OPINION: To address essential skills shortages and prioritise sectors in the workplace, the work permit and visa system needs reform and there is a need to invest in English language training for migrants seeking employment to improve their employability and integration, suggests Donal O’Donoghue of the Employment and Recruitment Federation
The Employment and Recruitment Federation’s 2024 Budget submission highlights the need for employment taxes that attract and reward, combined with investment in building labour market skills and in reskilling, to address a growing crisis in the Irish economy’s talent space.
Unemployment in Ireland is back at 4.1%, its lowest since 2001, and, apart from the inflationary pressure on pay, most employers, including the public service sector, are hard-pressed to find workers.
We have insufficient affordable housing, childcare provision and public services in sectors like healthcare and education. These social issues are a product of the talent shortage, and are also, in turn, major contributors to the diminishing workforce.
To address essential skills shortages and prioritise sectors in need, the work permit and visa system needs further simplification and reform. Similarly, investing in English language training for migrants seeking employment will improve their employability and integration in the workforce and significantly benefit the economy.
Our ability to attract back the non-Irish nationals who departed during Covid, along with younger Irish nationals who emigrated, and to generate new inward migration, is severely impacted by the cost of living, housing and, for some, childcare.
Investing some budget surplus in social issues will take the pressure off the labour market and help restore competitiveness in Irish industry.
Ireland’s high marginal personal tax rates, especially for top earners, is hindering economic growth and talent attraction. Reducing the overall level of the 52% marginal tax rate, and revising the entry point before it applies, will make Ireland more competitive on the global talent stage.
Acknowledging that it is vital to broaden the tax base, to allow for increased public spending, targeting various exemptions and credits is recommended, along with more streamlined cost-effective revenue collection
The submission calls for a five-year roadmap for substantial reform of income tax code, PRSI code and Universal Social Charge, to reassure employers and support FDI. Reducing the number of PRSI classes, capping PRSI for employees and employers, and introducing automatic indexation based on inflation, is essential to maintain real value.
To foster innovation and growth in STEM fields, the income tax credit for STEM third-level programmes should be enhanced. Removing the cap on the credit and making it available at the individual’s marginal rate for all STEM courses, will encourage more people to pursue these critical disciplines. Growing concerns across the business community about rapidly increasing labour costs, which affect competitiveness, are highlighted in the Budget submission. Significant political commitments on labour policy issues are also driving this overhead.
The potential additional cost implications of government proposals for a new living wage, a possible 12.4% increase in the national minimum wage from 2024, pensions auto-enrolment, the recent legislation on statutory sick pay, a new public holiday from 2023 and other statutory leave changes, could reasonably increase the average wage bill by up to 10% by 2030.
In domestic sectors like retail and logistics, pensions auto-enrolment and living wage costs could have a significantly higher impact.
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