TAX CREDITS:WITH RECORD numbers of unemployed professionals in Ireland, talk of skill shortages here may seems ironic. However, according to the Irish Internet Association (IIA), a skills gap is now the greatest impediment to business growth in the digital sector.
The IIA has prepared a detailed submission to Government for a key skills tax credit programme to incentivise the digitally skilled to take up positions in Ireland, details of which will be announced in early July.
Cutting the effective rate of taxes for key ICT workers may seem like a brave move for a cash-strapped government, but the IIA sees it as the equivalent of investment in broadband.
“For our digital economy to continue to flourish we need to build a reservoir of the world’s best talent to work here. With so many other countries competing for the mantle of the ‘smartest’ smart economy, we need to be smart about attracting people to come here. People follow jobs but the job creators set up camp where they have a deep well of talent from which to draw and a strong eco-system of local partners,” says the IIA’s chief executive, Joan Mulvihill.
Mulvihill says demand exceeds supply in a number of key areas – web and mobile developers, SEO experts, social media and community managers, e-commerce managers, digital designers and digital media account managers – and says we need to be daring in our approach to dealing with this issue.
“Human capital is a necessary business resource. This tax credit proposal should be seen as an investment in the sector in the same way as we would view an investment in broadband infrastructure. We need to increase our bandwidth of people and we need to do so quickly. This proposal is elegantly simple and like good cloud solutions, capacity can be ramped up and down as required. We are not proposing a blanket scheme, but rather a targeted and controlled investment mechanism for increasing the supply of a critical resource,” she says.
Ireland needs to stem the flow of emigration of “smart skills” and to incentivise positive repatriation of those who have left and the managed immigration of the skills we need, she argues. “There are interesting proposals circulating for a ‘nerd visa’, but it’s my belief that they don’t go far enough. It is not a question of managing who ‘can’ come to work in Ireland but rather a question of getting them to ‘want’ to work in Ireland,” she says.
There is growing evidence of a “brain drain” in certain areas. A recent salary survey carried out by Prosperity Recruitment noted an increasing number of Irish candidates seeking job opportunities in the UK – and not because they cannot find work here. While the salary differentials between the two countries are negligible, people are attracted by the lower cost of living in the UK.
“There has been a reversal of inward flow, too. Until 2009 we had successfully attracted international talent from the UK, continental Europe and Australia – but with the negative publicity of recent years, it is a tougher sell to get attract people to come here to work,” says Mulvihill.
The problem is most acute at the SME level as multinationals are better equipped to absorb the best talent. As they can offer higher salaries, benefits and security. “It is incredibly difficult for indigenous small and mid-size businesses to compete as it drives up salary costs and, ultimately, impacts our longer term international competitiveness with perceived higher labour costs,” she says.
The IIA proposal is endorsed by economist Constantin Gurdgiev, who agrees that radical thinking is necessary to stimulate growth in key areas such as the digital sector.
“It will take too long to address this skills deficit through the education system. By the time you produce graduates and train them, you are looking five years down the line and our growth is going to be stalled in the meantime.”
Gurdgiev says that intervention through the tax system makes sense. He says that he can endorse the idea as an economist but whether it is politically feasible to introduce this is up to others to decide.
The issue of competitiveness is not one about having the lowest average industrial wage, as the game is about high added value – paying attractive salaries for key skills is not the problem.
“We are competing for human capital and we need to be ahead of the curb,” he says. “Highly skilled people are leaving jobs in Ireland – in some cases taking the same jobs abroad with them – with high resulting losses for the Exchequer,” he notes.
Employers appear to like the principle of the tax credit as well. Jonathan Sharkey, a recruiter with Paddy Power, says the company is finding it increasingly harder to recruit IT professionals in areas such as testing and development.
The firm has recruited 50 technology specialists this year and hopes to fill over 100 additional technology posts before the end of the year. “It’s a longer process and it requires a much wider global scale to find the calibre of people that we want. Getting Irish people based in the UK to come back here is now quite difficult. If there were incentives there, it would help.”
