Business leaders believe economic crisis likely in next five years
In the wake of Budget 2019, directors of Irish businesses have signalled a warning to the Government, believing that we are likely to experience another economic crisis in the next five years, according to the most recent IoD Director Sentiment Monitor, a quarterly survey of director sentiment by the Institute of Directors in Ireland (IoD).
- Irish business sentiment remains somewhat optimistic (35%), albeit there is a marked decline in confidence when compared with Q1 (52%) and Q2 (46%) results
- 46% expect the financial performance of their organisation to improve in Q4 (down from 56% in Q2)
- The perception of Government’s performance in Q3 is the weakest since the IoD Director Sentiment series began in April 2018.
- 54% believe the current Confidence and Supply Agreement for the Government will be extended after Budget 2019 and just over half (51%) say that a forthcoming general election is unlikely
- Brexit is seen as the single biggest risk to organisations
- The respondents were equally divided with 46% saying the Government is attuned to the needs of business and 46% saying it is not
- While the principle of gender pay gap reporting is broadly supported, over a third say that their companies have not investigated whether bias exists
- Two-thirds of organisations foster flexible working hours
- Directors feel most positively about an ‘enhanced work life balance’ business trend
The survey of 273 of IoD members, in early October 2018, involved chief executives, senior executives, non-executive directors and chairpersons, and shows that 82% believe that another economic crisis within the next five years is somewhat or very likely. Over half (54%) believes that Ireland’s domestic economy and banking system are not sufficiently resilient or prepared for this and 86% say that the Government needs to run a budgetary surplus to act as a buffer against future economic shocks.
Commenting, Maura Quinn, Chief Executive, Institute of Directors in Ireland, said: "As the Irish economy faces significant risks going forward, both at a macro and micro level due to Brexit uncertainty, amongst many other uncertainties, business sentiment appears to have weakened in Q3. It is quite clear that Ireland's business leaders are in a cautious mood and are concerned for the future of business in Ireland.”
In Q3, just 14% rate the Government’s performance as either very good or excellent (a considerable drop compared to Q1:23% and Q2:30%), and 44% rate government performance as either fair or poor, up from 30% in Q1 and 26% in Q2.
In response to specific questions, 76% of respondents say the Government’s management of the Cervical Check crisis has been either fair or poor and 82% believe its management of the housing crisis has been either fair or poor. Conversely, 66% say the Government’s performance to date as either good or very good in terms of the Brexit negotiations.
Divergent views are also evident as almost half (46%) of the respondents say the Government is sufficiently attuned to the needs of businesses in Ireland with the same percentage (46%) saying it is not. (57% of respondents from SMEs say it is not).
Brexit and growth markets
As March 2019 fast approaches, Ireland's business leaders’ sentiment remains unchanged as they select Brexit as the single biggest risk facing their organisation at 26% compared to 26% in Q2 and 18% in Q1.
The UK is seen as an increasingly less attractive market for growth: Q1 (19%) Q2 (8%) Q3 (5%).
The most significant opportunities for growth are expected domestically (39%) followed by the EU (22%). The US has dropped from 18% in Q1 to 9% in Q3.
It is anticipated that emerging markets will provide significant opportunities for growth for just 5% of respondents.
Gender pay gap and flexible hours
While a large proportion of respondents (64%) agree with the principle of gender pay gap reporting in Ireland, over a third (37%) says that their organisations have not taken action to investigate if gender pay bias exists in their businesses.
Notably, over a quarter (27%) does not agree with the principle of gender pay gap reporting split, as follows by gender (31% of male respondents do not agree; 17% of female respondents do not agree).
More than two-thirds of respondents (69%) say that their companies have taken action to introduce more flexible working arrangements (i.e. flexi-time, job-share, remote working).
While a majority of businesses (57%) are experiencing increasing difficulties in sourcing talent, the same as Q2 (56%), 22% of the respondents state that the sourcing and retention of talent is the biggest risk currently facing their organisation, second only to the effects of Brexit (26%).
Business leaders’ attitudes towards the perceived impact of future trends on organisations, over the next five years, are largely positive. Most (81%) believe that ‘enhanced work life balance’ will have a positive or very positive impact on their organisation.
Following closely is the ‘automation of certain tasks’ (75%), ‘increased transparency’ (66%) and ‘big data’ (64%), and three out of five (60%) say that ‘new management structures’ will positively or very positively impact business. 56% say that ‘artificial intelligence’ will do so.
Notably, 30% say the impact of ‘collective retirement of older workers’ will be slightly or very negative.
*The Director Sentiment Monitor is a research initiative from the Institute of Directors in Ireland (IoD). It tracks director sentiment on a quarterly basis and will compare and contrast trends and attitudes among business leaders in Ireland. Online survey conducted between 1st -5th October 2018 with a sample of 273 members of the Institute of Directors in Ireland.