- ISME welcome Dr Ruane’s comments on the importance of liquidity in maintaining the viability of the SME sector.
- According to the scorecard, the costs of insurance and legal services remain un-competitively high.
- ISME welcome the fact that the NCC confirms Ireland is a relatively high-wage economy.
- The fact that the SME Sector remains unrepresented on the NCC remains evident in some of its findings.
Irelands Competitiveness Scorecard 2020 was published today by the National Competitiveness Council. We welcome the clarity and crispness evident in the recommendations of Dr Frances Ruane in her first scorecard as Chair of the NCC.
The 2020 scorecard is, of course, overshadowed by the Covid-19 pandemic. But this makes it more important than ever that our business environment is as efficient and as cost-effective as it can be. We particularly welcome Dr Ruane’s comments on the importance of liquidity in maintaining the viability of the SME sector.
It is noteworthy that two areas ISME has been lobbying on consistently for the last four years remain unresolved in the eyes of the NCC. The cost of insurance and legal services remain un-competitively high. In our view, Mr Varadkar and Mr Martin will have to give careful consideration to the calibre of the ministers to be assigned to the Departments of Finance and Justice respectively. There is clear evidence of regulatory capture of the current ministers in those departments by the insurance and legal lobbies.
The OECD country report on Ireland, the EU Commission’s (multiple) semester reports on Ireland, and the NCC cannot all be wrong. We have a persistent, systemic failure to tackle rent-seeking (and possibly collusive) behaviour in our legal and underwriting services which simply cannot be allowed to continue. This must cease immediately with the formation of a new cabinet, which will require heavy hitters in those departments.
Dr Ruane and her team have been admirably blunt and pithy in their call on Government to ‘Address Long-Standing Issues.’ They note the following in particular:
- Access to short-term liquidity and investment capital at affordable rates
- The cost of insurance and legal services
- Indirect costs such as housing and childcare
- Operational burdens associated with public administration or inefficient/non-competitive private markets
- Under-investment in key public infrastructure
The NCC states bluntly ‘we need to take decisive action now.’
We welcome the fact that the NCC confirms Ireland as a relatively high-wage economy. Its wage and salary levels exceed the euro area average, are comparable to those in Finland, Germany and the Netherlands, and lag only those of Luxembourg and Denmark. It is because of the amount of misinformation about wage levels and social supports in Ireland that ISME supports the development of a Social Progress Indicator for Ireland (SPI).
The fact that the SME Sector remains unrepresented on the NCC unfortunately remains evident. The Scorecard states that ‘Ireland scores well in terms of paying taxes, protecting minority investors, and resolving insolvency…’ even though 98% of Ireland’s business demography cannot afford access to the examinership process in the Companies Act. This is an area in which ISME has been seeking administrative reform since 2012. The SME sector remains a strategic blind-spot for the NCC, despite the fact that it accounts for 74% of employment in the productive economy, and 98% of active enterprises. This is because, despite the presence of an excellent cohort of members on its Council, the SME sector has no delegate. We have pointed this out to the Department of Business, Enterprise and Innovation without success to date.