SMEs expect rise in turnover which may offset wage burdens, report shows
Enterprise Minister Peter Burke suggested additional SME supports are being ironed out by Government despite underwhelming application figures for the Increased Cost of Doing Business Grant. Picture: Sasko Lazarov/RollingNews
Many indigenous firms said increased labour costs will be a significant challenge for employers this year, but most still expect to report an increase in turnover as inflation cools, according to a survey.
The Enterprise Barometer 2024 by professional services firm KPMG found that over half of the respondents to the survey said wage inflation has largely fuelled the high cost of doing business and hit profitability.
However, the survey also showed that the majority of respondents have the cash to tackle wage inflation, as most expect to increase staff salaries in the next year amid a tight labour market and record low unemployment.
Chief executive of state body Enterprise Ireland, Leo Clancy, said the results of the research are “positive” amid a “challenging global economic environment for businesses.”
The overall sentiment among approximately 200 people working in the indigenous business space that were surveyed during the first three months of the year was optimistic, as 65% anticipate an increase in their turnover within the next 12 months, compared to 55% in 2023.
Housing has also become a hurdle for employers in recent years as it has become harder to attract and retain staff with a lack of affordable accommodation on offer in the Irish rental market.
Elsewhere, a separate report recently published by the Department of Finance showed the vast majority of small firms traded well last year, despite an inflationary environment, however some business groups have argued that cost pressures continue to weigh on employers.
The SME credit demand survey showed the hospitality sector had the highest percentage of firms reporting an increase in turnover, while the percentage of small- and medium-sized firms exporting jumped to 22% from 19% in the previous year.
Neil McDonnell, Isme chief executive, said cost pressures have increased during this economic cycle, weighing on business's viability.
“While total employment is rising, and firms are entering the market, we are not seeing competitor entry in the sector where members are complaining of cost strain,” he said.
Mr McDonnell said businesses are struggling with average rents of more than €1,800 per month in addition to labour costs.
As a general election looms, which looks likely to be held before the March 2025 deadline, government have come under pressure from lobby groups to alleviate cost burdens.
Newly appointed Enterprise Minister Peter Burke last week suggested additional SME supports are being ironed out by government despite underwhelming application figures for the Increased Cost of Doing Business Grant among small firms.
Mr Burke said his department is working with Social Protection Minister, Heather Humphreys, and Minister for Higher Education, Patrick O'Donovan, "to put a package on the table for the SME sector", details of which are set to emerge by the end of this month.
Mr Burke also added that there are more businesses opening than closing in the Republic.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
