THERE is increasing concern about our supply of skilled professionals and management in the years to come.
Attempts are being made to solve the problem through the education and training systems but these efforts are missing out on one enormous resource available to this country Ireland's "management diaspora".
That pool of bright and ambitious people who emigrated in former years and who now possess management, technical, and professional skills that could be put to Ireland's benefit if only they could be repatriated.
Talented young people traditionally emigrated to Britain and the USA. These countries remain the principal magnets for Irish emigrants despite an emerging trend favouring other EU countries.
Many would like to return but are deterred by the often dramatic lifestyle changes this often entails. The problem is not that salary levels here are much different from those of other countries, but that take home pay is so reduced by taxation. And the tax disadvantages of working in Ireland are greatest compared to the UK and North America.
In Britain or America, the earner not only takes home a greater proportion of nominal pay, but will likely (because of lower indirect taxation) have greater purchasing power with his retained income.
The 54.75 per cent combined income/social tax deducted from a typical general manager's salary in Ireland stands comparison with such countries as Germany (53 per cent), Denmark (56 per cent) and even Spain (50 per cent). But in Britain, the combined tax take is only 40 per cent.
As an executive search company, we have found the tax code here discourages suitable candidates who might otherwise be willing to make the move.
In one recent case, we offered a senior position with an Irish client firm to a British executive. The candidate, eminently qualified in skills currently in short supply here, Was enthusiastic about the job and the generous relocation package and delighted to relocate to Ireland. It was a surprise when he subsequently turned down the position, as did a second British candidate who was initially enthusiastic.
In this case the blame can be placed fairly and squarely on Ireland's taxation system. The gap in take home pay between Ireland and Britain can be illustrated by a simple arithmetical exercise determining what must be paid to an executive in Ireland and Britain to deliver a take home salary of £25,000 in both countries. For simplicity's sake, we assumed sterling/pound parity. We found that an unmarried executive in Britain earning £35,337 gross would, on moving to Ireland, require a pay package of £44,026 gross in order to maintain his/her net income an increase of almost 25 per cent.
Where the gap really opened up was in terms of income tax rates, with the UK earner paying the top British rate (40 per cent) on a mere £2,077 of taxable earnings, equal to just 5.9 per cent of gross salary, while the Irish executive was hit for the top Irish rate (currently 48 per cent) on over £14,000 of taxable income, equal to 33 per cent of gross earnings.
Given this disparity, we should not be surprised at the reluctance of Irish people working abroad to return home. On the positive side, however, many Irish people move home for lifestyle considerations.
Irish employers should be aware that attracting people to return to the auld sod particularly from Britain can be quite costly. In our experience, however, many clients find internationally experienced Irish nationals are extremely attractive additions to their management teams.
