Insurance costs top ‘dirty dozen’ list

THE cost of insurance remains Business Enemy Number One in a list of the ‘dirty dozen’ problems for small businesses, according to a new survey.

Members of the Small Firms Association (SFA) were asked to rate their top 12 negative factors affecting their ability to develop, expand and create new jobs.

The survey was sent to a sample 3,500 of the SFA’s 8,000 member firms and 1,049 responded.

The results reveal that for the second consecutive year, insurance and labour costs are the two most significant issues affecting small businesses.

Some 19% of those who responded said insurance was their biggest difficulty, while 12.5% said labour costs were their most significant problem.

The SFA said inflation emerged as the biggest emerging threat, with 10.3% of respondents citing it as the most important issue for their business.

New entrants on the so-called ‘dirty dozen’ list include energy costs, commercial rates and the minimum wage.

The top 12 concerns in order of ranking by firms were: insurance costs (19%); labour costs (12.2%); inflation (10.3%); increasing legislation (7.6%); energy costs (7.1%); traffic (7%); skills shortage (6.6%); red tape (6.5%); commercial rates (6.4%); late payment from debtors (6.3%); road/rail infrastructure (6.3%); minimum wage (4.7%).

It said that in the past year, insurance costs had increased by an average of 52%, but many companies had seen increases of around 70%. It said the pace of promised Government reform of the personal injury system was not fast enough or deep enough to have had the necessary impact on insurance premiums.

The ability of the Irish economy to create new jobs was declining rapidly and there would be a significant downturn in employment creation this year, the SFA said.

Expressing concerns on the emergence of the minimum wage as an issue for companies, the SFA said: “In the 2002 survey, the National Minimum Wage was not seen as problematic, but since then the NMW has increased from 5.97 to 6.35 and will increase to 7 in 2004.

“A far better way to increase reward for work, reduce social dependency, exclusion and poverty would be to increase take-home pay for those on low pay through continued tax reform.

“Government policy should be directed to ensuring that low paid workers pay no tax, thereby removing the need for legislation, which damages the flexibility of the labour market.”