IBEC: business costs spiralling out of control

THE cost of doing business in Dublin is spiralling out of control, according to a new survey by employers group IBEC.

The group said its latest research showed business costs in the capital were rising three times as quickly as the general inflation rate and the future of homegrown companies and multinationals was at risk.

Total non-pay costs shot up by 18.5% over the last two years, according to IBEC’s figures. This compared unfavourably with the 5.9% increase registered in the Consumer Price Index over the same period.

Owners of commercial property were the worst offenders for hiking prices, as commercial rents soared almost 25% over the two years.

However, local authority charges were also singled out for criticism, as waste collection and treatment charges went up by 18% and water costs increased by 14%. Increases in the cost of insurance (22%) and energy (17%) were also highlighted. Smaller companies suffered more than bigger ones, IBEC said.

“Increases of this scale are both indefensible and unsustainable,” said IBEC enterprise director Brendan Butler.

“Unless meaningful action is taken to address this imbalance, the ability of business to compete will be seriously threatened and this will ultimately put jobs at risk.”

IBEC has set out a 10-point action plan to combat rising costs. It has called for a freezing of indirect taxes, such as VAT and local authority charges. It also wants a cap on wage increases to make sure Irish employees do not get bigger pay hikes than those in other EU countries, and a bigger efficiency drive by the Government to get more value for money from public sector employees, coupled with greater investment in infrastructure to handle road traffic and waste.

“The move to a high-cost, high-wage economy must be matched by a significant increase in the value of the goods and services we provide,” said Mr Butler. “To date this has not been achieved. An increasing cost base with no increase in value added is a recipe for disaster.”

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