Irish labour costs are now 30.8pc more than our nearest competitor, the UK, 16pc more than the EU average and 11th highest in Europe, the Small Firms Association told Minister for Jobs, Enterprise and Innovation, Richard Bruton today.
The SFA Director, Patricia Callan also met Minister for Skills, Research and Innovation, Damien English, today to set out the small business priorities for increasing jobs.
"Government job promises in the Action Plan for Jobs can only be delivered through successful small businesses. We need to improve the general business environment. We need to encourage more people to take the risk and become self-employed and set up new businesses. We need to make work attractive for those on social welfare. But first and foremost we need to ensure that there are no more increases in the cost of employment, which is the biggest barrier to existing employers in creating new jobs," the SFA leader said.
She pointed pout that the small business sector currently employs half the private sector workforce, some 700,000 people.
"This is putting us at a distinct competitive disadvantage, and is a particular problem for SMEs in the services sector where the cost of employing an individual accounts for over 80pc of location sensitive business costs (i.e. costs which vary by location rather than being set by a worldwide market). Government changes in PRSI, illness benefit, redundancy rebate, health insurance and general taxation all impact negatively. No further costs can be imposed through Budget 2015. We are opposed to any increase in the statutory minimum wage and mandatory sick pay or pension provision, which would have a devastating impact on the fragile recovery that is taking place in small firm employment," she said.
The SFA called on the Enterprise Ministers to support its call for the reintroduction of a lower rate of employer PRSI which applies to employee earnings of E356 or less per week, for a further 3 years to assist in sustaining and creating jobs in the critical hospitality, tourism and retail sectors. This had been reduced from 8.5pc to 4.25pc as part of the 2011 Jobs Initiative but lapsed at the end of 2013 with no announcement, which is unacceptable. "It is now hitting payroll costs and affecting employment decisions and should be reversed in Budget 2015," argued Ms Callan.
On making work attractive, the SFA supports the JobBridge Scheme which "continues to be well received by our members, with many converting the internships into on-going jobs after the completion of the programme," and Callan stated that this should be retained. "Similarly, the Jobs Plus programme is working very well for small firms recruiting new employees."