ISME claims inflation figures mask reduced competitiveness

The Irish Small and Medium Enterprises (ISME) Association has warned that the Government must not continue using forgiving external factors such as an inflation crunch, whilst ignoring the rise of key business costs domestically.

The ISME wants more robust action on addressing the growing cost pressures of labour, property, business services, legal and insurance.

The annual Consumer Price Index (CPI) inflation figures show prices have remained unchanged this year, while last month there was a 0.4 per cent change – the ninth successive month of negative or no inflation.

Mark Fielding, chief executive, ISME, said: “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, fuelled 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.”

Fielding also warns that insurance remains a “major concern” for SMEs and is concerned 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,” added Fielding.

“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.”

Date published 23 Sep 2015 | Last updated 23 Sep 2015