What are over 250 Irish CEOs saying about the outlook for the Irish economy in our CEO Pulse Survey 2014? It seems that confidence and growth are firmly back on agenda with 86% of CEOs feeling positive about Ireland’s economic outlook. For the first time since pre-recession times have CEOs been confident about our economy.
But what are the key threats to growth? A large majority of Irish CEOs, view increasing tax burdens and rising labour costs as the main threats. CEOs are also of the view that reducing personal tax should be a top priority for Government.
Threats and challenges to growth
86% of CEOs consider the increasing tax burden the greatest economic and policy threat for business growth. This likely reflects the heightened global corporate tax debate as well as Ireland's high levels of personal taxes. Rising labour costs (81%) is the top business threat and reflects CEOs concerns around wage inflation as they strive to attract and retain key talent. Other top challenges include over-regulation (83%), availability of key skills (69%), cyber threats (69%) and the speed of technological change (62%).
Talent and the need for data analytics
Over a quarter of Irish CEOs (28%) say talent constraints have significantly impacted their company's performance. In fact, 44% have not been able to pursue a new market opportunity, 33% have had to cancel a strategic initiative and 29% have had to reduce innovation.
Data analytics is becoming vital in helping CEOs to make decisions on people matters. For example, just a quarter receive comprehensive information on the costs of employee turnover (26%) and staff productivity (24%), with only one in six (16%) receiving sufficient information on return on investment in human capital.
Confidence in FDI
92% of responding MNC CEOs confirmed that their company's investment in Ireland is considered to be a success. Almost 9 out of 10 currently plan to increase or maintain their investment in Ireland. The ability to access highly skilled people is the most critical factor (78%) for increasing and/or maintaining this investment, up from 31% last year. Competitive wage rates (76%) and improved cost competitiveness (56%) are also very high on the agenda. The retention of the 12.5% corporate tax rate is important for over two-thirds (69%) and having a competitive personal tax regime for foreign employees working in Ireland is twice as important compared to last year.
International tax reform
Nearly two-thirds (64%) of Irish CEOs feel the international tax system is in need of reform. Just over a third feels that a consensus on tax reform can be achieved among the G20 countries in the near future.
Nearly half of CEOS (47%) feel that multinationals should be required to publish the revenues, profits and taxes paid for each territory where they operate. While 50% say that it is appropriate for tax authorities around the world to share freely information they have on companies amongst themselves.
Managing global change
Irish CEOs lag their global counterparts in terms of capitalising on the opportunities of global change. Nearly two-thirds (60%) of Irish CEOs reported that technological advances is the top global trend that will impact their businesses (global: 81%). In terms of capitalising on these changes, only 16% of Irish CEOs have already initiated or completed change programmes to become more innovative (global: 27%). Just over one in five (22%) have made any headway in getting to grips with big data (global: 28%) and only a quarter have altered their technology and digital investments (global: 35%).
The top priorities for Government
Just over half (51%) of Irish business leaders are calling for Government to prioritise reducing personal tax and/or widening the tax bands, up from 29% last year. Other key areas include continuing the focus on job creation (50%) and reducing public sector costs (46%). Perhaps a sign of the progress being made is that ensuring available finance and reducing the national debt have fallen in significance compared to last year.