Business Opinion - part 2 - in association with Ulster Business magazine

Contents :

GRAPHICAL REPRESENTATION OF REPORT

Last month the first part of the annual business opinion survey conducted by Millward Brown Ulster in conjunction with Ulster Business magazine was featured. This survey was conducted at the end of 2004 and into early 2005. The first part of the survey, covered in the February edition of Ulster Business, expressed the business community’s views of how politicians should proceed with issues such as taxation, red tape, and infrastructure, while this month current and future economic and business expectations are explored.

The research was carried out through the medium of the Millward Brown Business Omnibus Survey. This survey (conducted quarterly) comprises telephone interviews with a cross section of 200 directors, senior managers and executives of private-sector manufacturing and service companies. As such, the results represent the opinions of the business community as individuals rather than companies. Interviewing was conducted at Millward Brown’s 35-station Telephone Research Centre in Belfast.

In the first part of the survey results we saw that short term business confidence had increased marginally, with more than 1 in 10 (12%) very optimistic about the next 12 months while a further 1 in 2 (55%) were ‘quite’ optimistic. In terms of longer term confidence, this has remained remarkably stable over the last four years, with 15% feeling very optimistic about the prospects for the Northern Ireland economy over the next five years. A further 51% were quite optimistic. This steady and sustained optimism probably reflects the extent to which worldwide markets and economies demonstrated their resilience after the post-millenium stock market crash , 9/11 and Iraq.
The vast majority (88%) perceived the performance of the Northern economy to have improved over the past five years, with half of those (44% of the total sample) believing the economy to have improved a lot. Whilst not quite up to the level of the ‘Celtic Tiger’, Northern Ireland is clearly seen as enjoying a considerable economic surge.
Views on the policies of the present Labour Government were divided but similar in terms of their impact across the whole spectrum. There was a divergence of opinion with roughly half rating their policies with regard to business and industry in the UK as a whole as good (45%) and half (44%) rating the policies as poor, 12% rated the policies as very poor. A major aspect of Labour Government policies has been the sustained introduction of new and wide ranging legislation impacting on almost all facets of business and industry in areas such as national minimum wage, statutory benefits, health and safety and taxation, and it is interesting to see the equanimity with which they appear to have been accepted.
Again with specific emphasis on their opinions with regard to their own companies, just over a third (35%) of business executives believed that the numbers employed in their company would increase in the next twelve months. Most (59%) felt that they would stay the same while very few (3%) thought there would be a decrease. More than 6 in 10 (61%) expected the volume of sales for their company to increase in the next 12 months, while most of the remainder (32%) thought they might stay the same. Again few (3%) expected a downturn.
In relation to the current performance in terms of profitability, the vast majority of business executives (86%) believed their companies to be at least fairly profitable, with 14% deeming them to be very profitable. These levels of perceived profitability have changed little since 2001.
Similarly, when asked how they viewed their company’s profit performance compared to the targets set by the company, levels have not changed significantly since 2001. In this most recent survey nearly 1 in 5 (17%) believed that their company’s profit performance was exceeding targets set by the company with a further 3 in 5 (57%) believing that targets were at least being achieved.
In the first part of the survey 14% of respondents indicated that they saw the size of the public sector or the reliance on the public sector as a significant obstacle to the growth of the economy in Northern Ireland. When asked specifically about this, two-thirds (66%) agreed that the Northern Ireland economy is too reliant on the public sector. This represents a decrease compared to 2002 and 2003, suggesting that business concerns about the prevalence of the public sector have eased.
In light of this, more than half (53%) of respondents were in favour of reducing the size of the public sector while only 19% were opposed to such a move. However, while nearly half (45%) did think Northern Ireland was ready, more than a third felt that Northern Ireland wasn’t ready to ‘fill the gaps’ if the public sector was reduced. In December 2004, the Finance Minister, Ian Pearson MP outlined the government’s commitment to greater efficiency across the public sector and savings in the cost of administration, which included targets to reduce Civil Service numbers by 2,300 over the next few years.
