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63% of Small Firms will Retain Employee Numbers in 2014
By Patricia Callan, Director, Small Firms Association
Sep 16, 2014

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  • 63% of small firms will retain employee numbers in 2014 while 7% will reduce employee figures
  • 3 in 10 small firms hope to increase employee numbers during the coming months
  • 45% expect their pay bill to increase in 2014

The Small Firms Association (SFA) have released the latest Jobs Sentiment Survey for the second half of 2014, which indicates an increase in employee numbers within small firms and reflects the recent upturn in labour market performance.  However, for some firms retaining and creating employment remains a challenge.

SFA Director, Patricia Callan stated, “Although the recovery path for the labour market won’t entirely be smooth, this survey shows that just over 30% of small firms plan to increase employee numbers in the second half of 2014 and 63% will retain their current employment levels.  While the figures are positive, 7% of firms will reduce employee numbers as business input costs and labour costs remain challenging.”  

“There are sectors such as traded services and hospitality that are showing strong job growth, for other sectors job creation will be fragile and every step must be taken to ensure no additional taxes are placed on labour to ensure job retention and growth,” added Callan.

While some firms will retain a recruitment freeze, 27% of respondents indicated an increase in the recruitment of permanent staff during the final 6 months of 2014 and nearly 29% will recruit temporary staff.  “While firms may be reluctant to recruit based on a number of issues mainly business and financial uncertainty; these figures are a positive move in the right direction,” said Callan.

The survey shows the level of lay offs and reduction in employee hours has slowed, which may be a reflection of increased sentiment within the small business community and some positive exchequer figures on the economy. 

In regards to pay over half of respondents (53%) expect their total pay bill to remain at its current level, while 45% of small firms expect their pay bill to increase. Callan highlighted that Irish labour costs are still the 11th highest in Europe and 16% above the EU average. In terms of hourly labour costs Ireland is 30.8% ahead of our nearest competitor, the UK, putting us at a distinct competitive disadvantage. 

“Labour costs have risen in recent times; this reflects the impact of Budget 2014 on employers, with increases in employers’ PRSI and health insurance.  While some moderate wage growth will continue during the remainder of 2014, mainly in the form of performance related bonuses rather than wage increases, these will be focused on the more strongly performing sectors of the economy with many small firms not in a position to carry additional wage costs,” said Callan.

“Tackling unemployment remains a challenge, and this needs to be reflected in the measures to support SMEs and job creation in Budget 2015.  The Government should reduce the lower rate of Employer PRSI from 8.5% to 4.25%, reduce the marginal rate of tax, extend the entry point to the marginal rate and drop the pension levy in Budget 2015.  There must be no additional taxes introduced on labour.” Callan concluded.

Patricia Callan, Director
Small Firms Association
Confederation House
84/86 Lower Baggot Street
Dublin 2
t: 01 605 1500
d: 01 605 1602
m: 087 6999345

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