Phase in minimum wage rise, says CCI

THE 10% increase in the minimum wage which comes into effect in February should be phased-in over the next 12 months, the Chambers of Commerce of Ireland (CCI) said yesterday.

In the context of rising wage, insurance and stealth tax costs, the CCI president Mark Staunton said the concerns of small and medium sized enterprises are set to become more acute when the statutory minimum wage is increased further in February 2004," he said.

"We are calling for the introduction of the 10% increase in the minimum wage, which has been planned for February 2004, to instead be phased at 5% in 2004 and for the second 5% not to be introduced until February 2005," he said.

Yesterday, the CCI released the results of its "SME Business Confidence Survey Review '03 & Outlook '04" which indicates that SMEs are cautiously optimistic about the business environment in 2004, but see rising business costs as the number one threat to business in the coming year.

The survey found 28% of respondents believe there will be an improvement in the business environment in 2004, while 42% believe it will be comparable to that of 2003.

"A small majority (58%) expects an increase in total turnover in 2004 compared with 2003, while half expect revenue from domestic sales to expand in 2004. Almost two thirds (61%) of respondents expect the size of their workforce will remain the same in 2004 while 39% expect investment levels in their businesses to grow," the survey's authors said.

The survey, conducted by MORI MRC, shows however, that the rising cost of doing business is seen as the biggest threat to business in 2004 with 82% of respondents citing it as the reason why they believe the general business environment in 2004 will be less favourable. Ninety per cent of SMEs cited insurance as one of their top four increasing business costs in 2003 while the second most commonly occurring cost was labour (81%). Local authority charges were also cited as a rising cost with 51% of all SMEs ranking them in their top four. The survey found almost two thirds (62%) of respondents believe that the Government's efforts to tackle rising insurance costs will not have a meaningful impact on insurance premiums in 2004.

Respondents said the rising costs identified will have significant implications for human resources with 39% of SMEs expecting to provide lower pay increases or a pay freeze. "Some SMEs expect to respond to rising costs by either not replacing staff who leave (33%) or introducing staff redundancies (26%)," the report found.

Mr Staunton said, it is encouraging to note that a significant number of SMEs are planning to increase investment in their business in 2004. "It is important that the Government recognises and supports in a meaningful way the investment that SMEs are making.