Small businesses’ confidence plummets as job losses exceed those created

CONFIDENCE has plummeted in the small business sector as job losses exceeded the number of jobs created in 2002. That’s the first time since the early 1990s that there has been such an outcome, and the outlook for this year is also pretty grim.

As we face into the new year, a

survey by the Irish Small and Medium Enterprise Association (ISME) found confidence deteriorating rapidly,

reflecting the poor jobs outlook. This year, the number of jobs created will be marginally positive, but overall, businesses are concerned about what the future holds, the survey found.

In its findings, the employer body warned of a bleak and turbulent future ahead unless the Government intervenes in the months ahead. “Economic uncertainty, inflationary pressures and out-of-control public finances” are the biggest concerns facing firms in the new year, it said. It also called for strong government leadership “to steer the economy through troubled waters” over the next 12 months.

Almost half (46%) of those surveyed are pessimistic about the 2003 outlook. ISME says that without doubt “economic uncertainty” is the issue of biggest concern to small business, which is reflected in the business confidence, employment prospects and the investment outlook.

ISME chief executive Mark Fielding, said “the survey confirms that this year showed the worst levels of employment sustainability in the small business sector since the early 1990s, with 26% of companies employing less than this time last year in comparison to 23% who employ more.”

Manufacturing shed most jobs in 2002, a fact confirmed by the Central Statistics Office, which showed more than 18,000 industrial jobs were lost in the first nine months of the year.

Prospects in that sector for 2003 are nil, but some boost to the jobs figures is projected from the services and distribution sides of the economy. Over the year, a net 7% in both sectors

expect to increase employment next year. ISME pointed out also that

one-fifth of the members survey

reported cancellation of orders during the year.

And it emerged that up to 40% of the cancellations were from the multinational sector of the economy in the last quarter of 2002.

That compared with 23% in the previous quarter.

That finding was seen as further proof that multinationals in Ireland have continued to retrench throughout the whole of 2002. Businesses face other pressures on the export front as 2003 unfolds, according to the survey.

If the euro continues to increase in value against either the dollar or sterling, “then Ireland will be further exposed as the high cost, uncompetitive economy we have become,” said Mr Fielding.

The reality of the uncompetitive

nature of Irish business is reflected in the cut in jobs, which is the only mechanism employers have open to them to cut costs at this stage, he said.