Skills shortages undermining productivity, business growth, revenues and profitability in 2021

91% of Irish-based employers have experienced recruitment challenges in the past 12 months. These skills shortages have had a significant material impact on Irish businesses, impacting productivity, growth, and profitability, according to recruiting experts Hays Ireland.

A total of 50% of Irish-based employers claim ongoing skills shortages have had a negative impact on organisational productivity, 39% say it has undermined their ability to deliver key projects and 30% claim it has stalled their plans for expansion.

One in five employers suggest recruitment challenges were impacting their profitability and revenues.

The research, published as part of the Hays Ireland Salary & Recruiting Trends Guide 2022, surveyed a total of 1,500 Irish-based employees and employers. Other prominent challenges cited by employers due to skills shortages include:

— Employee morale (38%)
— Business development (27%)
— Customer / client service (24%)
— Innovation / creativity (16%)
— Absenteeism due to stress (14%)

Reasons for skills shortages

The majority of employers (68%) cited competition from other employers as the primary cause of their inability to meet their recruitment and retention goals.

Other prominent reasons cited included a shortage of new talent entering their industry (33%), individuals leaving to work in other industries (17%) and people moving to other geographic regions (13%).

Significantly, seven per cent of employers cited the reduced access to migrant workers from overseas as a key challenge. Other notable challenges cited included:

— Lack of opportunities for progression (14%)
— Negative perceptions or stereotypes of the industry (12%)
— Lack of diversity amongst those entering the industry (10%)
— Inadequate awareness of opportunities amongst second and third-level students
— Lack of entry-level graduate schemes (8%)

Looking ahead to 2022

Over the next 12 months, 84% of employers intend to recruit staff, rising from 78% in 2021. This represents the highest levels of recruitment activity in the last five years.

Permanent recruitment is expected to be more widespread, rising to 69%, from 56% last year. Meanwhile, 31% are planning to hire temporary staff, slightly down on 34% in 2021.

Rise of counter-offers

In response to ongoing talent shortages, Irish-based employers are currently 35% more likely to make a counter-offer to resigning employees, compared to before the Covid-19 pandemic.

The considerations for doing so were, according to those surveyed, to keep talent from leaving (86%), it was the most cost-effective thing to do (51%), to avoid talent gaps (29%) and it provided an opportunity to rebalance salaries for individuals (13%).

Unrealistic salary expectations and visa challenges in 2022

While the rise of counter-offers is certainly a consideration for employers, overall, 73% of employers expect a continued shortage of suitable applicants in 2022, with 56% anticipating unrealistic salary expectations on the part of applicants.

Recent media headlines suggest a significant backlog at the Department of Enterprise, Trade and Employment (DETE) in processing work permits for non-EEA workers.

According to reports, the volume of applications is up 50% year-on-year, with average processing times increasing from six to 12 weeks in 2021.

Tellingly, 14% of employers are planning on the basis that immigration visa restrictions will continue to curb their ability to recruit the most suitable candidates.

According to Maureen Lynch, director at Hays Ireland: “the competition for talent has been a universal challenge for Irish-based employers throughout 2021 and we expect this trend to continue into the New Year, based on the findings in our Hays Ireland Salary and Recruiting Trends Survey, published earlier today.

“In line with the report’s findings, it is telling that nearly two in five Irish employers are more likely to make counter-offers to resigning staff than they were pre-pandemic. This development points to employers’ acute awareness of the ongoing competition for talent, and the time and resourcing that goes into replacing in-demand skillsets.

“At a more macro-level, it is well documented that the Irish economy has rebounded strongly in the second half of the year and Irish employers understandably want to capitalise on this growth and position themselves for further expansion in the 12 months ahead.

“To this end, it is important that we look to identify meaningful solutions, including tackling recent work permit delays, to alleviate ongoing recruitment pressures. The ability of employers to recruit and retain talent is integral to delivering upon their wider business objectives, including realising their growth projections, maximising revenues and ultimately driving the fundamentals of a healthy business environment.”