In This Issue

- tax briefs page
- grants mean good business for smes
- business briefs
- new national pensions framework
- legal briefs page
- setting your sites page

RECRUITMENT & EMPLOYMENT OUTLOOK FOR 2010

Most economic commentators agree that the next six to twelve months are going to be challenging for the economy as a whole, however, small ‘shoots’ of recovery are starting to appear. The fourth quarter of 2009 saw a 27% increase in the volume of recruitment conducted by recruitment consultancies in the Irish market, and the fi rst three months of 2010 have continued in a similar vein. While the impact on employment numbers continues to make worrisome headlines, people actively engaged in the market have a slightly more positive story to tell.

Employers have cautiously started hiring again. Why? Well, for a start, employer confi dence is starting to rise on the back of more positive economic indicators. We have seen positive growth return to a number of Ireland’s closest trading partners including the US and much of the Euro area. Consumer confi dence is also creeping upwards. The ESRI announced that the consumer sentiment index made an 11.3% leap in January 2010.

Two sectors have continued to perform above the average: IT and Sales & Marketing. The IT market has shown a 32% increase in the number of new positions handled by agencies since September 2009. Software Developers maintained their salary levels to a large degree in 2009, particularly developers skilled in .NET and Java technologies. The web industry has been particularly robust over the last year, therefore, people with strong web skills were largely immune from the recession in terms of pay.

Across most industry sectors the need for good sales people remains high. Companies realise that good sales people are integral to the future development of their business, particularly if they can help win new business, retain existing clients and ultimately aid the growth of revenue. In 2010, there will continue to be a demand for experienced sales professionals and new business developers. The demand has increased signifi cantly due to the restructuring of sales teams and increased demand for ‘hunter’ profi le personality types.

Accountants were not unaffected by the downturn: salaries, in practice, were reduced by around 10% across the board. Areas that have shown a considerable slowdown include Wealth Management, Transactions Services and Corporate Finance. However, every cloud does have a silver lining, and Corporate Restructuring/Insolvency remains an area of growth for most fi rms.

The broader banking market had an extremely tough year in 2009. The term ‘Recruitment Freeze’ has been widely associated with domestic banking markets since mid- 2008. This trend should continue into 2010, with some minor exceptions in business critical areas. Investment management and associated markets made a muted comeback toward the second quarter of 2009, with a return to a reasonable volume of recruitment towards the end of the year.

Within the Insurance sector, the fi rst quarter of 2009 was a low point for employment. The second half of 2009 saw steady improvement in the number of new and replacement positions created. This owed much to the decisions of some international insurance providers to relocate their head offi ce functions to Ireland from other off-shore locations. Whilst other markets are slowly returning to normal, the construction sector continues to fl ounder, and the recovery of service markets, such as Legal, Architectural and Retail Banking, has been delayed as a result. The outlook for these particular markets is dependent largely on the success or failure of NAMA along with the ability of employees within these markets to adjust their expectations regarding salary and scope of responsibilities.

The provision and subsequent demand for outplacement services to employers has increased by 21% during 2009. Employers see the value of a properly delivered outplacement and career transition service in terms of supporting an organisation and its employees through this diffi cult time. In particular, these services signifi cantly ‘soften’ the effect of redundancy on departing employees and leave a positive impression of the company. In order to aid the selection and hiring process employers are looking for more sophisticated ways of screening and sourcing candidates. Companies are also looking at ‘partnering’ with experienced recruitment consultancies that can provide ‘value-added’ services such as psychometric testing, interim and temporary solutions, talent identifi cation and acquisition, as well as executive search strategies.

One of the ironies of the current market is that it is still extremely difficult to find and hire ‘good people’. Skilled mid-to senior-level candidates who are currently employed are reluctant to move from the safety of their current positions. To this end, employers are finding that there is enormous value in partnering with recruitment consultancies that are skilled in sourcing ‘hard to find’ people. Consultancies that have the expertise and reach to identify ‘passive’ candidates that employers would not otherwise be able to source are enjoying significant growth in demand for their services.

