The North will get much-needed financial jobs and the South will be able to draw on a deeper talent pool, writes Simon Carswell
THE BATTLE for financial staff in the IFSC in Dublin has become so intense that head-hunters have been known to loiter outside offices and tempt workers on their lunch breaks with job offers.
Despite the global financial tremors, the Irish financial services sector kept growing last year. But many international companies lament the absence of a large pool of talent to fill their vacancies.
A major headache for most IFSC firms, it is seen as a significant obstacle to future growth and an erosion of the Republic's competitiveness and productivity.
One of the largest employers in the IFSC, Bank of New York Mellon, bemoaned this publicly. The company's president, Gerald Hassell, told The Irish Times in an interview last September: "With us growing here - and the other financial services companies growing in the marketplace - there is not enough depth of talent of employees for us to hire, so we tend to hire from each other."
Brian Cowen and his counterpart in Northern Ireland, Peter Robinson, announced on Monday a new initiative that will allow financial firms in the South to establish satellite offices in the North to help cope with the deficit of skilled staff in the South and to create well-paid jobs in the North.
Cowen described it as "a win-win result" for both economies. The North will get much-needed financial jobs and more income tax receipts, while the financial companies in the South can access skilled recruits and keep reaping the benefits of low corporation taxes. It will encourage Dublin-based companies not to relocate.
Somanagement roles will remain in Dublin, while back office staff will be based in Belfast.
It was apt that Cowen and Robinson announced the initiative in the Titanic Quarter in the Belfast docklands, an area which in its heyday employed 35,000 shipbuilders. Estimates put the Northern jobs boost from the latest initiative at not quite that level. Robinson said there were 8,000-9,000 vacancies in financial services in the South that cannot be filled, though the plan is expected to create 3,000-5,000 positions over five years. That means well-paid jobs for lawyers, accountants and economists. Companies could save 40 per cent on wage bills, improving competitiveness in the South.
Bank of Ireland's Northern Ireland economist Alan Bridle says the initiative couldn't come at a better time - the North is in dire need of new financial employers. Financial and professional services are badly under-represented in Northern Ireland, where a third of the workforce is employed by the public sector, compared with 20 per cent in the Republic.
"It makes perfect economic sense on a small island," says Bridle. "It is a retention strategy for the Republic - there may be a rush to relocate financial service jobs to another part of Europe and Northern Ireland is a natural place for them."
The developers of the Titanic Quarter, which covers 250 acres, compared with the IFSC's 35, will be encouraging firms in the IFSC to set up in the 600,000 sq ft of offices they plan to build.
Mike Smith, chief executive of the Titanic Quarter, says the initiative will tempt IFSC firms to open operations in Belfast. "We have an educated labour force and costs in the North are at least 50 per cent lower than in Dublin. This comes at a time when banks are looking at their costs."
Leading the project is developer Pat Doherty's Harcourt Developments. Another shareholder in the Titanic Quarter is financier Dermot Desmond, who is credited as the inspiration for the IFSC.
However, the North has some catching up to do if it is to develop an IFSC of its own. Known as the brain drain, about 4,000 students leave every year for British universities. Then there's the annual "milk-round" of graduates every spring with financial companies visiting the North's universities and cherry-picking the brightest and best for jobs in Britain.
Few return. Bridle says it will take time to tempt them back and "a financial finishing school" is needed to train Northern graduates up to the requirements international firms expect. "There is a pool of graduates but their skills are not perfectly aligned with the job specs," he says.
Mike Irvine, head of Davy Stockbrokers in Northern Ireland, says the initiative's timing could have been better. The credit crunch has cost many back office financial jobs, particularly in hedge funds. "This could be a slow burn - it could take three to four years."
Economist Neil Gibson, director of the Lisburn-based research firm Oxford Economics, says it should not be presumed that thousands of jobs will be created overnight. He said the North's financial sector only employs 20,000 people, including those in retail banks.
"We export a lot of talent so there is potential but there is not a huge ready-trained bank of labour here." Overseas graduates will only return for the same standards of living and pay they enjoy in London. "They are going to want to come back for £50,000-plus jobs, not back office jobs," he says.
University of Ulster economist Mike Smyth says the shortage of skilled staff in the North could even force new financial firms initially to head-hunt staff from an already shallow pool of financial talent.
While some cautioned its immediate benefits, the initiative was universally welcomed in the North and few saw major political significance in the financial sectors North and South joining forces.
