'SMEs are being squeezed from every side': ISME urges National Minimum Wage reset

Neil McDonnell, Chief Executive of ISME, said: 'We need policies that back Irish businesses, not just foreign multinationals.'

Neil McDonnell, Chief Executive of ISME, said: 'SMEs are being squeezed from every side on energy, insurance, regulation, housing and wages. This Budget needs to stop the rot.' File picture

ISME has published its pre-Budget submission, which calls for a reset of the National Minimum Wage, saying it is not the solution to the cost-of-living crisis.

The business group, representing small and medium businesses, listed five issues to be addressed by the Budget in October. 

In relation to business costs, they said there are structural and statistical issues with the calculation of the minimum wage here. They said public sector wages exceed those in the private sector and with Ireland at full employment, they expect the matter to be reversed.

They also said that SMEs in particular experience the “crowding out” effects of the FDI sector in wage pressures, accommodation pressures, and pressures for access to water, sewerage and energy infrastructure. ISME said it was seeking a report within six months specifying why the components of Ireland’s consumer and energy costs are the highest pre-tax prices in the EU.

Neil McDonnell, Chief Executive of ISME, said: "SMEs are being squeezed from every side on energy, insurance, regulation, housing and wages. This Budget needs to stop the rot. We need policies that back Irish businesses, not just foreign multinationals. If we don’t address this imbalance in the economy now, we will pay the price in jobs and lost investment. 

"We cannot continue with business as usual. If we want thriving towns, competitive employers and a balanced economy, we need to put Irish SMEs at the centre of policy, not on the sidelines."

The group also made recommendations in relation to the public finances saying the State's current spending profile is unsustainable and is propped up by unreliable corporation tax receipts. 

"ISME considers it unwise to divert so much of this excess yield into core recurring expenditure. We must stop untargeted something-for-everyone spending and focus on right-now deficits in infrastructure, energy and security."

They also called for changes to social protection and said supports must not encourage lower work intensity. "Everyone, including workers earning below €352pw, should pay into the social protection system," the submission states.

Housing

ISME said the prime driver of wage demand growth was the cost of housing, and that many medium and large companies have become the new local landlords.

"The rapid decline in our available stock of accommodation post great financial crash is due to tax and regulation policy. These must be reversed."

"We also need to understand the impact on housing stock that the influx of large numbers of foreign students attending our universities creates. Students should not be competing with families and adults for access to housing, and require a dedicated stock of accommodation," ISME said.

They said planning laws have become the greatest impediment to the delivery of housing, commercial property and infrastructure and while the Planning and Development Act 2024 is intended to speed this process up, it will only impact new applications. 

"Government must consider strategies to expedite necessary applications that are already in the system," ISME said.