Tax and transport barriers hold back all-island jobs market

Almost half of Irish workers North and South would consider cross-border jobs, but tax complexity and transport barriers are limiting opportunities across the island.

A significant number of workers across Ireland and Northern Ireland would consider crossing the border for their next career move, highlighting the potential for a more integrated all-island labour market.

A major workforce survey from Ibec, Hays and the Confederation of British Industry (CBI) found that 46% of workers would consider a cross-border role, with higher pay and better career opportunities among the main attractions.

The research, based on responses from more than 1,200 people across the Republic of Ireland and Northern Ireland, also suggests employers see considerable potential in looking across the border for scarce skills.

Some 69% of respondents believe the skills required to fill current vacancies are already available in the neighbouring jurisdiction.

KEY NUMBERS: All-island workforce

Red tape, not borders, hold people and firms back

Yet tax, transport and administrative complexity continue to make cross-border employment more difficult in practice.

Only 30% of workers surveyed said they clearly understand the dual-tax requirements associated with working across the two jurisdictions. Among hiring managers, 53% identified greater tax alignment as an urgent priority, while 51% called for improved transport links.

Speaking about the findings, Fergal O’Brien, Executive Director of Policy, Lobbying and Global Affairs at Ibec, said: “The all-island economy has become one of our greatest shared economic achievements, with an integrated labour market helping businesses access talent, address skills shortages and drive growth on both sides of the border.

“However, these findings show that we are not yet realising its full potential. Almost half of workers would consider a cross-border role, while 69% of respondents believe the skills needed to fill vacancies already exist in the neighbouring jurisdiction. That represents a significant opportunity for businesses and workers alike.”

The research comes after significant employment growth across the island, with 550,000 jobs added since 2019, according to the report. It also found that 26% of recruitment professionals expect the labour market to tighten over the coming 12 months.

‘The complexity of my tax affairs is quite mind-boggling’

Barney Ely, senior managing director for Ireland and Northern Ireland at Hays, believes the figures point to both the scale of the opportunity and some of the practical difficulties involved.

In an interview with ThinkBusiness, Ely said businesses should be able to tap into a wider pool of skilled people across the island.  

“We’ve got a common travel area, but have we got a single labor market,” he said. “The background of it is over the last five or six years, the all-island labor market has been phenomenally successful in its jobs creation.”

The barriers facing workers range from commuting costs and transport links to taxation, pensions and social security arrangements.

Ely has first-hand experience of that complexity through a role that requires him to work across Ireland, Northern Ireland and England.

“As you can tell, I’m from across the water, and I work 60% of my time in Ireland, 25% of my time in Northern Ireland, and then the rest of them my time in England. And so the complexity of my tax affairs is quite mind-boggling, and do I understand it? No, I don’t understand it. Do I have to do it? Yes, but I think that’s what puts people off,” he said.

He said the implications extend to employers attempting to recruit skills that may be available relatively close by, but on the other side of the border.

“69% of employers believe that specific skills needed to fill their current vacancies already exist, but in the neighboring jurisdiction. So there is a perception and reality that I could get this talent if I could only fish in a wider pool of of people to fill the the skills gap that I’ve got in the business,” Ely said.

Smaller businesses face a tougher challenge

The difficulties can be particularly significant for smaller employers that do not have the resources available to navigate cross-border tax and employment requirements.

“What we find is larger organisations have the resource to be able to understand and spend time and money on investigating it on their behalf of their employees. Smaller organisations clearly don’t have that resource or don’t have that readily available, and therefore they might not have the experience in it,” Ely said.

While specialist advice and support are available, accessing them can add expense and time to the hiring process.

“But it can be costly, and therefore it can be a barrier when things need to move quickly and vacancies need to be filled timely as well,” he said.

Flexible working adds another dimension. The survey found that 68% of employees prefer hybrid roles, while just 14% would consider a position that is fully onsite.

Ely said employment structures need to keep pace with changes in how people actually work.

“Hybrid, flexible working, the gig economy, fractional work is so much more prevalent than it was five years ago or so pre-Covid that the regulation, the structure, all of those mechanics that go around the labour market need to evolve in line with the natural behaviors of how people want to do their work and how employers want to do their work as well.”

The research suggests that the concept of a single labour market has yet to gain widespread acceptance. One-third of respondents, 33%, do not regard the two jurisdictions as one unified labour market.

Call for smoother cross-border rules

Ely said greater alignment does not require both jurisdictions to operate identical systems. Instead, the focus should be on making existing arrangements easier for employers and workers to navigate.

“There is significant opportunity to be gained if those tax and those regulation elements can be made smoother. I don’t think we’re going to get parity, and I don’t think we need to get parity to create a more conducive opportunity for people and for businesses. But it’s taking it to the next level. That that’s what the ask is with regard to this.”

Ely said the appetite for cross-border employment is already evident.

“The research shows a clear appetite among professionals to look beyond the border for better pay and career opportunities, while employers increasingly recognise the potential to access skills and talent beyond their immediate market. At a time when businesses continue to face skills shortages, cross border hiring presents a significant opportunity for both organisations and workers.

“However, interest alone will not create mobility. Commuting costs, tax and social security complexities, and restrictions on flexible working can all influence whether a cross-border role is a realistic option.”

Angela McGowan, Director of CBI Northern Ireland, said a better-functioning all-island labour market would help employers access talent while allowing workers to pursue opportunities on either side of the border.

“The ‘Tomorrow’s Talent’ report highlights the importance of employees being able to work seamlessly across the island and employers having access to the all-island talent pool. In a modern economy, we cannot afford to leave talent untapped or critical roles unfilled. A delivery driver working between Sligo and Strabane, or an IT specialist working in Dublin and Belfast, should not face unnecessary barriers to doing their job.”