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Lack and cost of accommodation biggest problem for tech firms

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Lack and cost of accommodation biggest problem for tech firms

Lack and cost of accommodation biggest problem for tech firms
August 18
09:00 2017

While staff retention was the primary difficulty for Digital and Technology companies in 2016, this has become secondary to the fastest emerging problem in 2017 – the lack and the cost of accommodation. According to the latest market analysis and salary survey by recruitment group Prosperity, the enduring reality is that the Digital and Tech sectors in Ireland cannot be sustained by the indigenous skills base. Irish Universities simply do not create nearly enough graduates to fulfil the demands of the multinational and indigenous Digital and Tech sectors in Ireland. Therefore, there is a reliance on attracting foreign talent to Ireland, and in recent years, as many as 40% of staff placed by Prosperity have originated from abroad.

This reliance of local demand on international supply is now being jeopardised by the increasing cost of living here; in particular the cost and the availability of rental accommodation.

Whereas in 2016 and preceding years, we had a rejection rate of approximately 15% on job offers to candidates living abroad, by the third quarter of 2017 that has doubled to nearer 30%. Time and again, candidates from abroad have cited an internet search on the cost and availability of accommodation in Dublin (and the many associated horror stories) as their reason for rejecting a job offer, and they instead choose to remain at home or locate to a different European city.

“This crisis of supply has in part been a motivating factor in Prosperity expanding to service Digital and Tech companies based in other European markets, and we now have a presence in Paris, and are establishing offices in Berlin and Lisbon,” a spokesperson for the firm said.

“Salaries in the Continental European Digital and Tech Sectors often closely mirror those paid in Ireland, yet the cost of living index can be far lower. For example, a mid-weight User Experience Designer would pay 80% less for an apartment in Lisbon yet they might earn a salary of just 10 – 15% below what they could earn in Dublin. If you bundle in transport costs in Lisbon (also 80% less) and the cost of food (at 50% less), and the sunshine, the maths doesn’t exactly favour Dublin.

“We tend to compare unfavourably with a few destinations in Europe. For example, the Digital / Tech jobs market in Berlin is doing well at the moment. The pay range for a Front End Developer in Berlin is €42 – 60k + per year, which pretty much tracks the pay range for an experienced Front End Developer in Dublin which comes in between €45 – 65k per year. Berlin, however, offers higher availability of rental accommodation and at 50% less than what we pay in Dublin; it also offers cheaper transportation at 30% less; and across an index of accommodation, transport, food, entertainment and clothing, it comes in at between 35 and 40% cheaper than Dublin. The top rate of tax in Germany also happens to be a few points lower than it is in Ireland.

“The pay range for an experienced Search Engine Optimisation Specialist in Amsterdam is €30 – 55k + per year. Dublin comes in a little lower at €28 – 50k; but Dublin also falls short on a cost of living index with Amsterdam, with accommodation approximately 10% more expensive in Dublin, and a general cost of living that is approximately 15% higher.

“It can be argued that Ireland often compares favourably on income tax, but we find that candidates in job seeking mode tend to look at the headline comparisons – i.e. cost of rent; gross salary – and give little consideration to how actual take home pay compares between one country and another.

“Anecdotally, we are hearing from clients that foreign nationals are quitting good jobs in Dublin to move to cheaper rental markets. At time of writing, we talked to a client who is losing a key analyst who is returning to Spain due to his inability to move his family here in light of the typical cost of €2k per month for a family sized apartment within reasonable proximity of his workplace. We had been hearing these stories occasionally, maybe on a monthly basis. We seem to now be hearing them on a weekly basis.

“This loss of talent exacerbates the ongoing skills shortages in the Irish market. Demand remains strong – particularly for Technical candidates. Considering that 9 of the top 10 software companies in the world are based here and Ireland is the second largest exporter of computer and IT services in the world and ranks as world number one for Fin Tech, this is no surprise. There remains an acute shortage of candidates in particular areas. 46pc of Tech roles posted by employers are Developer roles. Python Specialists are in demand and difficult to find, and companies are increasingly looking for Front End Developers with strong JavaScript experience and experience working with JavaScript frameworks. UI experience is a real plus. Full Stack Developers are very much in demand too; they are one of the fastest-growing Tech roles in Ireland: Full-stack Developer postings are up by a factor of 8 compared to what they were in 2015.”

 

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