Government’s push for unwarranted wage increases stifles jobs growth.
Tax system must be used to stimulate consumer spending.
ISME, Friday 27th March 2015
At the release of the latest CSO Retail Sales figures, today (27th March), ISME, the Irish Small & Medium Enterprise Association, warned that retail margins were under severe pressure due to aggressive but necessary price cutting. The resultant reduction in margins and fear of unwarranted wage rises are having a knock-on effect on retail refurbishment, investment in shop equipment and jobs in the most fragile sector of the economy.
Retail sales figures showed an annual increase of 8.2% in volume and 4.4% in value. However, when the motor trade is excluded, sales were 4.8% higher in volume and only 0.7% higher in value, clearly showing the price reductions.
According to ISME CEO, Mark Fielding, “Retail volumes are rising slowly while prices are continuously being cut just to generate sales. Many SME retailers are ‘ticking over’ at present and are not yet at a point where they can consider investing for growth. In addition, owner-managers are facing increased uncertainty concerning wages, particularly the National Minimum Wage, and Government pre-election rhetoric is exacerbating the situation”.
“The slight recovery being felt in Dublin is not replicated throughout the country and this creates a challenging environment for consumer facing provincial businesses and the ability to protect or grow margins through price increases, is very limited. Quite clearly there is no room for wage increases in the retail sector and this is a situation that is repeated throughout the entire SME sector.”
“The tax and welfare system must be used to put money into people’s pockets, rather than Government ministers encouraging an economically damaging upwards spiral in wages. The notion of pushing up wage costs at this juncture fails to recognise the business realities, in what is still a very challenging economic environment”, concluded Fielding.