SMEs crippled by €25bn 'black economy'

The Irish Small and Medium Enterprises Association (ISME) has warned that the growing ‘black economy’, which could be as high as €25bn, has the potential to cripple the small business sector and wants tougher sanctions issued for rogue traders.

A loss of €5bn in unpaid taxes alone is said to be causing havoc for legitimate business and is halting SMEs from creating jobs to boost the national economy.

The ISME has led the calls for a concerted effort by to publicise the damage being done by black market activities and use zero tolerance when dealing with those refusing to play by the rules.

Mark Fielding, chief executive, ISME, said: “As a nation we need a sea change in relation to tolerance of black market activities.

“Turning a blind eye to illegitimate trade is still part of our culture and must change to protect jobs and businesses.

“A national campaign to inform people of the cost of illicit trade is a priority. The campaign on insurance fraud was reasonably successful and a similar drive against the black market is called for.

“No longer can we tolerate the thriving ‘nixer culture’ where there has been a definite shift towards a ‘cash only’ shadow economy.

“We need a cultural shift that makes consumers understand the risks they are taking when hiring illegitimate traders, the impact their choices have on the local economy and the illegal activities money spent in the black economy often funds.”

It remains difficult to put a specific figure on the cost of Ireland’s black economy, but based on previous global estimates and ISME observations and reports from members, it’s thought to amount to 14 per cent of GDP.

“Tackling the shadow economy needs to be a key feature of the Action Plan for Jobs 2016 and ISME is requesting that a fully-funded awareness campaign is initiated immediately to change the culture of tolerance and acceptance of the black economy,” added Fielding.

“SMEs have cut their margins to the bone and are working long hours in an attempt to survive. However, they cannot compete with non-compliant operators who can offer ‘knock-down’ prices on ‘knock-off’ goods.”

Date published 3 Aug 2015 | Last updated 3 Aug 2015