Fingal Business Sentiment Survey Report Q3 2023

CONTENTS

INTRODUCTION:

3

BUSINESS CHALLENGES:

4

COMPETITIVENESS

6

INFLATIONARY COSTS

8

ENERGY SAVING MEASURES

9

EMPLOYEE TURNOVER

12

SKILLS GAP

13

ATTRACTING AND RETAINING STAFF

14

GOVERNMENT SUPPORTS

15

LOOKING TO THE FUTURE

16

CONCLUSION

17

Introduction Fingal Chamber is delighted to present the results of its second Business Sentiment Survey for 2023.

Our surveys play an important part in forming and refining the Chamber’s advocacy and policy framework on the significant issues that have been highlighted. It has been designed to pinpoint key challenges for business in Fingal and in doing so identify workable solutions to support them.

Fingal Chamber advocates for business, provides advice, support, referrals, lobbying and represents members to deliver positive change for Fingal and its businesses.

The Chamber works with Government Ministers, MEPs, the Mayor of Fingal, Fingal County Council and local representatives to deliver pro-business and employment initiatives.

The survey was conducted over a three-week period from September 12 – October 4 2023 and focused on the immediate and short-term challenges facing businesses in the Fingal region, including additional questions reflecting those new challenges facing business since our last survey.

Of the total number of responses received, 51% came from businesses with 26 plus employees while 49% of responses came from businesses employing 25 or less.

The majority of responses came from retail and wholesale sector followed closely by the hospitality and tourism area, business and professional services, transport and logistics, healthcare and pharmaceuticals, manufacturing and production sectors.

It asked questions about key business challenges, competitiveness, recruitment and retention, barriers facing businesses, energy costs, support from our local authority and future outlook.

According to businesses in the Fingal region, housing and rental accommodation for employees is the single most important issue facing competitiveness in the region in the next six months. This is followed closely by the availability of skills and talent and public transport services.

The responses provided strong optimism for the future of Fingal with almost 58% of respondents saying they expect revenue to increase in the next six months, almost 51% expect profits to increase, almost 70% plan to upskill its labour force while over 46% expect staff numbers to increase.

Fingal Chamber conducts its business sentiment survey twice yearly providing critical feedback to its members, the local authority and local representatives on the important issues facing businesses in Fingal. The next survey will take place in Q1, 2024.

A sincere thank you to all businesses who took part in our survey. Sharing your views and experience is vital not only in forming our policy and advocacy work it is essential feedback for Fingal County Council’s Executive Team.

Business Challenges Our survey asked, ‘What is the biggest challenge facing your business in the next six months?’

What is the biggest challenge facing your business in the next 6 months?

40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Responses

Almost 36% of businesses said that staff retention and recruitment is the biggest challenge facing them in the next six months. Reducing business costs, the cost of energy and raw materials are also significant issues impacting organisations in Fingal.

According to the Fingal Chamber’s HR partners, Adare HR Management, one of the greatest challenges facing organisations generally is attracting and retaining talented employees. Implementing effective employee retention strategies will help create more reasons for employees to stay. However the first step is to understand why employees leave.

To ensure success and profitability, businesses must include a strategic review talent and skills in addition to its overall operational business strategy.

Adare HR Management has advice on this issue via a free ebook available called Retention Strategies on its website to help businesses in this specific area.

Almost 20% of businesses said that reducing costs in their organisation is a significant challenge for them. Rising costs in the supply chain logistics and increasing fuel costs are all added challenges and pressures being experienced by many businesses across Fingal. The recent budget announced an increase in the national minimum wage to €12.70 from January 1, 2024, and while this is welcome news for employees and may help with recruitment issues in some sectors, for other businesses there is no doubt that this will be an additional significant increase in costs for others.

The cost of energy and raw materials was highlighted as an important challenge facing businesses in the next six months. This is not a surprising revelation given the increasing rising cost of energy and fuel prices due predominantly to the continuing war in Ukraine.

Competitiveness Turning to the question of ‘What is the biggest issue for Fingal’s competitiveness in the next six months?’

What will be the biggest issue for Fingal’s competitiveness in the next 6 months?

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Responses

Almost 43% of businesses in Fingal said that the availability of housing and rental accommodation is a serious issue for them.

