Business leaders believe rising wages represent the biggest threat to the Irish economy over the next year, while skills shortages and poor infrastructure could also pose problems, according to a survey. Property prices and the possibility of interest rate rises are also worrying employers, the survey says.
The survey of the Republic's top 400 business leaders was commissioned by the firm of solicitors, A&L Goodbody, and carried out by MRBI. Asked what the Government should not do over the next 12 months, almost one third said the most important thing was to avoid conceding to public sector pay demands outside the Partnership 2000. Increasing taxes and fudging on wage agreements were identified as unacceptable by a further 18 per cent.
Questioned on what represented the greatest threat to the economy, 36 per cent said wage inflation, with 30 per cent identifying skills shortages and 22 per cent pointing to the Republic's poor infrastructure. Respondents also saw property prices, new employment legislation and State regulation as threatening economic prosperity.
When broken down over industry sectors, respondents in the manufacturing, distribution-retail, construction and transport and communications sectors saw wage inflation as the greatest threat to economic growth, A&L Good body said. In the services sector, poor infrastructure and scarcity of trained staff emerged as the largest concerns, and almost half those questioned in the technology sector said the skills shortages issue was the biggest threat.
"The results of the survey indicate a degree of concern among Irish business leaders about managing wage expectations and public sector expenditure," said Mr Frank O'Riordan, managing partner of A&L Goodbody. " also reflects significant concern about gaps in infrastructure, perceived by many as seriously restricting the expansion of their businesses.
"As we face into the new century, it is clear that we will have to take a more imaginative approach to sustaining the economic progress we are currently experiencing. It may be that dealing with our success might prove to be just as challenging as achieving it in the first place," Mr O'Riordan added.
Legislative developments together with labour market pressures will lead to radical changes in the traditional relationship between employer and employee, he said, with employers finding that flexibility, consultation and employee shareholding essential in attracting and retaining a skilled workforce.
