Low overall inflation concealing cost increases borne by SMEs.
Dearth of Bank credit strangling SMEs.
Union demands jeopardizing job growth.
ISME, Thursday 7th August 2014.
ISME, the Irish Small and Medium Enterprises Association, reacted to the release of the CSO Inflation figures today (7th August), by warning Government that their complacent stance on SME bank credit and the uncompetitive high business costs being borne by Irish SMEs are costing jobs and slowing economic progress. The Association called for all state imposed business costs to be reviewed and benchmarked internationally and a faster release of credit to SMEs.
The July inflation figure was -0.2%, with annual inflation at 0.3%, which does not accurately show the steadily increasing business costs being borne by SMEs, as they are masked in the overall composite figures of all price changes.
Commenting on the figures, ISME CEO, Mark Fielding said, “The Governments attempts to generate an export-led recovery are being jeopardised by a lack of bank credit and the high business costs that they impose. While multinationals, which are not dependent on local banks, thrive, the domestic economy is being strangled by a lack of bank credit”.
“Irish businesses continue to pay more than their international competitors for electricity, gas, transport, rates etc. As long as this situation continues recovery will remain slow and indigenous businesses will struggle to expand. Owner-managers have no further room for manoeuvre on profit margins and need Government intervention on costs so that they can price their products competitively”. “Key Government officials appear to recognise the dangers of premature wage demands but they must continue to reinforce this point to over-zealous Unions who do not understand the fragile nature of economic growth. Most SME owner-managers cannot afford to give wage increases at this point and continued wage pressure will result in them taking a cautious approach to recruitment. The focus must be on assisting SMEs to grow and create jobs rather than on increasing wages.”
The Association called on the Government to:
Find faster ways of releasing credit to SMEs.
Ensure that all state imposed business costs are reduced in line with competitor countries.
Address the costs of energy, transport and exorbitant fees of the monopolistic legal profession.
Legislate for upward only rent reviews on legacy leases.
Reduce Public Sector costs by addressing their increments, perks and inefficiencies.
Fielding concluded, “The low overall inflation figure is an excuse for Government to avoid tackling the serious issue of high business costs and low bank credit. The next Action Plan for Jobs must concentrate on the battle for competitiveness, if it is to be effective.”