Shortage of housing to buy or rent are significant challenges for big companies in particular with some businesses in the region are seeking to purchase houses for accommodation for their staff.

The seriousness of this issue is borne out in a new jobs report by Morgan McKinley Ireland Quarterly Employment Monitor.

The report outlines that the accommodation crisis is fuelling a brain drain in some sectors as young professional are lured by better opportunities and the lower cost of living overseas. Professionals in the accounting, construction and legal sectors in particular are suffering due to the lack of accommodation in Ireland with job offers regularly being turned down as a consequence. The jobs report also highlighted that availability rather than affordability is now the key issue where accommodation is concerned.

The slow delivery of infrastructure, specifically housing, presents a threat to Ireland’s competitiveness and reputation resulting in a direct impact on recruiting and retaining employees and, worryingly the ability to attract additional FDI. Fingal Chamber welcomed Fingal County Council’s recently announced Capital Programme from 2024-2026 which has estimated a spend of approx. €859.87m set aside specifically for housing capital works. This 3-year programme is to maximise Housing Supply and the availability of suitable accommodation for households unable to provide accommodation from their own resources, along with the provision of high-quality housing to purchase or rent at an affordable price. The programme covers a wide specification of required housing.

While this is wholeheartedly welcomed the pace of advancement is frustratingly slow.

Almost 18% of Fingal businesses cited the availability of skills and talent as their biggest challenge. In this regard Fingal Chamber works with Skillnet Ireland to identify shortfall in business training needs and support businesses with bespoke training programmes at a subsidised cost.

12% of respondents said public transport services or traffic congestion were at risks to the region’s competitiveness. Looking at this specific challenge, Fingal Chamber is working with a number of businesses in the region to address challenges around employee transport.

Some businesses also highlighted infrastructure such as water, energy and broadband as well as taxation levels as other areas impacting competitiveness in the region.

Fingal Chamber continues to work on these important areas with the Minister for Housing, Fingal County Council, the NTA, TFI and TII.

Inflationary Costs Regarding the recent inflationary period, has your business taken any steps to address rising costs?

In reaction to the recent inflationary period, has your business taken any of the following steps?

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Yes No N/a

Increased costs to customers/clients

Reviewed its operating costs and implemented savings

Reduced employee numbers

Just over 66% of businesses said they had increased prices to their customers.

Some 90% of businesses said they had reviewed their operating costs and had implemented costing saving measures such as not investing in new equipment due to interest rate rises. Some 78% of businesses said they had not reduced their employee numbers due to increased costs.

Energy Saving Measures

Has your company implemented any energy-saving measures in the past 6 months?

80.00% 70.00% 60.00% 50.00% 40.00%

Responses

30.00% 20.00% 10.00%

0.00% Yes

No

Energy costs continue to cause a huge concern for many businesses and homeowners with 69% of businesses saying they had implemented energy saving measures recently.

Some initiatives to save on energy include investing in solar panels, electric cars, lowering internal temperature, changing lights to energy saving, installing condensing gas boilers and improved building insulation.

Fingal County Council and the Sustainably Energy Authority of Ireland have a range of supports for business as follows: Business Grants and Supports: https://www.seai.ie/business-and-publicsector/business-grants-and-supports/ SMEs information and Support: https://www.seai.ie/business-and-publicsector/small-and-medium-business/ Steps to Energy Efficiency for SMEs: https://www.seai.ie/business-and-publicsector/small-and-medium-business/steps-to-energy-efficienc/ Find out if your business is eligible for a €2,000 voucher towards the cost of a professional energy audit: https://www.seai.ie/business-and-public-sector/smalland-medium-busines…

Responding to why they had not implemented cost saving measures, some businesses said they had already implemented saving initiatives, others said it was too expensive to implement at the moment, transport and power costs are out of their control in some instances and others said they are operating from old buildings where cost saving just is not an option or them or it is too expensive.

By what percentage have your energy costs increased?

By what percentage have your energy costs increased in the past 6 months?

40.00% 35.00% 30.00%

25.00% 20.00%

Responses

15.00% 10.00% 5.00% 0.00% 1-25%

26-50%

51-75%

76-100%

101% +

N/a

Turning to the increase in energy costs in the past six months, over 62% of businesses said their energy costs had risen by up to 50%. Almost 16% of businesses in Fingal said their energy costs had increased by between 50% - 100% and 22% of businesses said their energy costs had risen by over 100%.

