Does Ireland really face a banker exodus?
The €500k salary cap proposed by the government last month is obviously bad for the executives lucky enough to earn more than that. Add the increased income tax levy to the mix and Ireland suddenly looks a lot less alluring place to work lower down the ranks as well. But is a brain drain on the cards?
One headhunter thinks so. Speaking to the Irish Independent, Simon Waddington, partner with Merc Partners, says: "There's a danger these caps will lead to a brain drain of bank executives. The cap also makes it very difficult to attract talent from outside Ireland."
Finance minister Brian Lenihan's proposal to cap bankers' pay at €500k was a controversial one, but he's not alone. The US plans to set an upper limit of $500k on banking salaries within TARP covered institutions, and although the UK has ruled this out, bankers there are facing tougher regulation over bonus payouts and a maximum income tax level of 50%.
David Hannon, manager at Deloitte Executive Search in Ireland, thinks the problem may be overstated.
"In Irish banks, at executive level the general policy is to recruit from the indigenous population, who often have too many ties to consider leaving and will probably live with the cap," he says. "However, somebody on a secondment within an international bank, who is only here for their career, is likely to seek negotiations to ensure the cap doesn't affect them, or look to be redeployed back to their country of origin."
The bigger concern, perhaps, is that the lack of new job opportunities and bigger income tax levy, may prompt those in lower ranking roles to emigrate.
So far, this isn't happening though, says Paul Cotter, director of Cotter Personnel.
"Where are they going to go?," he says. "The traditional locations for emigrating Irish financial services staff - New York, London, Sydney - are very quiet at the moment, and I haven't heard of many people looking to go to places like Dubai, which has its own problems currently."
