Increasing costs hit small businesses

SMALL business group ISME says its members have seen their costs rise by 30% in the last three years.

In its latest survey of business costs, the group said its members had seen gas and electric price rise by more than 40%, while insurance premiums have doubled. The survey found that local authority rates, postal costs, labour and water charges had all increased significantly since 2002.

“It is disingenuous of the Government, on the one hand to exhort indigenous businesses to move up the value chain and increase productivity and on the other hand, restrict potential growth by sanctioning cost increases well above those of our competitors,” ISME chief executive Mark Fielding said yesterday.

He said four fifths of small firms had seen their profits adversely affected by the price rises, with more than a third of businesses cutting staff over the period to cope with the higher costs.

“In this context it is particularly essential that, as indigenous industry strives to drastically improve its competitiveness, the Irish business cost base be brought into line, in order for us to compete.

“The Government have a key responsibility in this area and it is imperative that action is taken to control costs under their remit.

"Unless remedial action is taken on the cost competitiveness front the situation will continue to deteriorate,” Mr Fielding said. ISME wants the Government, through the recently set-up Small Business Forum, to establish a competition council tasked with reversing the negative trend in competitiveness.

“That will require a comprehensive review of the cost environment in which Irish businesses operate, including the costs over which individual businesses have control and the costs, which are imposed.

“This would help to identify key cost constraints and trends on an ongoing basis and propose solutions,” Mr Fielding added.