89% rise in non-wage business costs

Nine in ten Dublin businesses (89%) have seen a rise in non-wage business costs over the past 12 months, according to Dublin Chamber’s most recent Business Outlook Survey (Q1 2022). Just under two thirds of these (60%) identified energy prices as the main driver of this increase.

A Rise in non-wage Business Costs

A total of 86% of Dublin businesses have increased salaries in 2021. Over half of businesses (53%) reported an average salary increase of 1-5% in the past 12 months, while for a third of businesses (33%) the average salary increase has been 6% or more. Almost one in ten firms (9%) report an average salary increase of 11% or more over the past year.

Dublin Chamber’s Director of Public & International Affairs Aebhric Mc Gibney said: “Over half of Dublin businesses (55%) now report that managing the cost of doing business is their top priority for 2022. Decades of poor housing supply in Dublin have exacerbated an already tight labour market. Many firms face double and even triple digit increases in energy prices. As a result, companies are looking to implement energy saving measures, which would have been unviable a few short months ago.”

Mr Mc Gibney continued: “The impact of increasing costs can be seen in the divergence between revenue and profit expectations over the next quarter. Over the next three months, 65% of firms expect that their company’s revenue will increase while only 46% expect profits to rise, implying a decline in margins and expanding costs.

The increase in business costs and particularly energy prices pose a serious challenge that will need to be tackled as the year progresses. Dublin Chamber proposes that to alleviate rising costs and accelerate towards a sustainable economy, a ‘Going Green’ tax credit should be adopted, modelled on the R&D tax credit, to stimulate green investment.”

A Tight Labour Market

‘Attracting, retaining and upskilling staff’ was chosen as a key priority for 2022 by more than three in four Dublin businesses (78%), reaffirming widespread reports of skill shortages and retention difficulties. However, when asked how they expected their company’s staff numbers to change over the next three months, most respondents (62%) had a positive outlook, expecting staff numbers to increase.

Mr Mc Gibney said: “While the employment outlook is positive, these survey results illustrate the need to continually upskill employees and address retention and recruitment challenges. Staffing issues are closely connected to the housing crisis. While employees struggle to secure affordable accommodation with reasonable commute times, recruitment and retention challenges for businesses will continue. These problems will in turn continue to affect Dublin’s competitiveness.”