75% of firms to freeze or cut pay

THREE out of four firms will keep wage bills static or cut them over the next three months, the Small Firms Association (SFA) Winter Jobs Sentiment Survey indicates.

The survey of 677 companies employing 14,237 indicates that 48% expect their total pay bill to remain at its current level in 2011, while 25% expect their pay bill to decrease.

SFA director Avine McNally said: “This shows that the focus on costs will remain in 2011.”

Ms McNally said that in the past small firms have demonstrated the capacity to create employment, and they will do so again if they are given the right economic conditions.

“In 2010, 12% of firms increased their employee numbers, however, the final months of the year showed a decline in the numbers at work in small firms and this may have been a reflection of the uncertainty that firms felt about Ireland’s economic future.”

Despite difficult trading conditions, 62% of companies indicated that employee numbers will remain at current levels during the next three months, while 14% expect to increase employee numbers in the next three months, an increase of 7% on the last quarter of 2009.

The survey shows that the rate of job losses; reduction in lay-offs and employee hours has slowed. This is a reflection of the series of actions which have been taken by many small firms to reduce costs and retain jobs.

Some 42% of firms will implement further actions and initiatives to ensure greater job retention: these include new product/services development (38%); process improvement (42%); greater employee engagement (30%) and greater management communication (42%), said McNally.

While many small firms will still retain a recruitment freeze, 13% indicated an increase in the recruitment of temporary staff and 11% a rise in permanent staff over the first quarter of 2011. “These figures are a positive move in the right direction and hopefully these figures will increase as the year progresses.” said Ms McNally.

“Confidence must be restored to the economy to generate greater consumer spend and Government urgently needs to deal with the issue of costs for the small business sector, as businesses must focus on costs before they start to focus on expanding pay roles or creating jobs.” concluded Ms McNally.