Lessons from the month of January

As February creeps in and brings us a little more light, we’ve decided to look back on the month that was – and share what we’ve learned from some of the biggest stories in business news.

1. Argos redundancy packages

First up, beloved by children and adults, especially closer to Christmastime, ​​Argos announced that it is to close all stores and operations in the Republic of Ireland by the end of June, with more than 500 staff being affected. The decision follows “a long period of careful consideration” with the retailer concluding that “the investment required to develop and modernise the Irish part of its business was not viable”.

There are 34 bricks and mortar Argos stores across Ireland. It is understood staff were told the trading conditions in Ireland, including rents and the overall cost of doing business here, were the reasons behind the closure.

While some of the stores will close from March as their leases expire, the remainder will close by the end of June. Argos said in a statement that it is “committed to doing everything it can to support its people and is talking to 580 colleagues” about their options.

Mandate, the trade union that represents Argos staff, has expressed its disappointment at the decision. “We understand this is difficult news for our customers and colleague,” said Argos Ireland Operations Manager Andy McClelland. “As with any major change to our business, we have not made this decision lightly and we are doing everything we can to support those impacted.” Mandate official Michael Meegan said the union would be engaging intensively with the company to get the best possible deal for the workers who are being made redundant.

People Before Profit spokesperson on workers’ rights Paul Murphy said the closures are a “cruel blow to the 580 workers affected”.

“It underlines how vulnerable retail workers are in the current environment. We will redouble our efforts to get the Debenhams Bill passed into law to protect other retail workers in situations where a company declares bankruptcy,” Murphy said. “People Before Profit will be talking with Argos workers in the coming days and will support workers fighting to retain the jobs or for improved redundancy.”

2. Calls for Leaving Certificate Accounting paper to be reviewed

Ongoing capacity constraints remained consistent in the first few weeks of 2023, with the President of Chartered Accountants Ireland pointing to the urgent need to address the ongoing shortage of critical accountancy skills in the Irish labour market at his election by members at the Institute’s 134th AGM in Dublin, recently.

“Despite the recent and current challenges of the pandemic and the re-emergence of significant inflationary pressures, the economy continues to grow,” Pat O’Neill told attendees. “Our economic pillars of large-scale foreign direct investment and successful domestic business require appropriate levels of accounting talent, both within their organisations and the accounting profession upon which they rely for their transactional and regulatory compliance needs.”

Despite this fundamental need, however, the reliable supply of accounting talent continued to be disrupted by structural issues requiring urgent action, O’Neill said. “If we don’t work hard to tackle significant issues facing accounting supply in this country relating to education, qualifications and permits, this ongoing shortage could have a significant impact on both indigenous and FDI businesses, potentially harming the wider economy in the future.”

Among the significant issues he presented was the accounting syllabus at secondary level schooling, and how the current syllabus–which will be 26 years old this year–is no longer fit for purpose. “Not only does this mean that our students are being taught material and concepts, which are now somewhat obsolete, but the syllabus also does little to introduce our young people to the breadth of what the modern accountant’s role actually is—and how they add value to businesses, the economy, and society as a whole.”

It is crucial that the syllabus be reviewed, refreshed, and made “truly fit for purpose” in the 21st century, O’Neill said.

3. The role of inherited wealth in Ireland today

According to fresh analysis from the Central Bank of Ireland, the number of Irish households receiving inheritance or gifts from previous generations is growing. Using self-reported data on inheritances from the Household Finance and Consumption Survey (HFCS), the Central Bank’s analysis found the incidence of inheritances appears to be increasing over time, with a higher proportion of households receiving inheritances in the last 20 years than previously.

Up until the year 2020, more than one-third of households in Ireland had received inherited wealth totalling €97 billion–a figure which accounts for approximately one-sixth of the current net wealth for these households. Of those who received an inheritance, cash was the most common type of asset received, at 57%. Just over one-third received homes, followed by land at 19%. Parents accounted for 78% of the total value of all inheritances and gifts as of 2020. In less surprising news, the analysis also found that those who have received an inheritance are typically much wealthier and own more property.

International studies on wealth transfers through inheritance or gifts have shown the deep-seated inequality in intergenerational wealth, further stating that such wealth transfers can account for up to a third of current net wealth in some countries. However, the Central Bank study found that the value of inherited wealth is a larger share of total wealth for those in the middle of the wealth distribution than for those at the top. As a result, they said inheritances in Ireland do not appear to contribute to wealth inequality, and may even reduce wealth inequality, which is similar to findings in Britain, the US, and Germany. “We find that inheritances may actually have reduced overall wealth inequality over time, as their contribution to net wealth is higher for households in the middle of the wealth distribution than for households at the top,” the report concludes.

4. Even more tech job losses

It’s been a bad few months for the tech sector. Mass global job cuts at tech giants such as Meta, Twitter, Stripe and Alphabet, the parent company of Google, have as analysts have put it, given investors a “wake-up call” for the side effects of Ireland’s over-dependence on big tech. The country’s decades-long gamble on global IT has paid off handsomely in investment, according to stockbrokers Davy Group, with jobs and billions of euros in taxes paid by the multinationals that have European headquarters in the Docklands, and employ 12% of the capital’s workers.

However, with Meta sacking 13% of its global workforce, Musk cutting Twitter’s employees by half and Stripe, the payments company founded by Limerick’s Collison brothers, letting go of 14% of workers, the tech bubble of the past decade may have burst as companies that expanded fast now face a rising cost of credit. The companies are also in direct competition with one another over an area called generative artificial intelligence. Listen to our Noa monthly Series on AI in 2023 HERE

In a memo to staff, chief executive of Alphabet, Sundar Pichai said that the firm had reviewed its products, people and priorities, which led to the decision to cut jobs. “The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here,” Pichai wrote. Like many other companies, Google says it expanded too quickly and now faces a “different economic reality” from what it thought. Wayflyer and Stripe said something similar when they announced job cuts.

According to the tracking site, Layoff.fyi, so far this year, 133 tech companies have announced layoffs impacting nearly 39,000 jobs. Last year, more than 153,000 jobs were cut from the tech industry.

Summary:

Even though we seem to be in our Liz Truss era, the Irish economy actually appears more carrot and less stick. It’s a good start to the year as we’re unlikely to experience a full-blown recession, according to Minister for Enterprise, Trade and Employment Simon Coveney, anyway. Speaking at the launch of Enterprise Ireland’s latest annual report, which showed firms backed by the agency created an additional 20,000 jobs last year, Coveney said the economy here had “a very strong base of resilient, tech-orientated” companies which “we can continue to support and build on”. However, he warned the deteriorating economic outlook internationally was likely to bring “setbacks” in terms of job losses. “I think we will see disruption . . . that’s not a surprise, a lot of countries are going into recession this year,” he said. “We’re not…and we’re going work hard to make sure we don’t.”

Overall impressions? It seems the best idea is to make like Paschal and simply weather the storm, or maybe like Jacinta Ardern and make dignified choices out the wazoo. Saying that, the likelihood is a more Prince Harry-adjacent narrative; going balls to the wall and seeing what happens. For now, we’ll trust Coveney, and those who’ve gotten inheritance into their bank accounts of late. Worse comes to worst, they can get the next round.

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