Steady creep of business costs hampering SME growth.
Wage pressures must be resisted despite political cheerleading.
The latest CSO Inflation Figures today (10th December), show little variation in overall inflation figures. However, ISME, the Irish Small and Medium Enterprises Association, warned that these headline figures were disguising the steady increase in business costs which is hampering competitiveness. The Association also drew attention to the unaffordable wage pressures being placed on SMEs, as a result of the uneconomic minimum wage increase, leading to further wage demands across the economy.
In November the Consumer Price Index was minus 0.2% in the year and minus 0.3% in the month.
ISME Chief Executive, Mark Fielding commented, "While the composite CSO figures show negative or zero inflation in each of the last twelve months, the figures disguise the high business costs which are seriously impeding SMEs' ability to grow. We are seeing continuous increases in insurance, legal bills and utilities, combined with stripped back margins to stimulate consumer demand. It's impossible for SMEs to develop their businesses where costs are increasing and prices are falling".
"Loose talking politicians, themselves insulated by fat pensions, have caused serious problems with their uninformed rhetoric about 2015 being the 'year of the pay rise'. Unfortunately, they didn't ask SMEs if this was realistic and have created a false sense of prosperity, despite the tentative nature of the recovery. These wage pressures are delaying SMEs from hiring new staff. It is imperative that all politicians resist the urge to promise higher wages in their pre-election promises."
"The harsh truth of current politics is that we do not have one leader with an ounce of courage. In their lust for re-election and power they have become 'binge-promisers' with no thought for the consequences."
The Association called on the Government to:
Ensure that all state imposed business costs are benchmarked internationally.
Address the costs over which they have influence; energy, telecom, transport, insurance and exorbitant legal fees.
Use the tax system to facilitate and promote job creation.
Reduce public sector costs through targeted private sector outsourcing.
"The economy is definitely doing better and this has provided some measure of relief and breathing room to SMEs. However, the ongoing issues of increasing costs and decreasing competitiveness are delaying business plans and job creation." concluded Fielding.