Attracting talent is biggest challenge for Ireland’s life sciences sector
Attracting and retaining talent and reform of the personal tax system are the biggest challenges facing Ireland’s important life sciences sector, according to new research from Accreate, the leading global executive search firm.
Strikingly, 98% of respondents see Ireland as having a favourable corporate tax regime when compared to other EU countries, with the other 2% seeing it as neutral in comparison. Unfortunately, this is in stark contrast to how our personal tax regime compares, with 90% believing that Ireland is a less favourable location than our EU counterparts. It’s clear that our tax measures to attract companies to relocate to Ireland do not at all match our ability to attract overseas talent.
Accreate Executive Search surveyed 350 leaders of life sciences businesses based in Ireland to identify the biggest challenges facing the sector in Ireland and gather suggestions from the industry as to how these challenges could be overcome.
Ireland’s life sciences industry employs over 50,000 people across all regions and in in most of the world leading companies. It is home to six of the top seven diagnostics companies and eight of the world’s ten largest medical device companies, all of whom contribute to the sectors €45bn worth of exports each year.
The main findings of the Accreate research are:
• 84% of life science leaders said attracting and retaining talent were the ‘most challenging’ or ‘challenging’ issue affecting their businesses.
• Just over 50% identified Ireland’s personal income tax regime and regulatory environment as the next ‘most challenging’ or ‘challenging’ issues facing the sector.
• 82% identified personal taxation reform as being ‘most important’ or ‘important’ measure that would enhance their ability to attract and retain talent, boosting economic growth.
• There was a clear preference for the broadening of the highest marginal tax rate. Most felt that the highest rate of tax should kick in at a much higher level of income and should be capped at a 50% effective rate, which is still less competitive than our UK counterparts.
• R&D credits came in as a close second in terms of tax reformation to facilitate growth.
• 98% of respondents see Ireland as having a favourable corporate tax regime when compared to other EU countries, with the other 2% seeing it as neutral in comparison.
• 79% of respondents see Ireland as being of significant importance to the future of their businesses
David Phelan, Managing Partner, Accreate commented, “This is the first in the Accreate Connects series of insight reports. We are leveraging our expertise and network in our specialist areas to explore in some depth the issues and challenges facing key sectors such as life sciences, financial services, consumer and technology.”
“Attracting and retaining talent was seen to be the ‘most challenging’ or ‘challenging’ issue affecting their businesses to date. Our personal income tax regime and our regulatory environment were the next ‘most challenging’ or ‘challenging’ issues.”
“However, the difficulties with attracting talent and personal income tax are not mutually exclusive. Well over three-quarters of leaders say personal tax reform would facilitate growth in the sector as it would enhance their ability to attract and retain talent.”
“There is a clear preference for the broadening of the highest marginal tax rate. Most leaders feel that the highest rate of tax should kick in at a much higher level of income and should be capped at a 50% effective rate, which is still less competitive than our UK counterparts. This would make Ireland a more competitive location for highly skilled professionals to seek employment.”
“R&D credits came in as a close second in terms of tax reformation to facilitate growth. Many feel that there is a need to include a broader range of activities under the scheme which is seen as less valuable to pharma and biotech businesses with higher value research, longer timelines to commercialisation. Respondents felt that there should also be more of an incentive for IP developed in Ireland that then goes to production here too.”
“Corporation tax also received a mention as 14% felt that reformation there would provide growth. This is due to the perceived threat from the Trump administrations drive to reduce the corporation tax rate in the US. Many felt that if we made a pre-emptive reduction to 10%, that this would put any US reformation out of reach of affecting inward investment to Ireland and reduce economic uncertainty around investing here in the near-medium term.”
“If personal taxation, corporation tax and R&D tax credits were reformed, 84% believe their business would both increase investment in Ireland and increase headcount. 42% also felt that they would see a growth in revenue, should these measures be introduced.”
“Overall, the sentiment for the businesses currently situated in Ireland is strong. 79% of respondents see Ireland as being of significant importance to the future of their businesses, which is a considerable endorsement of the value which Ireland brings to the many multinational businesses here.”