GREAT PEOPLE MAKE GREAT COMPANIES

More and more employers and business leaders are realising that the single biggest difference that they can make to their business in 2010 is acquiring the most talented people in the market. Identifying, attracting and retaining talented individuals will be the name of the game in the Post-Celtic Tiger era.

Abrivia’s full Salary Survey for 2009/2010 is available online at www.abrivia.ie

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In This Issue

- Tax briefs
- Cloud computing
- Business briefs
- Efficient business in 5 steps
- Legal briefs
- Debt enforcement

Investment Review and Outlook

Just over one year on from Lehman Brothers’ collapse, the world economy appears to be regaining its positive momentum and risk assets (i.e. equities, corporate credit, etc.) have performed remarkably strongly. The key equity market drivers have been risk and liquidity friendly economic policies, a robust corporate bond market, and the fact that many investors appear to be in underweight equities.

Yet, the story of the last quarter has not been entirely one of increasing risk. Government bond yields have fallen and gold has broken through the psychological $1000 levels – moves normally associated with increasing risk aversion. This suggests that some investors have not forgotten the events of the last year and are far from unanimous in embracing the ‘risk trade’.

The main problem that many investors face in their portfolios is that the asset class they chose to protect them against the ravages of the financial crisis – cash – does not earn enough of a return anymore, while the main reason for holding cash – uncertainty – is slowly fading away. Hence, the dominant capital ow in markets was the steady movement out of cash and into other better yielding assets.

THE NEAR TERM?

IT’S ALL ABOUT MOMENTUM,

WHICH CAN CHANGE QUICKLY!

All attention has now shifted to the shape of global earnings recovery. Predictions of a lacklustre economic recovery have raised fears that analysts’ consensus forecasts for 20–30% global earnings growth in both 2010 and 2011 are too ambitious.

The immediate macroeconomic backdrop is defined by strenghtening economic growth, very low in ation, ultra-low short-term interest rates, private sector deleveraging and extremely unorthodox monetary policies. Global interest rates remain at historically low levels and monetary authorities have clearly indicated that it is too early to shift towards tighter monetary policies. Investors are becoming less enamoured with cash returns and are being encouraged to move up the risk curve and into government bonds, corporate credit and, increasingly, equities.

Markets should also continue to benefit from a backdrop of earnings recovery determined by the moderation of inventory de-stocking, which will lead to some inventory re-stocking, a better (although subdued) employment environment, and the consumption benefits of some restored wealth via higher financial markets.

THE MEDIUM TERM?

IT’S ALL ABOUT THE HEADWINDS,

WHICH CAN CHANGE QUICKLY!

Despite gathering evidence of a recovering global economy, central bankers are sending a clear message that until they are convinced that further de-leveraging has taken place and unemployment is no longer a threat, the current stimulus will not be withdrawn. Therefore, today’s massive policy stimulus is likely to be maintained for longer than needed as insurance against an economic relapse.

Perhaps the greatest challenge to corporate profitability will be in late 2010/early 2011 when we should have already seen a cyclical recovery in profits, but when monetary and fiscal policy are likely to be tightened.

Of course, no market moves in a straight line (up or down!) and periodic reversals are highly likely, especially with potential confusion from upcoming economic data as upward momentum slows. When things become less supportive on the economic front, risk appetite could moderate and even turn adverse. It is anticipated that investors will become more defensively oriented. In addition, future investment returns may start to re-emphasise dividends/yield, given the substantive differential between cash returns and dividend yields. Private investors who cannot put up with any possible volatility should steer clear of equities no matter what their perception is of current market conditions.

SUMMARY

There is every reason to expect an uneven pattern of economic data releases to emerge because rates of growth clearly accelerated sharply around mid-year and are now expected to level off. It is also highly likely that the challenge from ongoing de-leveraging in the household and financial sectors will make future growth rates lower than we have been used to. A foundation for recovery is intact, although not all the pillars are in place, and the latest economic news (particularly unemployment) provides reason to recognise the downside risk.

While it is tempting to recommend an exclusively relation based strategy, in light of the scale and duration of the rally to date, the rise in asset valuations and the existence of some unique upside and downside risks, a broader, slightly conservative approach is going to be most appropriate for many private investors.

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