Businesses unhappy with Administration performance in first Quarter.
Substantial drop in all indicators.
Next administration must address declining competitiveness.
ISME, the Irish Small & Medium Enterprises Association, has published the results of its latest Government Satisfaction Survey* today (8th April) for the first quarter of 2016. The results show that SMEs overall satisfaction with the Government performance had decreased dramatically by the end of March. The survey was conducted soon after the election took place, so reflects the view of the SME community in relation to the outgoing administration’s performance.
ISME CEO, Mark Fielding, commented on the results, “Businesses are concerned with rising costs and decreasing competitiveness. In many cases, particularly outside of Dublin, they have not seen the benefits of the recovery, which was trumpeted by the government. Issues such as increasing labour costs, access to finance, poor broadband and late payments must be addressed if Irish SMEs are to have a hope of surviving and thriving.”
‘In previous quarters the highest levels of dissatisfaction were generally seen in micro businesses. However, this quarter notes the highest dissatisfaction levels in businesses employing 11 to 50. This is possibly a reflection of how the effects of diminishing competitiveness are being seen by businesses of all sizes and not just by sole-traders and micro companies”.
The survey was conducted in the last week of March, with 1,070 SME respondents. 58% of whom employ less than 10, while a further 33% employ between 11 and 50 and the remaining 9% employ between 51 and 250. Geographically, 30% are from Dublin with 70% spread across the country, with 13% with multiple sites, giving a good reflection of the country as a whole, sectorally, geographically and by employee numbers.
COMBINED RATING (+11 to -6)
The overall satisfaction rating decreased 17 points from +11 to -6. Small businesses are the least satisfied at -15, micro businesses came in at -7 while medium sized businesses are quite satisfied at +32. Hospitality are the least satisfied sector at -33 while Construction and Manufacturing are the most satisfied at +10. Retail is at a -14 satisfaction level and Services are at -1.
JOBS RATING (+22 to +3)
There is a large decrease in satisfaction ratings with the Government’s handling of the jobs situation. The previous quarter saw the highest score in this area since the beginning of the survey in 2012. The rating has now dropped 19 points. This reflects the increase in the minimum wage and the growing costs of labour which are hampering SMEs. Small businesses here again are least satisfied at -5.
BANKING (-48 to -56)
The banking score has decreased 18 points from -48 to -56. SME access to finance had been improving but an increase in ‘declines’ has been noted in recent months. Small businesses are most dissatisfied at -60, with Micro and Medium scoring -56 and -45 respectively. This is an area that will need careful monitoring by the next Government to ensure that credit is flowing appropriately to small and medium businesses.
ECONOMY (+18 to -2)
This question examines how satisfied SMEs are with the Government’s handling of the economy. The -2 rating shows high levels of dissatisfaction, with a drop of 20 points and reflects the uncertainty seen in the economy due to issues such as Brexit, sterling fluctuations and cost pressures. The decline in competitiveness is also a concern and businesses are becoming increasingly frustrated with Government inaction.
BUSINESS COSTS (-52 to -57)
The worst performing indicator and by far the most important indicator for SMEs, Business Costs, still continues to be the highest rated reason for dissatisfaction. The negative scores are consistent across the various sectors with Distribution and Retail the highest at -69 and -68. The issue of high business costs is a key concern for ISME members. The Association is concerned that Ireland is rapidly losing its competitive edge and we have continuously called on Government to conduct a review of all business costs to bring them into line with our main export competitors.
“Government must tackle the key issues of business costs and bank credit and prioritise the restoration of our competitiveness. All costs, including public sector and legacy business costs must be benchmarked against our immediate international competitors. We must also expose sheltered sectors to greater competition in an effort to reduce all business costs and increase competitiveness for Irish SMEs,” concluded Fielding.