2018 outlook bright for Ireland.