A vicious circle: Fionnuala

Working to live

A recruitment crisis compounded by an accommodation crisis is afoot. Staff demand higher wages in order to afford their accommodation and some recruitment firms are going so far as to source accommodation for candidates in order to close the deal. Fionnuala Carolan speaks to leading recruiters in the industry about the state of play

A colleague, who was renting a room in their house, recently received an email from a recruiter looking to secure the room for a staff member of a well-known Dublin food store. It struck them as unusual as they have been renting a room in their house for years and have never come across this before. It made us wonder - is this something the recruitment agencies and retail groups are being forced to do to try to secure talent in today’s market? It makes sense when you think about it. Staff need accommodation close to their jobs and if they can’t find this, they can’t accept the job. So the recruiters need to work harder and smarter when filling a role, going above and beyond their traditional duties.

It’s a well-known fact that there is a worrying lack of accommodation available to rent or buy around the country. The property website Daft.ie revealed in its latest quarterly rental report that there were just 1,460 homes available to rent across the country at the start of November 2021, the lowest amount since the company began tracking availability in 2006.

In Dublin, there were only 820 properties available for rent, a fall of 51% on the same date last year leading rental prices in Dublin to increase by 2.7% on a year-on-year basis. In Cork there was a year-on year jump of 6.9%, 8.3% in Galway, 8.9% in Limerick and 10% in Waterford.

Dublin is now the sixth most expensive capital city in the world for renters, according to another new report by UK insurance group CIA Landlord that looked at the average cost of renting one-bed apartments in 38 capital cities across the globe. It states that the average rent in Central Dublin is €2,016 per month. Unsustainable for most on modest retail wages you would imagine.

When an accommodation crisis occurs, wages must rise to facilitate this. Already Dunnes has announced a 10% pay rise for its employees and Lidl earlier this month announced a €10 million investment in pay increases for its workforce of 6,100 from 1 March. ShelfLife has learned that drivers and temporary staff have seen wages rise from €14/15 an hour up to €27 - €30 an hour because of the boom in e-commerce during the pandemic.

This should be good news for staff but the fact that inflation is soaring means than any extra gains in a wage package are completely wiped out when rising accommodation and food prices are considered. From an employer’s perspective, it also means that if wages go up, it’s very hard for them to come down again and so the prices of goods need to rise to cover this making it a vicious cycle.

We spoke to two of Ireland’s leading recruiters in retail and hospitality to try to understand how we arrived at this point.

Staff crisis

Barry Whelan, MD of Excel recruitment says there are four main reasons for the staff crisis in retail, including the pandemic unemployment payment (PUP) and the loss of non-Irish workers. “Firstly, the pandemic unemployment payment is keeping a cohort of staff out of the workplace. Secondly, the migrant labour force went home during the pandemic and has not returned en masse. Thirdly, retail employees have re-evaluated their work requirement and are focused on moving to less customer-facing roles with more favourable hours. And finally, retail employees are being sought by alternative industries due to the overall staff crisis.”

Whelan also spoke of how the industry hasn’t moved on from a career perspective including the fact that there have been no changes in the law to allow for foreign

Barry Whelan, managing director of Excel Recruitment, says “the generous wages paid in Ireland are eroded by the cost of accommodation”

Thomas O’Sullivan, managing director of Carlos Munoz Hospitality Recruitment (CMHR), says “a room in Dublin city to share will cost between €125-€150 per week excluding gas, electricity, and bins”

language students to work more than 20 hours a week.

Thomas O’Sullivan, managing director of Carlos Munoz Hospitality Recruitment (CMHR) says there are also many contributing factors for the current staff crisis including the loss of the student population.

“The Covid-19 pandemic certainly didn’t help the situation with domestic and international students studying from home as opposed to living near their college campus,” he says. “The pandemic unemployment benefit also became an issue whereby it was too accessible for people who simply did not want to work. A lot of immigrant workers decided to return home with so much uncertainty and the cost of living in Ireland while they may have been on reduced working hours or PUP.

