While recent employment statistics appear benign, they may not tell the full story, suggests Michael Farrell.
Across the island of Ireland, employers continue to experience difficulty attracting and retaining employees. Nisra’s May 2019 Labour Market Report shows that the employment rate in Northern Ireland reached a record high (71.3%) for the first three months of the year while in the Republic of Ireland, there was an increase in employment of 3.7% or 81,200 in the year to the first quarter of 2019.
While these statistics appear benign at first glance, they do not tell the full story. For example, some businesses may be hiring rather than investing in training due to the ongoing uncertainty about Brexit.
InterTradeIreland’s latest All-island Business Monitor shows that only 11 per cent of business planned to increase levels of staff training in Q1 2019, compared to 17 per cent in the same period last year.
Businesses are also continuing to delay investment and decision making. Almost a third of larger companies (31 per cent) say Brexit is having a negative impact on investment decisions, according to InterTradeIreland, and only 6 per cent of firms plan to spend on research and development over the next 12 months.
Smaller businesses are particularly exposed
IntertradeIreland also highlights the vulnerabilities of smaller businesses—34 per cent of micro firms record profit margins of less than five per cent, leaving them highly exposed to external shocks that cause even minor increases in costs.
During periods of uncertainty, the ability to generate accurate forecasts is very important. The better your forecasts, the better your decision making will be. Good forecasts require access to accurate data. While not every business has the in-house expertise to produce accurate forecasts, outsourcing can be an affordable and effective solution with the added benefit of 24/7 access to reliable information and support from qualified accounting professionals.
Optimising working capital is also vital. Areas to focus on include controlling spending, stocking, collection procedures, management of labour, reviewing contracts and negotiating better terms where possible, and swapping short-term debt for cheaper long-term debt.
Finally, remember that InterTradeIreland offers 100% financial support up to £2,000/€2,250 towards professional advice in relation to Brexit matters. For details, contact PKF-FPM’s Brexit Centre of Excellence.
Michael Farrell l Director