Employer’s PRSI in need of adjustment to offset Minimum Wage increase.
Rising Business costs still a major cause for concern.
Budget pivotal to consumer confidence and demand.
ISME, the Irish Small & Medium Enterprises Association, reacting to the latest Retail Sales figures issued by the CSO today (Monday 28th September), has called on the Government to reintroduce the reduced PRSI rate for employers to offset any increase in the National Minimum Wage (NMW) and boost employment in the sector.
The August retail sales figures show a decrease of -4% in volume and -1.7% in value in the month, sales are up 5.6% in value in the year. However, when motor sales are excluded volume was up 7.6% and value increased by 3.7%.
According to ISME CEO, Mark Fielding, “The economy is showing signs of improvement but as can be seen from the last two year’s retail figures, while volume is increasing, the margins in retail are disappointing, putting pressure on SME retailers in particular. Progress is also being hampered by the impending increase in the minimum wage, which is slowing down recruitment in the sector”.
“The NMW increase will have a massive negative effect, as relativities will be expected to remain, leading to an overall increase of 6% in wages in the Retail sector. This added cost will trigger price increases, pushing domestic inflation and further wage demands in a repeat of the disastrous Celtic Tiger wage-price spiral”.
“This additional state imposed wage increase will exacerbate the situation, reducing margins further and in some cases driving businesses into losses, with resultant negative job consequences. The Government has an opportunity in the Budget to address the wage costs by at least introducing a reduced employer’s PRSI rate for the lower paid who will benefit from a statutory minimum wage increase, without any increase in productivity.”
The Association called for the:
Introduction of a reduced employer’s PRSI.
Government action on commercial rates, unrealistic rents and uncompetitive labour costs.
Introduction of a Code of Practice, with an ombudsman for the sector.
A review of the effect of the abolition of the Groceries Order on prices.
Bank credit availability for SMEs.
“Employing over 250,000, the Retail sector is pivotal to the survival of local economies and deserves more pro-enterprise policies to ease the burden on SMEs and tackle the cost-base, particularly in the retail sector”, concluded Fielding.