Labour shortages threaten post-lockdown recovery, say local business leaders

A major labour shortage is the biggest threat to the local economy making a robust post pandemic comeback.

That's according to the presidents of Mullingar and Athlone chambers, who made the comments at a pre-budget online meeting with Minister for Finance Paschal Donohoe this morning.

Speaking during the event sponsored by The Ardonagh Group, which is opening a global data and risk management centre in Mullingar, the president of Athlone Chamber Alan Shaw said that the availability of labour is “the single biggest issue” facing many local businesses as they adjust to the full reopening of society.

He said that while most sectors are affected, he was recently speaking to a local childcare provider who said that the current difficulty in hiring new staff is similar to what they experienced at the height of the boom.

He said that businesses are concerned that a labour shortage will lead to a “spiralling” of wage costs, which will have a knock on effect on inflation levels and put upward pressure on consumer prices.

Many companies are now having to look outside Ireland to hire staff but there are “big issues” with the pace at which work permits are being processed by the state, he said.

The president of Mullingar Chamber John Geoghegan echoed his Athlone counterpart's sentiments saying that there are major labour shortages in the construction sector, in particular.

He said that for the first time since the Celtic Tiger years, he was hearing of “lads coming over from Moldova over the course of a weekend to work on a building site in Navan”.

Minister Donohoe said that when nearly 500,000 were on the PUP in January of this year, no one would have predicted that there would be a labour shortage later in the year.

“If we had said that by October we would be having discussions about labour shortages when in January we were confronting the risk of mass unemployment again, we would have thought it was simply a swing that was too big to happen over nine months. It has happened. If you think of where we were in December of last year, not to mention March to June of last year, to be in a position where we are seeing domestic demand at the level that it's at, is really a remarkable change.

He said that the supports introduced at the support of the pandemic have driven the rapid recovery of the economy.

“The economic supports that we put in place have really made that happen, supports such as the PUP are the foundations of our economic recovery.

“The things that we will be looking at in the budget on Tuesday will be, number one, the level of capital investment within our economy. I am acutely aware of some of the risks that are developing at the moment could yet be a source of risk to a recovery. For example, where we are with inflation, where we are with the supply of homes...

“Number two, how we can help our public services cope with the pent up pressure they are now facing. Many of you may be aware of the challenges that our hospitals are facing at the moment and how we can help them...”.

While he said that he could not go into any detail of the specifics of “number three”, the minister said that in each budget “we always look at things within our business taxation code to see if there are areas of support and help that we can give and this budget will be no different”.

“There are an array of things that over the weekend we will conclude on and, of course, like any budget there will be many people that will say it doesn't go far enough, there will be an equal number of people who will say that it has gone too far. Everyone will evaluate it through their own particular need and find it wanting but it is my job to make the case in the round.”