Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
WE’VE SEEN THE slogans and heard it from the Taoiseach himself - Ireland is the best small country in the world in which to do business, right?
But does that only apply to the big end of town and what costs are dragging down the owner-operators who keep the economy ticking over?
This month as part of TheJournal.ie’s coverage of the small- and medium-enterprise (SME) sector, we are looking at important money matters for these businesses – which together put nearly 70% of private-sector workers in a job and account for about half the nation’s commercial output.
Here’s a handy graph to start with as we look at where most of that money goes:
This year’s Forfás report into the cost of doing business in Ireland showed that across all business sizes and sectors, labour expenses were easily the number-one drain on the company purse.
When “location-insensitive costs”, or materials and equipment which had prices set by the global market, are taken out of the equation, businesses on average spent between 54% and 87% of their total costs on staff depending on the industry.
Irish Small and Medium Enterprises Association (ISME) chief executive Mark Fielding said wages were easily the number-one cost for businesses and the government could cut taxes to lift workers take-home pay and reduce the pressure on SMEs from wage rises.
There is much too much emphasis on foreign direct investment in Ireland – I’m not against it, but there needs to be the same amount of interest show to the SME sector now as there is to the multinational sector,” he said.
Despite workers taking a big hit during the recession, the figures show Irish workers’ average hourly costs remain above the eurozone average – €29 per hour last year, compared to €28.20 across the region and €20.90 in the UK.
The average worker was still earning less last year than they did in 2007, although there have been marked differences between industries.
Here’s a comparison of how the average cost for workers in construction, whose pay packets have shrunk the most since 2009, have fared compared to those for staff in IT and communications, who have had the biggest increases:
Property costs are the next-biggest expenses for businesses in most industries, except for manufacturing where transport is the big drain on the company purse.
And when it comes to bricks and mortar, Ireland scores surprisingly low on a global scale – especially when compared to property prices from the boom era, when Ireland ranked among the most expensive places in the world to secure real estate.
Rents for both prime office and retail spaces came in below the eurozone averages last year, although analysts have noted prices ramping up again - as much as 28% in the capital over 12 months as companies starting to be pushed to the city fringes to cut costs.
Transport fuel and utility costs both rate as expensive by European standards with Ireland having the third-highest retail electricity prices for SMEs out of the major EU countries.
Chambers Ireland policy director Mark O’Mahoney, whose organisation this week headed to Brussels for a EU-wide business conference, said Irish and other European SMEs were feeling the pinch from the higher costs of regulation in the region when compared to many of their Asian and North American competitors.
“I think Ireland is potentially a very competitive place to do business – it is a good example of how a country can turn itself around and we are looking into 2015 pretty positively,” he said.
“But Ireland is still a high-cost economy so it is something we need to be mindful of if we want to keep up. We are a small country and we are competing with the rest of Europe and the world these days.”
To embed this post, copy the code below on your site
Global? Start at home first.
This government needs to do more to support the largest employer in Ireland, SME’s.
Great country if you are Google etc. God help anyone looking to run their own business tho!
Large players like Google actually distort the market here, welcome as they are.
You have mid level managers thinking 80k is their right, not something that is unheard of in most of Europe. Rent and property prices in Dublin driven crazy by high paying multi-nationals which destroy the competitiveness of the country.
Most of our exports come from 40 US owned companies, over 85% in fact. What a position to place oneself in.
Multi-nationals are lovely to have but they are in terms of economic sustainability and jobs they are a distant second in importance to SME’s.
Double edged sword,
Seanie, multinationals were our one saving grace when the sh!t hit the fan in 2007 so I wouldn’t be so quick to dismiss their importance. They also create service industries around them which are equally just as important. And if as you say they represent 85% of our experts what do you propose replaces that? It’s not like we have a tonne of natural resources to tap into.
It is the sheer volume of the Pharma industry that distorts the exports.
We live in hope that America will not need someday to refocus tax at home in a recession or jobs at home for political reasons. What a gamble.
