Increase in employment dependent on reduction in SME costs.
Industrial unrest causing economic uncertainty.
At the release of the latest CSO Live Register figures today (2nd June) ISME, the Irish Small and Medium Enterprises Association, called on the Government to concentrate on cost reduction as a method to ensure that jobs are created. The Association warned of the vicious circle of industrial unrest leading to unaffordable wage increases resulting in higher cost of living for all and called for a strong response from government.
The Association welcomed the reduction of 38,574 on the Live Register in the year to May but highlighted the 140,488 still unemployed for more than one year.
ISME CEO, Mark Fielding said, “While the cost of labour is the largest business cost and must be managed, other expenditure such as transport, finance, insurance and property cost have continued to rise. Ireland is a relatively high cost economy and cannot continue to rely on favourable exchange fluctuations to buttress our competitiveness. In this area of cost the government have a crucial part to play”.
“High costs have implications for the cost of living, with consumer prices 20% above the euro-area average, which drive wage demands and the cycle is repeated. It is vital that we continue the fight against high costs which are not justified.”
While oil has dropped by up to 70% in the last year we still pay 9% more for our diesel than the euro-area and 66% of the cost is tax.
Bank interest is twice the euro-area.
We pay the second highest minimum wage.
Retail rents have increased 22% year on year.
Insurance increases ranging from 30% to over 100%.
Legal fees increasing due to lack of progress in the Legal Services Act.
The Government must focus on competitiveness. The drive must be to reduce state-influenced costs while the private sector increases productivity.
The Association restated its advice to employers to stand firm on wage claims and called for:
A full benchmark and overhaul of all government influenced business costs with a target of a reduction to below the EU average for all within one year.
A full review of labour market inhibitors, including social welfare constraints and black economy.
Introduce new and improve existing activation schemes in conjunction with employers.
The implementation of a further reduction in state assistance for those who refuse job offers.
Increase job-rich infrastructure investment.
Ensure real measurable access to affordable credit for viable SMEs.
Outsource more state sector services to SMEs.
A greater training incentive for small business to compensate for the cost of on-the-job training.
“Without the ability to devalue our currency to manage competitiveness pressures, a combined effort on costs and productivity from both government and business will lay the foundation for sustained growth. The result will be a virtuous circle of jobs, exchequer income, reduced social welfare costs and improved living standards,”concluded Fielding.