“Also our economy is offering better paid jobs and employee benefits such as health care through high-end pharmaceutical and IT companies,” he says.

It seems that the shortage of affordable accommodation in Dublin is making it more difficult to hire staff from abroad or even from outside the city and the same issue is prevalent in cities and towns nationwide.

Whelan says that the housing crisis is compounding the staff crisis at present. “The generous wages paid in Ireland are eroded by the cost of accommodation,” he explains.

O’Sullivan agrees that it is a major issue and a fundamental problem affecting our competitiveness as a country, city and for our businesses. “In Dublin it’s a huge issue but also some regional cities and towns such as Killarney and even rural towns like Dingle. If employers can’t offer affordable accommodation they simply cannot recruit or retain staff,” he states.

The fact that retail wages have risen in recent times has caused problems for employers trying to manage their wage bills.

Whelan says retail wages have risen across the board from staff through to management. “This is driven by demand, the Dunnes workers have received a 10% increase and the living wage is paid by Aldi and Lidl,” he explains.

According to O’Sullivan, retail wages have risen by up to 35% making it unsustainable for many hotels, retailers, or production/ manufacturing plants. “Some employers are taking a short-term view and are often using EWSS employment supports to fund their rising payroll costs. They have done this through necessity as opposed to thought-out strategy.

“Employers are offering higher wages to attract employees. This is dangerous territory and could be considered unfair to the overall employment market. I like the analogy of “life support” however it is only creating a problem which ultimately will need to be resolved. “These wages are unsustainable for most if not all businesses in the retail, hospitality, and production/manufacturing plants,” he adds. “However, for places like Dublin, the wages have risen as it is simply too expensive to rent a room, house or apartment in Dublin. A room in Dublin city to share will cost you between €125-€150 per week excluding gas, electricity, and bins.”

So are there any easy positions to fill in retail at present we wondered? “There are no easy roles to fill,” says Whelan. “In our own business we have two recruiters working each role instead of one. This is due to the difficulty in filling the roles. The hardest roles to fill are the specialists such as butchers and bakers followed by entry level staff,” he explains.

O’Sullivan also says there is no such thing as easy when it comes to recruitment now. “Human resource departments are working determinedly to recruit, engage and retain employees. Frontline employees and middle management appear to be the most difficult to find. I have had the privilege of working with some very progressive and innovative human resource managers over the past 12 months. ‘Staff engagement’ will be the HR crusade for 2022!” predicts O’Sullivan.

Accommodation capacity

As we already know, but to drive home the point, the Institute of Professional Auctioneers & Valuers’ (IPAV) latest report shows “a severe and diminishing lack of rental properties to meet demand”.

“While there is such a low level of stock, rents are going to remain elevated,” says Pat Davitt, IPAV chief executive.

“We believe further rent controls are not the answer but increasing the supply of homes for rental and for purchase. This is critical from a social and economic perspective,” he adds.

The crisis can only be solved by an increase in supply of houses. The government has promised to deliver 300,000 new homes by the end of 2030 under a €4 billion per-year strategy and among that are 54,000 affordable homes. The plan is said to provide for a mix of social, affordable and private housing for sale and rent.

Ronan Lyons, economist at Trinity College Dublin and author of the Daft report says: “Covid-19 temporarily reshuffled Ireland’s rental problems but the latest figures confirm those problems of shortages are getting worse over time. More than 50,000 more rental homes have been proposed. Their construction would help improve the availability and affordability of rental homes, something for policymakers and planners to consider.”

To deal with rising inflation, at the time of writing, the government had just announced plans to address the rising cost of living including an energy rebate. While this will be welcomed as a small reprieve, the rising cost of living cannot be fixed until the housing crisis is tackled. In the meantime, recruiters will have to continue to accept that sourcing accommodation to attract talent has to be part of the package. n

Ronan Lyons, economist at Trinity College Dublin and author of the Daft report, says the latest figures show the shortage of rental properties is worsening