Growing Pains

Paul Cotter examines the labor market which has fuelled the success of the IFSC and finds that success on this scale brings with it its own set of challenges.

It would be difficult to find a city on the globe that has seen its financial sector grow to the levels that Dublin has seen over the last ten years. The IFSC, which was created to attract financial institutions to set up operations here, now offers employment to over 15,000 people from what was once a Greenfield site. The banking sector, which predominantly covers fund administration, is the second largest such location in the world and offers high volumes of employment opportunities. The insurance sector is also a large employer in the Irish market with more than 100 firms trading within the city but, in contrast to the banking side, is very much on the front end of its markets, offering a real alternative to other international locations such as Bermuda and London. Within insurance several types of companies are based in Dublin including captives -both managed and self-managed, direct writers and reinsurance companies. Therefore there is generally a high volume of positions being regularly recruited for across the underwriting, accountancy, actuarial and claims disciplines.

Historically a high number of Irish people have emigrated to pursue their careers and the same has been true for professionals working in the insurance sector. When I talk to executives here, either as clients or candidates, a very high percentage that now work for IFSC companies previously worked overseas. This I believe had a massive impact on the success of the companies that opened as they carried with them a wealth of knowledge, experience and contacts. Another factor which has contributed to the success of the Dublin market is our capital city’s profile. It is no longer viewed as a small city at the edge of Europe; instead it is a city that has transformed itself into a financial centre that allows companies to use it as a hub into Europe. We have to be honest and admit that the incentives that were used to attract these corporations into Ireland were the prime reason for their establishment, however without the talent that allowed these companies to grow it would not ultimately have been the success story we see today. Another influential factor was and remains the increasing number of foreign nationals that now live and work here. Look at any developed economy in this world and you will see the positive impact migrants have in the workforce. We are not just talking about the increasing numbers of people coming from the new accession states within the EU but also the British, Americans, Germans, French and Spanish. This shows no sign of abating. So why are they coming here? Simple, we have a strong economy that offers long-term employment prospects.

To provide an understanding of how strong the market is in Dublin, Joslin Rowe conducted some research with the Irish Independent at the end of November 2004. It was an illuminating project and some revealing data was unearthed. Almost 70 key financial services companies and 171 employees in Dublin were asked about employment trends for 2005. Encouragingly, Dublin’s insurance companies revealed a positive level of optimism for business prospects in 2005 and a very significant number (67%) are expecting to increase headcount during the rest of the year. Even more positively, just 1% of the firms felt they would be decreasing staff this year.

However, the need to increase headcounts is creating its own problems. Initially companies did not have any difficulty in finding people for roles here in Dublin. But as an increasing number set up, and the more established ones expanded, the demand for staff grew. Since the Irish domestic insurance market does not really provide the skill sets that many companies require, the need to find people who have gained international experience remains strong. Examples of roles which require this extra knowledge include: underwriters within property and casualty, financial lines, and reinsurance (various classes); captive personnel who have experience in managing global programmes; and accountants with specific industry experience. In fact, 65% of employers in our recent survey admitted difficulty in recruiting for specific skill sets last year, saying insurance underwriting professionals in particular were the hardest to source.

Employers’ solutions to these staff shortages focus mainly on training existing staff (53%), recruiting from overseas (32%) and implementing and expanding employee referral schemes to generate talent at home (22%). 1 Certainly, training is something which Dublin firms are incredibly committed to and our domestic talent pool is becoming stronger year on year.

Offering competitive salaries is also key in the fight to attract the best talent into the market in the first place or indeed back to Dublin. Although in real terms salaries are still lower than both the London and Bermudan markets they have significantly increased over the years. For example, the smaller candidate pool on the senior underwriting and broking side has ensured that remuneration packages have seen a large increase.

While Dublin will come under increasing pressure from competition from other locations, changes in legislation and the ongoing infrastructure problems, we will remain a strong player in the international insurance market. After all, it is not easy to develop a base of talent and such a strong reputation that can offer real value to companies. Any decision to move would lose this critical value.

1. The percentages are correct as the respondents could tick more than one option.

Paul Cotter is Managing Director of Joslin Rowe Dublin.

“When I talk to executives here, either as clients or candidates, a very high percentage that now work for IFSC companies previously worked overseas.”