Business and labour costs the key concerns for Irish SMEs

2nd September 2014

The Small Firms Association (SFA) has outlined business and labour costs as the key issues for small business owners, but the level of employee lay-offs has slowed.
 
With just seven per cent of Irish SMEs planning to cut staffing numbers and 30 per cent aiming to hire new staff in the coming months, there are signs of optimism.
 
However, SFA director, Patricia Callan has warned Irish labour costs are still the 11th highest in Europe and 16 per cent above the European Union (EU) average.
 
“In terms of hourly labour costs Ireland is 30.8 per cent ahead of our nearest competitor, the UK, putting us at a distinct competitive disadvantage,” said Callan.
 
Despite only a small number of firms planning to reduce the size of their workforce, the SFA’s latest jobs sentiment survey for the second half of the year revealed a recruitment freeze will be enforced in the majority of firms, while some will offer permanent and temporary contracts.
 
“There are sectors such as traded services and hospitality that are showing strong job growth, for other sectors job creation will be fragile and every step must be taken to ensure no additional taxes are placed on labour to ensure job retention and growth,” added Callan.
 
On the subject of pay, more than half (53 per cent) of bosses anticipate their total wage bill to remain at its current level, while 45 per cent expect it to increase.
 
The SFA called for the Government to take action and tackle unemployment by slashing the lower rate of Employer PRSI to 4.25 per cent and reduce the marginal rate of tax.
 
“Labour costs have risen in recent times. This reflects the impact of Budget 2014 on employers, with increases in employers’ PRSI and health insurance,” said Callan.

“While some moderate wage growth will continue during the remainder of 2014, mainly in the form of performance related bonuses rather than wage decreases, these will be focused on the more strongly performing sectors of the economy with many small firms not in a position to carry additional wage costs.”

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