SFA: 'Labour costs a threat to jobs'

IRISH labour costs, at 134% of the EU average, are threatening thousands of jobs and businesses according to a new survey.

Small Firms Association (SFA) director Pat Delaney has warned there was no room for complacency following publication of the fourth Annual National Business Survey.

He said it is foolish to underestimate the potential impact of problems such as energy prices and inefficient public service delivery. The tightening labour market, skill shortage and higher than average wage increases are all causes for concern.

Mr Delaney said: "The move to a high cost, high wage economy must be matched by higher productivity and reductions in input costs from the sheltered sectors of the economy."

Some of the key points:

* At 134% of the EU average, labour costs are the most significant problem for 81% of small companies.

* Energy and fuel prices are an escalating concern for 76% of small companies.

* Waste, water and environmental costs continue to undermine 69% of the business sector.

This survey strengthens the position consistently put forward by the SFA that costs in Ireland are rising more rapidly than in competitor countries, he said.

Even allowing for the strength of the economy, the impact of the increase in the cost base has been exposed, as the economy's international competitiveness plummeted to 30th place in the global league.

"This translates into job losses in the more exposed sectors, with over 30,000 jobs lost in the manufacturing sector over the past three years", he said.

The survey was distributed to 3,500 of the SFA's 8,000 member companies, which secured 1,152 responses.

Firms were drawn from manufacturing, distribution, retail and services sectors and from a regionally representative sample from all parts of the Republic.

Mr Delaney said: "While labour costs remain the most significant issue for business, major threats are now emerging in energy costs, commercial rates, waste, water and environmental charges. The cost of labour is the most significant issue affecting small business, with 16.2% of respondents citing labour costs as their biggest threat and 87% as a major business problem.

But, he said "non-pay costs are exerting huge pressures on the ability of small business to invest, develop, expand and create new jobs."