At the release of the CSO inflation figures for April today (12th May), ISME, the Irish Small and Medium Enterprises Association, called on the new government to prioritise the reduction of business costs as competitiveness is in serious risk of continued erosion as the economy returns to growth. The Association expressed concerns over the incessant barrage from the trades unions for increases in wages and warned the administration to stand firm. The annual CPI inflation figure is minus 0.1%, while the inflation for April is 0.2%. It is clear that labour costs are the most significant driver of business costs and as the market tightens further pressure will be put on business. It is imperative that any wage growth is less than our competitor countries, as we are already ahead of them in the last year. Wage growth must be matched by productivity growth to ensure real living standard increases. In addition the influence of the cost of property and residential rents is threatening basic competitiveness and driving wage demands. Insurances, motor fuel with its 66% tax and energy costs above the EU average also add negatively to the mix. Access to competitively priced finance is an essential element of a business and here once again the Irish SME is being charged double their EU competitor. The Government must also play its part in curtailing state influenced business costs. The Association called on the Government to:
Stand firm on public sector wage demands.
Ensure that all state imposed business costs are benchmarked internationally.
Reduce public sector costs by addressing the increments, perks and inefficiencies.
Outsource more state sector services to SMEs.
Address energy, telecom, bank interest, transport costs and exorbitant fees of the monopolistic legal profession.
"Cost curtailment and productivity improvements are the drivers of competitiveness and must be the core priority for the next administration," concluded Fielding.