1. Presentation to the Dublin Chamber of Commerce
2014 CEO Pulse Survey
Presentation to the Dublin Chamber of Commerce
Ann O’Connell, Partner, PwC

2. 2014 CEO Pulse Survey 9th year of the Survey
256 Irish CEOs participated
Good representation across sectors/FDI and indigenous Irish businesses

3. 2014 CEO Pulse Survey
Business confidence higher than 2007 and pre-recessionary times
Latest indicators:
Irish economy predicted to grow by 3.4% - ESRI, 6 August 2014
Latest exchequer returns are 1bn ahead of budget - Dept of Finance
Unemployment currently at 11.2% and falling
Continued expansion in manufacturing and services - Latest Investec Manufacturing and Services Managers Indices

4. 2014 CEO Pulse Survey The pendulum has swung
77% of business leaders expect revenue growth compared to 71% in 2008
69% of business leaders expect profit growth compared to 60% in 2008
58% expect to grow the workforce compared to 54% in 2008
Costs are also expected to grow but not at the same pace as revenues or profits
Highlights business leaders have a firm eye on efficiencies and competitiveness
Maintaining and improving our national competitiveness is key for Ireland and to compete internationally

5. 2014 CEO Pulse Survey Some of the economic and policy threats…
Increasing tax burden top concern, because:
On Corporate tax side : much debate on international tax regime and global tax initiative led by OECD. Irish Minister looking at ways to enhance the competitiveness of Ireland's tax regime
On the personal side - Irish employees now bear a very high burden of tax - entry point to pay 52% is now €32,800.
Other concerns: over-regulation; slow growth in developed economies, uncertain economic growth in Ireland

6. 2014 CEO Pulse Survey Some of the business threats…
The top business threats are:
Rising labour costs – CEOs are concerned about upward cost pressures – we have seen a number of years of wage decline. MNC CEOs also view competitive wage rates and cost competitiveness as key factors in maintaining/attracting investment to Ireland
Availability of key skills – a continued global concern also but more of a concern in Ireland
Cyber threats – PwC’s recent economic crime survey revealed that the incidence of cybercrime has nearly doubled in the last two years (2014: 45%; 2011: 24%) as fraudsters increasingly turn to technology as their main crime tool. Types of cybercrime include crime committed using computers and the internet. It includes the distribution of viruses, illegal downloads, theft of personal data ie bank accounts etc.
Speed of technological change – how business adapt to the latest technologies and embed digital innovations into the DNA of their operations will separate the winners from the losers.

7. 2014 CEO Pulse Survey
Business growth opportunities – sticking to what they know best
60% to target existing markets
Only 10% plan to target new geographic markets
CEOs still wary of scattergun approach and will stick to what they know best

8. 2014 CEO Pulse Survey
Focus on exports 66% plan to increase export volumes in the next 3-5 years Of this, 32% plan to increase export volumes more than 10%
Irish exports grew 7% in the second quarter of 2014 (CSO, August 2014). This bounce-back is predicted to continue as demonstrated by our survey.
Food and beverage doing well – up 10%

9. 2014 CEO Pulse Survey Focus on exports
Improvement in the UK is good for Ireland
CEOs also cautiously exploring other markets such as China, Middle-East, Brazil, Africa and Japan – but a long burn

10. 2014 CEO Pulse Survey
FDI
92% confirmed their investment in Ireland is a success
88% will increase or maintain investment in Ireland, up from 84% last year;
FDI comprises some 27% of Ireland’s GDP
FDI brought more than 13,000 new jobs to Ireland in 2013.
It is estimated that for every 10 Jobs provided by FDI, another 7 indirect jobs are generated.
IDA has secured 100 investments in the first 6 months of 2014, up from 70 last year – with an estimated job creation of 8,000

11. 2014 CEO Pulse Survey
Factors critical to maintaining and/or increasing Ireland’s attractiveness as a location of choice for FDI
Despite the mood of optimism, access to highly skilled people is the most important factor for this investment
Recent improvements in our immigration and visa regime should help this
76% of MNC CEOs said competitive wage rates is critical; 56% said improved cost competitiveness is critical

12. 2014 CEO Pulse Survey
Talent – 69% said availability of key skills is an issue for growth, up from 60% last year

13. 2014 CEO Pulse Survey
Over a quarter reported talent constraints significantly impacted their company’s performance over the last year

