Business costs a big challenge for firms

MORE than half of firms will keep staffing at current levels in 2011 but business costs will remain a challenge, the Small Firms Association’s (SFA) first quarterly Jobs Sentiment Survey has revealed.

The survey of 626 companies employing 18,942 people indicated that some 55% of companies where employee numbers increased in 2010 expect a further increase in employee numbers.

However, 30% of companies that decreased their employee figures in 2010 expect to make further reductions this year.

SFA director Avine McNally said the survey shows that job losses in some sectors, such as wholesale and retail, appear to be stabilising, while more labour intensive indigenous sectors, mainly manufacturing, are starting to show signs of recovery.

Mr McNally said: “In the final months of 2010 there was 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.

“However, this survey shows that almost one-in-four (24%) hope to increase employee numbers in 2011, while over the next three months 16% will be recruiting permanent jobs.”

However, Mr McNally said that while the figures are positive, 18% of companies will reduce employee numbers as business and cost challenges remain for many firms, and any job creation is fragile until there is a restoration of cost competitiveness and greater certainty and confidence restored to the economy.

He said that the reduction in lay-offs and employee hours is a reflection of the series of actions which have been taken by many small firms to reduce costs and retain jobs.

“The survey highlights that firms will implement further workplace actions to ensure greater job retention.

“These include new product or services development (46%), process improvement (51%) and increased workforce flexibility (55%). These initiatives show the adaptability and commitment of employees in small firms to work with management to ensure jobs are retained.”

Mr McNally also welcomed the commitment by the Government to support job creation and the commitment to introduce no new taxes on employment, but added that the focus must also be on cutting business costs.

He said: “Small business will generate employment again throughout the nation given the right conditions.

“One of the immediate actions must be to reduce business costs, this will allow firms compete and survive.”