Just 10% of firms plan pay cuts

JUST over one in 10 firms are planning pay cuts this year with a fifth believing a recovery will be evident before the end of the year.

According to the latest KBC/Chartered Accountants business sentiment survey, 69% of firms have cut pay in the past two years but 13% said they cut pay in the past three months.

The survey said business sentiment is pointing to positive GNP growth in the second quarter of this year with increased business activity suggesting modest growth is underway.

Fewer firms expect activity to decline this year but no great surge is expected while job cuts continue.

The survey also said 36% of companies believe the weaker euro has helped but 23% say it hurt. President of Chartered Accountants Ireland Paul O’Connor said the survey hints that activity has begun to strengthen in recent months.

“Unfortunately, recovery is not being felt by all. It is very clear the improvement is relatively modest and is not being seen across all companies or sectors.

“Of course, it would be very unusual for all businesses across the economy to see a turnaround at exactly the same time.

“So, it isn’t surprising the survey suggests circumstances vary widely. In general however, it seems healthier business conditions are beginning to take hold,” he said.

The survey also suggests activity should improve further in the second half of the year but the upswing isn’t seen as strong or wide enough as yet to prompt any turnaround in employment.

KBC chief economist Austin Hughes said the survey sheds some light on what has become a heated debate about whether the economy is in recovery mode. “The survey points towards a recovery but also explains why it may not feel like a recovery for many.

“What is happening is a gradual easing in the negative factors that depressed activity and employment in recent years. So, the ‘feel bad’ factor is fading but the ‘feel good’ factor we normally associate with economic upturns remains largely absent,” he said.

Mr Hughes said while growth is rising, opinion is sharply divided as to how far we may be from a broadly based economic recovery.