14. 2014 CEO Pulse Survey
Room for improvement regarding certain talent related benchmarks
The growing field of HR analytics is a mechanism for enabling evidence-based decision making on people matters – but you need the right information on time to do this!
Only 16% have sufficient information on return on investment in human capital
Only 24% have sufficient information on staff productivity
Only 26% get comprehensive information on employee turnover
51% get sufficient information on labour costs

15. 2014 CEO Pulse Survey
Government priorities

16. 2014 CEO Pulse Survey
Managing global change – the megatrends and Ireland’s opportunity
Technological advances the single most important megatrend in Ireland
In general Irish CEOs lag behind their global counterparts in capitalising on global trends
As a small open economy, Ireland has huge opportunities

17. Megatrend 1: Demographic shifts
Explosive population growth in some areas against declines in others contributes to everything from shifts in economic power to resource scarcity to the changes in societal norms.
Spending of the Global Middle Class in 2005 US$ PPP
Source: Data taken from OECD Development Centre
Working Paper number 285, “The Emerging Middle
Class in Developing Countries, January 2010.
2009
$21.3 trillion
2030
$55.7 trillion
Annual population growth rate 2010 – 2050 (medium variant)
Proportion of the world population aged 60 years or more
Source: UN Department of Economic and Social Affairs
Source: UN report World Population Ageing

18. Megatrend 2: Shift in global economic power
The focus of global growth has shifted. Western economic dominance is a relatively recent phenomenon and the developments we see are essentially a rebalancing of the global economies.
Economic centre of gravity; – 2050
GDP, market exchange rates
Note: Orange indicates earlier years, Maroon indicates later years. Source: Data taken from OECD Development Centre Working Paper number 285, “The Emerging Middle Class In Developing Countries,”
January 2010.
Western economic dominance is a recent development
GDP of G7 and E7 countries at US$ PPP
Source: PwC Analysis
Source: PwC Analysis

19. Megatrend 3: Accelerating urbanisation
In the 1950s, less than 30% of the world’s population lived in cities. Currently, that proportion has risen to 50% and, by 2030, the UN projects that some 4.9 billion people will be urban dwellers. By 2015, the UN estimates that there will be 22 mega-cities – those with population of 10 million or more – with 17 located in developing economies.
World urban population by major region
Source: World Urbanization Prospects: 2011 Revision, Produced by the UN Department of Economic and Social Affairs
2010
$3.8 billion
2030
$4.9 billion
Percentage of population in urban areas, 2030
World urban population
Source: UN Department of Economic and Social Affairs
Source: World Urbanization Prospects: 2011 Revision, Produced by the UN Department of Economic and Social Affairs

20. Megatrend 4: Climate change and resource scarcity
Scarcity of resources and the impact of climate change are of growing economic concern. Demand for energy is forecast to increase by as much as 50% by 2030, and water withdrawals by 40%.
The Food/ Water/Energy Nexus
Water
It takes 1,200 l of water to produce 1 kg of grain
7% of global energy consumption is used for delivering water.
Food
Energy
1-2% of cropland is needed to produce biofuels
With a population of 8.3 billion people by 2030 we’ll need…
Projected water scarcity in 2025
50% more energy
40% more water
35% more food
Source: International Water Management Institute
Note: Orange indicates earlier years, Maroon indicates later years. Source: OECD; Dan Hammer, Center for Global Development

21. Megatrend 5: Technological breakthroughs
Venture capital and private equity attractiveness index
Source: The Global Venture Capital and Private Equity Country Attractiveness Index, IESE Business School, 2013
Breakthroughs in nanotechnology and other frontiers of research and development are increasing productive potential and opening up new investment opportunities.
The beginning of the “internet of things”
Source: Cisco Internet Business Solutions Group, April 2011
“SMAC”

22. Summary Economy is turning the corner Confidence is somewhat restored
Most companies are going for growth (revenues, profits, employment)
FDI flow continues; Exports on the increase
But, concerns around talent and increasing cost base
Ability to attract, retain and reward talent is critical for growth
FDI comprises some 27% of Ireland’s GDP
FDI brought more than 13,000 new jobs to Ireland in 2013.
It is estimated that for every 10 Jobs provided by FDI, another 7 indirect jobs are generated.
IDA has secured 100 investments in the first 6 months of 2014, up from 70 last year – with an estimated job creation of 8,000

23. Thank you
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