Interest groups representing small businesses in Ireland have expressed concern at rising costs, further job losses and the government’s apparent inability to tackle these issues at a time when their members require greater assistance.

The number of redundancies recorded in Ireland in January was 6,699. Labor costs are seen as particularly burdensome for small businesses, as Mark Fielding, Chief Executive of the Irish Small and Medium Enterprises Association (ISME) pointed out.

“Because SMEs are more labor-intensive than other businesses, they are disproportionately affected by higher labor costs,” he said. “The percentage of value-added in a multinational is 8% of wages – in other words, 8% of all money spent is on labor costs. For SMEs, the figure is 48%. Any change in wages over the last few years has had a six-fold impact on the SME sector.”

Fielding claims that Ireland “is in a state of flux … Small business owners are indicating that this situation will deteriorate further, with many companies just about hanging on by their fingernails, unless economic conditions improve. If the Government is serious about steering the country on the path to growth, they need to realize that a stable jobs market is essential to both confidence and spending, key ingredients to any upturn.”

Patricia Callan, Director of the Small Firms Association (SFA), believes that the government is “complacent on the jobs front … the redundancy figures clearly show that small businesses have continued to haemorrhage jobs into 2010. There is a clear need for the government to now prioritize the restoration of cost competitiveness to the small business sector, which is the only way to sustain jobs”.

In relation to state-influenced costs, such as commercial rates, water, waste charges and energy costs, which are outside the control of individual businesses, Fielding remarked in an ISME statement that:

“We are not and have not been competitive in a very long time, and recognizing this, small businesses have cut their controllable costs to the bone, as evidenced by the reduction in consumer prices of goods and services of 3.4% and 4.4% respectively. In stark contrast, state-influenced costs have continued their inexorable rise, undermining the cost cutting efforts of the Private Sector.”

He added: “The overall prize of reducing state-influenced costs is improved competitiveness, company survival and job retention.”

The SFA has argued that the government should act to reduce energy costs for businesses through a rebate system. The association also said that business rates charged by local authorities should be reduced by 10% in 2010.

Commenting on the SFA’s 2009 Business Cost Survey, Callan further remarked on the cost of regulation and compliance to small business: “In a firm with eight employees, it is estimated that half of one person’s time is taken up with administration.”