Swift Action Needed to Save Ireland's Small Businesses
Ireland is a nation of small businesses. Small businesses account for 98 per cent of the total number of businesses in Ireland. They are the heartbeat of our towns and the life blood of the wider economy. They play a vital role in the Ireland’s economic success story. A small business is defined as a business that employs fewer than fifty people. Forty-three percent of people employed in the private sector, work for small businesses, according to the most up-to-date data from the Central Statistics Office.
Small businesses have endured unique and terrifying challenges in recent years. A global pandemic, a war in Europe and Brexit in the space of a just a few years. This has led to supply chain uncertainty, fluctuating commodity prices, and spiralling energy costs. Coupled with international economic upheaval, small businesses are trying to manage a tsunami of regulations. In addition, the increase to the National Minimum Wage came into effect in January. This perfect storm of spiralling business costs is leaving many viable businesses struggling to stay afloat. The haunting spectre of empty shop fronts is already a visible feature in our towns and villages. The much reported closure of various retail and hospitality outlets merely represents the canary in the coalmine. Around three businesses per day are closing and with more closures are yet to come, unless the Government acts decisively and fast.
During Taoiseach Simon Harris’ maiden speech to the Fine Gael Ard Fheis, he singled out the contribution that small businesses. He correctly stated that small businesses are the heart of our communities that fuel local economies, that provide good quality, stable jobs. Furthermore, the Taoiseach stated that his administration will prioritise small businesses before the general election. Two weeks later, at the Fianna Fail Ard Fheis, Tánaiste Micheál Martin made a commitment to changes in employers’ PRSI, which will help small businesses cope with rising costs. Last week, the new Minister of Enterprise, Trade and Employment, Peter Burke acknowledged the many concerns facing small businesses in a statement to the Seanad. For the small business community, these are very encouraging words, but is it too late?
To the Government’s credit, the Department of Enterprise, Trade & Employment in collaboration with the Department of Social Protection, has already assessed the cumulative effect of the various additional labour costs on small businesses in a report published last month. The report acknowledges the challenges for small businesses, many of which feel that there are too many new labour cost requirements coming at such a short space of time. The report noted that some small businesses are projected to face nearly a thirty seven percent increase in labour costs over the next two years, with twenty percent of this increase directly attributable to government measures.
Since last year, the Small Firms Association (SFA) has been calling for additional assistance for small businesses. The SFA welcomes the Government package of €257 million for the increased cost of business grant. This grant has been set up in a way that makes it easily accessible to smaller businesses. However, more and targeted help is needed. Additionally, the SFA welcomed the announcement that the applicable interest rate for debt in the warehouse has been reduced to 0 per cent.
Last week, the SFA launched its policy priority document, which outlines key recommendations ahead of a busy year of elections. The policy document focusses on four key pillars aimed at creating better conductions for businesses to survive and grow. The pillars are, tackling business costs, easing the tax burden, upskilling the workforce and enabling prosperity through better national infrastructure. Among the various recommendations is the introduction of a PRSI rebate to assist small businesses with the transition towards the incoming Living Wage rates. However, implementation needs to be swift because small businesses do not have the luxury of time and resources that larger businesses might have. The rebate is more pressing for the retail and the experience economy because many businesses in these sectors are most impacted by seasonal demands in the coming months.
Looking beyond the current business cost crisis, the small business sector is looking to be fit-for-purpose for the needs of the 21st Century. This requires upskilling, training and ultimately retaining staff. The SFA is proposing a National Training Voucher Scheme, which has the potential to boost in-company training and widen participation in upskilling and reskilling employees. It is a method of assisting firms with time lost due to employees taking up training programmes during business hours. Upskilling staff ultimately helps small businesses compete in the marketplace.
Many politicians, past and present, have stated that they want Ireland to be the best little country in the world to do business in. If Ireland’s economy is ever to match the ambition of this genuine claim, then Government needs to be serious about putting the interests of small businesses at the heart of its policy platform. Not just for the election season but permanently. The SFA is also calling for the Government’s own SME Stress Test on regulations to be strengthened. The concerns of small businesses should no longer be considered as an afterthought by policy makers. As the global economy continues to fragment towards protectionism, action is needed now for our entrepreneurship to survive and hopefully thrive.
See the article on the Irish Examiner here.
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For questions about the SFA, small business supports and/or interviews, please contact SFA Director, David Broderick - david.broderick@sfa.ie
