Many of us will remember Economist Kevin Gardiner coining the phrase ‘Celtic Tiger’ in the mid ’90s, to classify the rampant Irish Economy at the time. Despite the view shared by many that the norm established during the Celtic Tiger could continue forever, we are all aware of what happened in the subsequent years.
What is Leprechaun economics?
Coined by Nobel Prize-winning economist Paul Krugman in 2016, it explains the phenomenal and ultimately artificial statistics around the reporting of our GDP, which at the time, was running at 26% and was later revised to 34%. The outlier performance at the time was subsequently identified as an impact caused by some clever accounting and cashflows by Apple.
Pharmaceutical and Tech Multinationals have a significant impact on our GDP reporting, which has led to the CSO and EU relying on alternative reporting data such as modified GNI* when assessing the performance of the Irish Economy. Even still, with these substitutes in place, the reporting of our economy is still believed to be somewhat embellished.
Where are we seeing the greatest impact?
Working closely with our clients we are aware of the challenges that they face daily in the current economy. Rising energy costs, interest rates, supply chain, competitive pricing and cash flow issues are all common themes. However, the most common variable being witnessed across markets is issues retaining staff, a challenge that is not necessarily restricted to the hospitality sector.
According to Enterprise Ireland, two-thirds of their clients have stated they were short-staffed in 2022. Other studies have shown that in OECD countries, SMEs account on average for 60% of total staff turnover. It’s an extremely competitive market when it comes to talent, which is being seen to negatively affect the availability of employees within the SME sector.
In recent years there has been a shift to a candidate lead talent market, and it is no surprise SMEs find it difficult to compete. Nine of the ten global software companies are hosted in Dublin alone, as well as nine out of ten global pharmaceutical companies across Ireland. Competitive salaries and a recruitment process that may be lacking in comparison to these larger companies are just some of the issues that SMEs are facing.
SMEs boast the ability to provide more opportunities for career progression and the ability to directly report to senior management as opposed to operating within silos seen largely within multinational companies. These are just some of the benefits that SMEs can utilise when operating in a market that is volatile. As we look to the months and years ahead one thing is for certain, SMEs stimulate competition and are important for creating employment and economic development. It is essential that SMEs will be supported when it comes to challenges that will be faced within the market during this time.
For further information contact Fachtna O'Mahony: firstname.lastname@example.org