Almost Half Of Small Business Have Cut Wages

It has emerged that 45% of all small and medium businesses in Ireland have implemented a pay cut due to the economic downturn.

The bi-monthly pay and conditions report from Irish Small and Medium Enterprises (ISME) also says 49% have introduced a pay freeze, resulting in 94% of all their workers suffering from the financial crisis.

The ISME said the survey of 2,000 firms confirmed that smaill and medium enterprises were continuing to downsize, with over one in four companies intending to make redundancies in the next 3 months while 50% of businesses are already operating on reduced hours.

Commenting on the survey results, ISME Chief Executive, Mark Fielding, said: “The figures confirm that labour intensive SMEs companies have no option but to cut their wage bills.

"The fact that many of these companies are implementing redundancies and reducing working hours is indicative of the drastic measures that have to be introduced just to stay afloat. Unless the cost of labour in this Country is dramatically reduced, many of these companies will simply cease to exist”.

Mr Fielding added that the figures were the result of high labour costs, which needed to be cut across the economy and not just in the private sector.

"This means that cutting the public sector pay bill is now a necessity. However we cannot wait for a new Benchmarking process, as recommended by An Bord Snip. The Government, as the employer, must act immediately and bring some semblance of reason to a situation where every euro of private sector taxation is being used to prop up the sheltered public sector,” he added.

The comments come just as The Midwest Taskforce, established by the Taniaste Mary Coughlan to reduced unemployment in the Midwest region, found that unemployment might rise to 20% in the region if the issue of labour competitiveness is not tackled.

The report, which was published by the Tánaiste Mary Coughlan yesterday, recommended the development of national strategy, targeting a 20% reduction in costs, including the civil service.

Meanwhile, in the North, there are moves afoot to introduce a scheme for rates reductions to boost SMEs.

The Stormont Finance Minister, Sammy Wilson, is behind the proposal.

See: Rates Relief For SMEs Proposed

(DW/BMcC)