Rate of Inflation masking the true increase in costs to Small Business.
Government must reassess their economic strategy.
Legal and finance fees being allowed to run out of control.
ISME, Thursday 12th June 2014.
At the release of the CSO inflation figures today (12th June), ISME, the Irish Small and Medium Enterprises Association, called on Government to, once and for all, get a grip on its costs which will improve Ireland’s competitiveness. The Association also warned against premature and unsustainable union calls for wage increases as many SMEs continue to struggle with high costs and low consumer demand. The May inflation figure was 0%, with annual inflation at 0.4%, which does not accurately show the steadily increasing business costs being borne by SMEs, as they are masked in the overall composite figures of all price changes. Services inflation is still marching ahead at 3.1%, which includes such items as legal fees under ‘other services’ at an annual inflation rate of 23.9%
According to Mark Fielding, ISME CEO, “employers must guard against the dangers of wage-led inflation. Economic recovery is far from assured and unsustainable wage increases will hamper growth. The emphasis must be on productivity and enhanced competitiveness, not on increasing the already high cost base of struggling companies”.
“The discredited Social Partnership began as a trade-off between actual pay and take-home pay, via lower taxes. It should not be beyond the wit of our leaders to have a similar trade-off via lower prices and a reduction in labour taxes. The answer cannot be a simplistic higher pay, as requested by the unions.”
The Association called on the Government to:
Ensure that all state imposed business costs are reduced in line with competitor countries.
Address the costs of energy, transport and exorbitant fees of the monopolistic legal profession.
Legislate for upward only rent reviews on legacy leases.
Reduce Public Sector costs by addressing the increments, perks and inefficiencies.
“The need for pay restraint must not go unheeded in the continuing struggle out of recession. The mad-cap logic of increased wages being the answer to the recession must be scuppered once and for all”, concluded Fielding.