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Wednesday, February 10, 2010
Small businesses key to economic recovery
The 6,699 redundancies reported for January will come as no shock to observers of the current economic crisis, writes David Dwane.
What is worrying though is the low level of Government activity to protect jobs, especially in the small business sector where many of these jobs were lost.
Among the measures being proposed by business representative organizations to deal with the problem of the jobs’ haemorrhage are a deferral of the carbon tax, a Government directive to Local Authorities to decrease commercial rates by 10%, and a further reduction in energy costs.
Patricia Callan, Director of the Small Firms Association, said “Competitiveness is critical for both the private and public sectors in exiting this recession. Since the year 2000, Irish competitiveness, as measured by the Central Banks Trade Weighted competitiveness index, has declined by some 30%.
Whilst small Irish businesses have taken a series of actions to regain cost-competitiveness within their own businesses, including negotiating real pay decreases with staff, many costs remain which are outside their control as they are government controlled.
In the absence of reductions in these costs, small businesses will continue to have to further reduce the costs that are within their control, and this will inevitably mean a further loss of jobs”.
Another report released last week showed that the services industry has been particularly badly hit in the first month of 2010. Restaurants, pubs and hotels are among the most seriously affected in that sector.
Mark Fielding, Chief Executive of the Irish Small and Medium Enterprises Association, said: “The country is in a state of flux, with 335 redundancies a day already being announced, following on from a disastrous 2009. Small business owners are indicating that this situation will deteriorate further, with many companies just about hanging on by their fingernails, unless economic conditions improve. Serious action is now needed to address our low levels of confidence, badly damaged competitiveness and international reputation. The Government need to propose and implement a long overdue action plan for the economy’s future, without delay, with job maintenance and creation at the very top of the list”.
The €250m Employment Subsidy Scheme introduced by the Government last summer was originally aimed at exporting companies, but was widened to include small firms with over 10 employees.
While the export sector represents the ‘glamourous’ side of our economic sector, it is important to remember that the small business sector, many of which have fewer than 10 employees, is the lifeblood of many communities, and a key influence on the trajectory of consumer confidence.
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