The Irish leadership talent market is in a state of constant flux, influenced by a variety of factors, including business confidence and labour market trends. The degree of certainty or uncertainty within this landscape often dictates whether organizations commit to growth, maintain their current course, or implement necessary cutbacks. In this commentary, we aim to shed light on prevailing viewpoints and the challenges and opportunities they present.
In Q2 2023, the Central Statistics Office (CSO) reported record highs in employment and record lows in unemployment. Key findings from this report include:
The employment rate for individuals aged 15-64 reached 74.2% in Q2 2023, marking the highest level since the series began in 1998.
The number of employed individuals aged 15-89 increased by 88,400, or 3.5%, to reach 2,643,000 in the 12 months leading up to Q2 2023.
A report by the Economic and Social Research Institute (ESRI) last June predicts a 1.7% increase in employment in 2024 and a reduction in unemployment from 3.9% in 2023 to 3.7% in 2024. However, as of September 2023, the unemployment rate remains stable at 4.1%, with a slight uptick to 4.2%. We would expect this minor increase to continue into the first half of the following year unless business confidence improves. It’s important to note that this figure still falls within the definition of full employment.
The initial economic rebound following the COVID-19 pandemic has subsided, giving way to increased uncertainty in the business landscape. Factors such as high inflation, a rapid rise in interest rates, the resulting cost of living crisis, geopolitical conflicts like the war in Ukraine and, more recently, events in Gaza, have contributed to this uncertainty, which is a deterrent to investment.
As of Q3 2023, predictions for Modified Domestic Demand (MMD) whilst not negative are on a downward trend in 2023 and 2024 are as follows:
ERSI: 1.8% (2023) and 1.6% (2024)
Central Bank: 2.9% (2023) and 2.6% (2024)
As a result, of this increased uncertainty, it appears that business confidence has dipped.
Consequently, across most sectors, we see the prevailing sentiment is one of “wait and see” or “maintain the status quo” before committing to further investment. This includes considerations regarding expanding the workforce, particularly at the senior level. We’ve seen a gradual softening in the market that began in early 2023 and has gained momentum in recent months, aligning with the objectives of the European Central Bank (ECB).
However, this softening has been tempered by low unemployment, essentially full employment and finding high quality people is still an issue right now. This is especially relevant to those sectors that buck the general trend with senior people in AI and green energy sector in high demand due to continued growth in these sectors.
Challenges and Opportunities
Most organizations now face the dual challenge of managing a slowing economy alongside a tight labour market. Two primary questions need to be addressed:
- How can organizations manage their costs, including those associated with hiring and retention, in a slowing economy?
- How can they attract and retain key talent that may otherwise seek opportunities elsewhere, possibly with a competitor?
The opportunity amidst this dual challenge is to attract high-quality talent, as individuals may be more open to making a move if their current organization does not have a talent strategy that addresses the challenges mentioned.