Counter-offers ‘becoming the norm’ in tech sector; CIPD queries implications for talent pipelines and cost competitiveness 

Private sector employers in Ireland are increasingly offering financial incentives to staff who plan to leave, as the race for talent picks up in the wake of a resurgent economy. 

A study from CIPD Ireland and Industrial Relations News found that more than two thirds (68 per cent) of businesses in the IT and software sectors have made a counter-offer in the last 12 months, compared to 55 per cent of financial services firms, 53 per cent in food and drink and 37 per cent of all businesses. Large companies were the most likely to use counter-offers. 

The findings suggest an increasingly buoyant market for skilled workers in Ireland, particularly in the tech sector, which employs more than 37,000 people and generates €35bn per year. Facebook, Twitter and LinkedIn are among more than 200 major IT-related businesses with regional headquarters in Dublin. 

Half of the survey’s respondents are planning to give their entire workforce basic pay rises averaging 2.7 per cent this year, while a further 36 per cent will target increases at specific groups or individuals. 

Mary Connaughton, director of CIPD Ireland, said the figures pointed to potentially troubling underlying trends that HR professionals ought to be aware of: “Our survey has some welcome positive findings, suggesting that the economic recovery will continue to contribute to robust employment and wage growth in 2016. 

“However, while increased wages and more jobs are good news for individuals, there is a chance that this trend could erode many businesses’ hard-won labour cost competitiveness. The growing use of counter-offers to keep talent also suggests that many Irish employers are struggling to keep key people at current pay levels as employment opportunities in the labour market increase, raising questions about organisations’ future talent pipelines. 

“Failure to address this will ultimately leave employers paying through the nose to recruit and retain staff. While employees may feel the benefit of this in the short term, it will undoubtedly prevent them from investing in key areas, such as innovation and workforce development.” 

The CIPD also pointed to January’s 50c increase in the national minimum wage – which the survey said would affect 28 per cent of private sector employers – as having a substantial impact on businesses’ wage bills, and their talent development plans.

Irish GDP increased by 7.8 per cent in 2015, the highest rate in the Eurozone and above even the most optimistic official projections. A pay survey from Morgan McKinley, released in January, found that the use of interim IT contracts in 2015 outpaced even the significant growth of 2013-14, with the financial services sector poised for particular growth in 2016.