Increased energy costs provide significant further challenges to organisations in the region, these in turn can lead to increased costs for consumers as businesses pass on the cost to them.

Minister for Enterprise, Trade and Employment Simon Coveney TD announced a Budget 2024 package which recognises the ongoing challenges businesses are facing. The Minister also secured approval for the Increased Cost of Business Scheme (ICOB), which is a once-off grant to benefit up to 130,000 small and medium businesses at a cost of €250m.

The aim of the Scheme is to provide financial support to those firms which have been most impacted by additional business costs, by providing a tiered grant equivalent to up to half business rates for this year. It is hoped that this will also go some way to helping businesses meet the increase in the Minimum Wage to €12.70, which is an important step towards the Government’s commitment to introducing a Living Wage.

Other business supports include, the Research and Development (R&D) tax credit is being increased from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025. The first year R& D payment threshold allows for a claim up to the threshold amount to be paid in full in year 1, rather than over three years. The current R&D threshold of €25,000 is being increased to €50,000.

The accelerated capital allowances scheme for Energy Efficient Equipment is being extended for two years to 31 December 2026.

From 1 January 2024, the minimum holding period to obtain relief for Employment Investment Incentive (EII) is being standardised to 4 years for all investments and the limit on the amount that an investor can claim relief on for such in investments is being increased to €500,000.

The temporary relief from benefit in kind (BIK) of €10,000 applied to the Original Market Value of a vehicle (including vans) for vehicles in category A-D and the amendment to the lower limit of the highest mileage band is being extended to 31 December 2024.

The tapering mechanism applied to BIK relief for electric vehicles is being enhanced by extending the current Original Market Value deduction of €35,000 until the end of 2025 followed by a reduction to €20,000 in 2026 and €10,000 in 2027.

Employee Turnover

Has your business experienced an increase in staff turnover over the past 6 months?

52.00% 51.50% 51.00% 50.50% 50.00% 49.50% 49.00% 48.50% 48.00% 47.50% 47.00%

Responses

Yes

No

Responding to the question ‘Has your business experienced an increase in staff turnover over the past 12 months?’

The survey noted that 49% of Fingal businesses have experienced an increase in staff turnover while almost 51% said they had no increase in turnover.

Skills Gap

Has your business struggled to fill a specific skills gap over the past 6 months?

60.00% 50.00% 40.00% 30.00% 20.00%

Responses

10.00% 0.00% Yes, recruiting for Yes, filling a gap in No, my business a specific role has skills through does not have a been difficult internal resources skills gap has been difficult

N/a

Almost 54% of Fingal businesses said they found it difficult recruiting for a specific role, while almost 10% said it was difficult filling a skills gap through internal resources and more than 27% of businesses said their business does not have a skills gap.

Recruiting qualified chefs is proving difficult for many members in the hospitality sector. Elsewhere, machine operators, experienced drivers for logistics businesses, pharma operators and recruiting electrical and mechanical operators is challenging.

A lack of qualified people in Ireland together with it being extremely difficult to get paperwork through the system for non-EU citizens was also cited as an issue.

Through its partnership with Skillnet Ireland, Fingal Chamber is in a unique position to assist businesses in the region address their skills gap by: • • • • • •

Identifying and addressing their skills needs Information regarding successful approaches to learning and talent development Offering flexible training programmes tailored to the needs of businesses in Fingal Expert guidance on achieving value when investing in learning and development Programmes for current and future leaders Certified and non-certified technical training

Attracting and Retaining Staff

What have been the biggest barriers to your business attracting and retaining staff?

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

Responses

Responding to this question, 40% of businesses said that recruiting for specific skills shortages posed difficulties in attracting and retaining staff, while almost 32% of respondents said competitive salaries and employee benefits are important for them in attracting new staff. At 30% the number of respondents who said availability of housing and rental accommodation is factor in attracting new talent increased by 5% on our previous survey earlier this year.

According to Adare HR Management, the retention of employees and the development of their careers is critical to the success of any organisation. The hybrid approach to working has added a further dynamic for HR departments in ensuring all employees feel valued, motivated, and challenged. Achieving this results in organisations having a workforce that is more likely to be productive, engaged, and committed to their jobs.

