ISME has published the results of its latest member survey identifying the priority issues facing SMEs in 2026, with business costs and labour costs overwhelmingly dominating concerns.
At 78% of respondents, business costs rank as the single biggest issue facing SMEs. These include energy, rent, commercial rates and other overheads, all of which have been subject to sustained and significant inflation in recent years. ISME notes that despite easing inflation in some areas of the wider economy, these structural business costs have not moderated.
Labour costs follow closely behind, at 76% of respondents. This includes employer PRSI, auto enrolment, statutory sick pay and related payroll burdens. Ireland has the fourth highest median wages in the EU, according to 2022 Eurostat figures, and SMEs continue to absorb cumulative increases in employment-related costs.
ISME said the survey findings underline the need for Government to focus on structural cost competitiveness in 2026, rather than layering additional obligations onto small businesses already operating on tight margins.
Neil McDonnell, Chief Executive of ISME, said: “There is a clear and consistent pattern in our survey results. Business costs and labour costs remain the dominant concerns for SMEs, year after year. These are not new issues, and the fact that they persist at such high levels should concern policymakers. It is also deeply worrying that long-running problems such as the cost of insurance remain unresolved for so many businesses, despite repeated reform commitments.”
Employee taxation ranks third, with 46% of members citing it as their biggest concern. Members highlighted the combined burden of PAYE, PRSI and USC on workers, as well as the comparatively low income threshold at which employees enter the marginal tax band. ISME notes that this creates upward wage pressure, as employers are often required to increase gross pay simply to protect employees’ take-home income.
39% of respondents cited the cost of insurance as their primary concern. Despite extensive legal reforms in recent years, employer liability, public liability, professional indemnity and motor insurance remain stubbornly high. In many sectors, businesses struggle to secure more than one quote for employer or public liability cover, effectively leaving them with a “take it or leave it” position.
38% of respondents said their biggest concern or the year ahead is the use of AI in the workplace to improve productivity and workforce efficiencies, and the ongoing challenge of recruitment and retention of talent.
About ISME
ISME (the Irish SME Association) represents and supports small and medium-sized enterprises across Ireland through independent advocacy, practical advice, and accessible training and networking. Our mission is to help SMEs start, scale and succeed.
For Information:
Neil McDonnell / ISME – (087) 299 5658 (available for comment)
Nigel Heneghan – (086) 258 7206 – nigel@heneghan.ie
Rory Sweeney – (086) 897 6442 – rory@heneghan
