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Over 70% of businesses plan to increase staff salaries in 2024

By May 8, 2024No Comments

Over 70% of businesses expect to increase salaries this year, while 40% plan to hire more staff, new data shows.

The latest KPMG Enterprise Barometer reveals overall optimism among Irish businesses, with 65% expecting turnover to increase in the next 12 months

However, those surveyed highlighted a number of challenges facing businesses this year, with rising labour costs top of the list.

85% said labour costs will be their most significant hurdle, up from 43% last year.

“It looks like the system cannot take further increases,” Alan Bromell, Head of Private Enterprise at KPMG Ireland said speaking on Morning Ireland.

“There is a tipping point where businesses are no longer viable,” he warned.

Over half of those surveyed attributed the rising cost of doing business to wage inflation, a significant increase from 22% in 2023.

The data shows that recruitment remains a big issue for Irish companies, with 64% facing problems finding suitable candidates, compared to 60% last year.

Mr Bromell said these companies are competing with large multinationals, at a time of full employment.

He said the shortage of affordable housing is also adding to their recruitment challenges.

On the issue of Artificial Intelligence, just 15% of companies believe AI will lead them to reduce their workforce.

The findings suggest that the adoption of AI is still at a very early stage, with only 21% of firms currently having a defined AI strategy.

Mr Bromell said the research shows that overall there is a general awareness of the transformative impact AI will have, but businesses have yet to feel that impact.

When asked about their views on the current tax regime, less than 30% think it encourages entrepreneurship and growth, up slightly on last year.

70% believe the Irish tax regime is more challenging for domestic businesses, while 60% are concerned about the “administrative complexity” of the Irish tax system.

The top three tax measures businesses would like to see in Budget 2025 include the introduction of tax measures to encourage sustainable behaviour, amending Capital Gains Tax rates or rules to encourage investment in Irish companies, and enhancing the Employment Investment Incentive Scheme.

Among the other findings – sustainability remains an important issue for the vast majority of firms, with eight in ten supporting more action on climate change.

However, almost 60% of companies are worried that an increase in green initiatives will lead to a rise in costs for their business.

Mr Bromell said those concerns could be holding businesses back from taking action, with many struggling to see the cost benefits.

“Our experience in KPMG is that increasingly this whole issue is being pushed down the supply chain from the large multinationals, and it is no longer a choice for domestic and indigenous businesses,” he added.

When it comes to diversity, just 65% of respondents said they had a diverse management team, down from 76% in 2023.

Meanwhile, only half have policies and strategies to address any gender balance gap in their management team, a fall from 62% last year.

“If you don’t have your pipeline right when it comes to the gender balance gap, then it won’t feed through to senior level,” Mr Bromell said.

Article Source: Over 70% of businesses plan to increase staff salaries in 2024

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