Government not taking business cost creep seriously.
Key business costs rising.
Insurance, labour and legal costs main dangers to recovery.
ISME, the Irish Small and Medium Enterprises Association, at the release of the latest Consumer Price Index (inflation) figures today, (10th September), warned government that they cannot continue to use the benign external factors as an inflation crutch, while ignoring the domestic cost-creep. The Association called for much more robust action on addressing the upward cost pressures of labour, property, business services, legal and insurance.
The annual CPI inflation figures show prices have remained unchanged in the year, while there was a 0.4% change in the month of August. The ninth consecutive month of negative or no inflation.
According to ISME chief executive, Mark Fielding, “There is a danger that Government have sat back with the false assumption that competitiveness has been regained during the recession and therefore not a priority. However at the SME level in particular, much of that competitiveness is being eroded. Ireland still remains a high cost location and the wage increase expectation, fueled by government ministers, increases that pressure”.
“It is imperative that all government economic policy decisions be decided on their direct impact on our competitiveness and on any resultant cost increases. From a labour cost perspective, government must give back some of the ‘recession based tax increases’ which increases take-home pay and encourages labour market participation.”
“An area of major concern for SMEs is insurance. There is a danger that the country is reverting to the bad old days at the turn of the century when the insurance industry and the legal profession succeeded in making a killing at the expense of the small and medium business sector. The combination of high premiums, exorbitant fees and over-generous awards almost crippled the economy. Now in less than ten years and under the nose of this government we are back to potential insurance mayhem for business despite the work of the Personal Injuries Assessment Board. Not alone will this increase inflation, it has the potential to close businesses.”
“Cost curtailment and productivity improvements are the drivers of competitiveness. Business owners live and breathe this truism. It is now time that our Government took notice and addressed the many cost pressure points within their sphere of influence. A good start would be to haul in the insurance companies and the legal profession and insist on fair play”, concluded Fielding.