No let-up in hiring expected next year as skills shortage continues to bite

An overwhelming majority of Irish employers have experienced skills shortages in the past 12 months, mostly driven by competition for talent in an economy that has reached record levels of employment over the past year or so.

Recruiter Hays Ireland on Monday released the results of its salary and recruiting trends guide for 2023, based on a survey of employers, which reveals that confidence levels remain relatively high despite the headwinds buffeting the global economy.

Some 90 per cent of employers said they plan to hire in 2023 with 72 per cent of survey respondents foreseeing an increase in their organisation’s expected performance over the coming year.

However, 92 per cent of employers surveyed indicated that they had experienced a skills shortage against the backdrop of a tight labour market in the past 12 months.

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Most employers (66 per cent) who responded to Hays Ireland’s survey said that competition from other employers for talent was the main driver of skills shortages over the past year with 41 per cent of employers forced to turn to temporary or contract staff to make up for gaps in staffing.

Pay rates have also climbed, according to the study, in line with competition for talent. Some 84 per cent of employers said they have increased salaries or rates of pay over the past year. That compares with just 56 per cent of employers who did so in 2021.

A plurality (34 per cent) of employers said they expect pay to be the main driver of employee movement in 2023.

Published last week, the Central Statistics Office’s Labour Force Survey revealed that employment hit a new record high of 2.55 million in the third quarter of 2022 on the back of the lifting of Covid-related restrictions and a strong bounce-back in consumer spending.

Employers surveyed by Hays Ireland said the cost-of-living crisis is still at the forefront of their minds, with 61 per cent indicating that the rising cost of living for staff is the top external challenge they expect to face.

Separately, Bank of Ireland’s latest Economic Pulse index indicated an increase in business sentiment in November. Overall, the index increased 6.7 basis points from October but was down 16 points compared with November 2021.

Loretta O’Sullivan, group chief economist at Bank of Ireland, said the survey was a “mixed bag” with consumer sentiment down and business sentiment up.

While she said “news of lay-offs in some high-profile tech companies may have unsettled households this month”, 32 per cent of firms said they expect to spend more on investment in 2023 compared with 2022.

“Though down from 38 per cent a year ago, this is nonetheless a solid print, and with Government supports helping households to mitigate increased energy and other costs, our new forecasts still have GDP growing by 4 per cent next year,” O’Sullivan said.

Economists have, however, warned that inflation has clouded the employment outlook with several agencies forecasting a marked slowdown in headline growth.