There was a divergence of opinion on what would be considered the best way to promote private sector enterprise and growth. While 43% thought the best way was through increased government intervention, 36% felt it would actually be through reduced government intervention. However the numbers opting for increased government intervention had fallen from 54% in 2003.
More than half (55%) of business executives felt that the treasury were justified in expecting Northern Ireland to be more self sustaining. Almost a third (31%) felt they were unjustified. Almost 3 in 4 (74%) thought that in order to reduce Northern Ireland’s draw on UK Treasury funds it would be better to reduce spending as opposed to 14% who thought it was better to increase revenue through mechanism such as water rates. However this would appear to be somewhat at odds with the government’s plans to increase public spending, including infrastructure investment, funding this with a higher level of rates and the introduction of water charges.
Overall more than half (53%) of business executives felt that Invest NI were at least fairly effective in supporting Northern Ireland business and industry, 16% rated them as very effective. Nearly 2 in 10 (18%) of all respondents rated Invest NI as ineffective, rising to almost 3 in 10 (29%) of executives employed in a manufacturing company.
Respondents were asked their opinion on how they thought the Government should prioritise a number of issues in the interests of strengthening business and industry in Northern Ireland by giving a score to each from 1 for extremely low priority to 10 for extremely high priority. The chart opposite shows those issues, in order, to which respondents felt the Government should be giving extremely high priority to. The issue most likely to be cited in terms of extremely high priority was reducing ‘red tape’ and the administration burden generally. (31% gave this a score of 10 for extremely high priority). This was followed by keeping inflation under control (28%), encouragement of industrial training and education (26%) and maintaining the Northern Ireland Agreement (26%).
Having expressed how much priority each issue should be given by the government, respondents were further asked to rate the performance of the institutions of the government in relation to each of these issues. The chart opposite plots the average priority that should be given, against the average score that the government was awarded for its perceived performance in tackling each issue. The one issue that stands out in particular is that of reducing red tape and the administration burden generally, business executives here felt this issue should be given high priority by the government but perceived that the government did not perform well in addressing this issue.
Proposals were set out recently in the Tomlinson report for England and Wales whereby a new diploma would provide for both academic and vocational qualifications with a required core of maths, ICT and communication skills. Business executives were asked to consider the perceived implication of the introduction of such proposals in Northern Ireland. Almost half (44%) felt that they would improve, at least a little, the skills of students available to businesses here. Nearly 3 in 10 (28%) thought these proposals could make things worse.
More than half of executives (52%) were already satisfied with the availability of good quality executive staff although for most (40%) their satisfaction was somewhat qualified in that they were fairly satisfied with only 12% very satisfied. The picture was similar for non-executive staff, with 16% very satisfied and a further 36% fairly satisfied.
There was a high level of agreement amongst executives that the education system in Northern Ireland needs wider provision of vocational subjects with more than two-thirds (69%) at least tending to agree. Almost half also agreed that the education system here takes on board the needs of the industry (47%) and provides for the vocational needs of business (44%). Around a third disagreed with these statements. There was however an even greater dichotomy of opinion in relation to whether or not the education system in Northern Ireland provides graduates well geared for business (38% agreed while 42% disagreed). Similarly 33% agreed that the government provides enough assistance for business and education to collaborate while 45% disagreed.
More than 9 in 10 executives thought it was important that companies consider the social and environmental impact as well as the economic impact of their activities, 6 in 10 considered it very important. To this end most (80%) did believe that their companies did exercise an adequate level of corporate social responsibility.
Almost 1 in 5 executives claimed to work more than 60 hours per week on average, with most of them (64%) feeling dissatisfied with the hours they work. More than half of the 15% who work on average 51 to 60 hours per week were dissatisfied with their hours. Few (4%) who worked up to 40 hours were dissatisfied.