A route to securing an engaged workforce, whether they are onsite, hybrid or fully remote is through investing in Career Planning and Learning and Development programmes, that both align to an individual employee’s career progression and the future skillset requirements of your business. The goal is to also keep a working model sustainable, ensuring efficiency and collaboration are increased, and most importantly a company’s corporate culture is not harmed. Recognising the importance of investing in your employee’s career progression requires HR strategic planning and commitment by employers and senior management.

Local Authority/Central Government Supports

Has your business availed of supports from Fingal County Council/Central Government?

Small business development centres, help with staff/cyber training, reduction in rates are some of the supports received by half of the businesses that responded to this question. Other businesses indicated that they had received from support and advice from the Local Enterprise Office.

Responding to the question what policies or initiatives do you think should be adopted by Fingal Council/Central Government to help your business?

The acceleration of housing and rental accommodation delivery together with significantly improved transport connections across the region were the top policy asks from businesses in Fingal.

While it is acknowledged that much has been done to date on housing delivery, many businesses are struggling to recruit employees who have somewhere affordable to live. Coupled with this, a considerable number of businesses in the wider Fingal area are endeavouring to solve transport issues for their employees by providing transport services themselves. These temporary solutions are simply not sustainable for businesses. A joined up approach is urgently required by all the agencies involved with Fingal County Council championing this issue on behalf of businesses in the region.

Additional support for energy costs, tax breaks, reduce business rates and less bureaucracy in getting work done were common themes from respondents to this question.

Looking to the future Businesses were asked how they expect their business to perform in the next six months:

Over the next 6 months do you expect your: 80.00% 70.00% 60.00% 50.00% Increase 40.00%

Decrease

30.00%

Stay the same

20.00% 10.00% 0.00% Staff numbers

Staff training

Revenue

Profits

Again, despite the challenges of recruitment and retention, skills gaps, lack of housing, soaring energy costs and inflation, the outlook remains positive for Fingal with many businesses responding positively. Almost 46% said they expect staff numbers to rise, while almost 70% said staff training will increase in their organization.

Almost 56% of organisations said they expect revenue to increase and more than 51% said they expect profits to increase over the next six months.

Conclusion Fingal businesses are resilient despite the huge challenges that come with the difficulty in attracting and retaining employees, lack of housing for those employees, transport issues, coping with rising business and energy costs. Businesses are almost at the end of four consecutive years of sucker punches. Recovering from the impact of COVID, the ongoing impact of the war in Ukraine and the cost of living crisis has resulted in the toughest environment for businesses.

Nonetheless, the overriding outlook from businesses in Fingal is positive with an increase in recruitment, upskilling, revenue and profits forecasted for the majority of businesses. It is important that businesses continue to work together to build resilience into their business models so we are all better prepared for the next disrupter.

Fingal is a great place to do business and there is huge appetite to build on what the region has to offer. It has significant economic advantages including Dublin Airport, fast access to Dublin Port, rail, road, power and telecommunications infrastructure.

Despite all this, in some quarters the business community is becoming ever more demanding on their principal stakeholders regarding the provision of services. It is incumbent on Fingal Chamber to take steps to allay their fears now, otherwise the disenfranchisement felt by some may well increase and pose an issue for the economic wellbeing of the region going forward.

While housing schemes, apartment builds and vacant property improvements can be seen across the region, and these are very much welcomed, the speed of delivery is frustrating.

The Chamber will continue to leverage its association with Skillnet Ireland and Adare Human Resource Management to support businesses requiring training and HR expertise in the Fingal region.

Fingal Chamber Skillnet supports regional development by helping local businesses to arrive at shared local solutions that are more accessible, affordable and effective in meeting their needs. The collaboration of the two organisations address both technical and non-technical skills needs across multiple sectors. Benefits of Skillnet training include more productive staff, improved retention rates, increased staff motivation, cost-effective training, a skilled workforce and a competitive and progressive workplace.

Feedback from this Business Sentiment Survey forms an important part of the Chamber’s work enabling us to effectively advocate and deliver further positive change for Fingal and its businesses.

The next Fingal Chamber Business Sentiment Survey will be conducted in Q1, 2024.

If you have any comments on our survey, or want to discuss our findings, please contact us at siobhan@fingalchamber.ie