Why our fight in the 'war for talent' must be fought on two sides

Both the State and employers have a role to play when it comes to competing for skilled workers.

By Sarah Connellan Chief operating officer, EY Ireland

IRELAND CURRENTLY HAS the fastest-growing economy in Europe.

While this is undeniably a fortunate position to be in, the symptoms of our success include a surge in job vacancies, increases in staff turnover, longer recruitment periods, and a greater pressure for employers to be competitive.

At a time of huge opportunity and uncertainty, both the State and employers need to keep their eye on the ball and ensure competitiveness is a top priority when it comes to the war for talent.

Ireland has the ninth highest personal tax rate of 34 OECD countries. Additionally, the marginal rate applies at a much lower income level here than in most other OECD.

In reality, this means that people have less money in their pockets.

These tax rates make it extremely difficult to attract talent from overseas, at all levels of earning.

This is arguably the most important issue that needs to be addressed by the government if we are to keep pace in finding the best talent to fill the wide number of roles available in the market, both today and in the coming years.

‘Too restrictive’

In 2012, the Special Assignment Relief Programme (SARP) was introduced in Ireland to attract overseas executives.

Under the programme, employees who are assigned by their foreign employers to work in Ireland, and earn more than €75,000, can get an income tax reduction of 30% on their employment income in excess of that figure for five years.

While SARP goes some way towards mitigating our unfavourable income tax rates, the qualifying criteria are simply too restrictive to have a broad-reaching impact.

The current scheme is only favourable to attract higher earners. Additionally, as the scheme applies only to people relocating from overseas with the same employer, anyone relocating to Ireland for work with a new employer doesn’t currently qualify.

If the criteria for SARP was relaxed, the potential impact could be huge.

Historically, multinationals have had a lot more flexibility around offering competitive reward packages to their employees, with the award of shares as a favourable reward mechanism.

However, in Budget 2018, Minister for Finance Paschal Donohue made the welcome announcement of the introduction of the Key Employee Engagement Programme (KEEP), a tax efficient, share-based incentive relevant to employees in SME unquoted companies.

It is arguably one of the most important developments around our reward and talent competitiveness agenda in recent years.

While the above measures are of great importance when it comes to attracting talent from overseas, the conversation must go farther than reward.

If Ireland wants to remain competitive, fundamental consideration must be given to the broader context of competitiveness, like the availability and cost of housing, schools, the health system, transport.

All of these factors are of crucial importance to both firms and people choosing to relocate here.

Fishing in a limited pool

With economic prosperity driving job creation, employees in Ireland have greater bargaining power when it comes to choosing employers – possibly than ever before.

Recruiting, motivating and retaining top talent has returned to the forefront of employers’ minds, and effective talent acquisition and retention strategies have become more important than ever.

Given our prohibitively high personal taxes, employers are having to innovate when it comes to rewarding their employees.


A key component of any reward package is the provision of a benefit.

A benefits package with a number of different constituents can act as a strong attraction and retention tool.

Flexible packages can contain additional holidays, education fees, travel passes or increased employer pension contributions.

Benefits also include meals to staff in a canteen, which can be provided tax-free where meals are provided to staff generally.

Packages focused around health and well-being should be prioritised by employers.

Tax considerations aside, the importance of physical and mental well-being are more than proven.

While there may be a feel-good factor to offering a benefits package that includes gym membership and a healthy canteen, it’s also hugely beneficial to maintaining an energetic and productive organisation.

As pensions remain under the spotlight, and it’s likely that many of today’s workforce won’t begin to receive a pension much later than previous generations, employer pension contributions to Revenue-approved schemes will continue to be one of the most valuable benefits that can be provided to employees tax-free, and will become even more important as time goes on.

This is of particular relevance now that most employer schemes have switched from defined benefit to defined contribution schemes.

‘Reward’, in its traditional financial sense, has become a basic expectation for most employees, particularly for younger generations.

Purpose, culture and environment have become as important – if not more important than money.

People want to work for an organisation that stands for more than just profit. In times of wild uncertainty, purpose is an organisation’s North Star. But importantly, purpose is something that must be lived and breathed and must be integrated across everything you do.

Today’s employees expect a culture and environment that celebrates diversity and allows them to grow professionally and personally.

The best organisations have a clear vision, strategy and purpose that everyone in the company understands. If everyone in the organisation doesn’t understand why they’re doing what they’re doing, you won’t reach the best outcome.

Organisations with a clear purpose that reward their employees in line with their individual contribution to the company’s performance are rated as some of the best places to work worldwide.

These outfits are providing the employee with what they want – that connection between the purpose of the business, their role and their reward package.

Sarah Connellan is chief operating officer at EY Ireland.

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