Our trade balance is a complete mirage due to Multi-nationals.
Focusing in on SME’s is much more important than Multinationals, they provide most of this countries jobs and spending.
We’ll never reduce unemployment just using multi-nationals, we’ll never have a sustainable tax base or economy by over relying on them.
There are a lot of sme’s that can be brought up to being large players.
Companies like Kerry Group, Glanbia CRH etc are leading global players in their fields, they are some of our multi-nationals, investing large sums all over globe.
Rental increases have nothing to do with google. It’s to do with the lack of housing supply due to a collapsed construction industry based on FF policy.
Don’t forget the planners J. They are still insisting developers build apartments in the middle of no where despite the obvious demand for 3 and 4 bed houses. I’m amazed this isn’t getting more media attention.
Govt too busy bending over for foreign multinationals and rolling out the red carpet for snakes like Donald Trump to help Irish SMEs. I see they’ve brought in an extra USC level now for self employed people. Shows you where their priorities lie.
Self employed earning over 100k. Hardening throttling enterprise is it?
A self employed person has more right to 100k than a high level manager in someone else’s business.
I haven’t much problem with the higher charge at that level but it is very wrong that it is just targeting the self employed. It should be across the board.
The higher tax rate for the self employed who are on reasonable wages shows that the self employed are actively targeted for bleeding.
C’mere to me, where do I get a job that pays €29 per hour??
Primary teacher!
Be a crappie hooker……
When is the next protest against water charges in Dublin?
NEXT Water charge protest: [NOVEMBER, 1st. DUBLIN]
Would like to see the relationship between average gross pay and net pay between Ireland and rest of EU. We have high gross salaries but I imagine they are so high to make up for all the tax and deductions. Talking Private sector here. Public Sector is another animal completely.
In most of Western Europe the tax take is much higher on average, never mind that property tax and water rates are also higher.
The tax wedge is much higher across Western Europe people, ye might not like that fact but that is still a fact.
That’s simply not true Seanie.
A useful graph to include would be each countries % spend of GDP. Most of the EE states with low cost of labour have less than 40% of GDP spent by governments. This with higher % spend have higher hourly rates. Relationship is striking
To take on them we will have to kick every high productivity business out of Ireland.
That is the key difference, most of them do not have any, at any level.
How is competing with high unemployment, low value businesses with poor national infrastructures a good idea.
Luddite.
That’s not my point at all. But I won’t waste my time or yours educating you
Why are labor costs in Ireland always so distorted?
Fact is the Irish worker has 20 days paid holidays in a year.
In Germany the Worker has 30 days paid annual leave ?
First three days of sick leave is at the employees expense.
In Germany sick pay is covered 100% from day (for a limited period of time)
The books are being seriously cooked here it is a complete lie that the Irish worker is so expensive.
However compare the wages of Lawyers,doctors and the public service teachers and politicians.
Our s are some of the worlds most expensive. The Wage issue is pure profiteer propaganda.
So what if we are still above the EU average, we are cheaper on that scale than most of our competitors. We’ll never beat countries like Spain or Portugal or Cyprus on wages, unless we consider cutting wages by 50% and kicking out the high wage multi-nationals.
We pay professional people, senior managers, doctors etc way too much, in many cases double even what wealthy European countries pay.
Legal fees here are outrageous and it is very wrong and selfish that no Govt. have tackled the Law Society here and its closed shop. It is an extortion on Irish society and deeply damaging to business here.
Do you ever take a break from commenting on here. Find yourself a hobby well ye
Ah yes, it’d be great if we could just not pay all the people that do all the work and watch the money roll in. A capitalists wet dream.
Welcome to Jobridge Ireland…
Yeah great place u can pay your employees as little as possible. Zero hour contracts jobbridge.fcukn assault on the working class
“Is Ireland really ‘the best small country in the world to do business in’?”
Not with that preposition dangling on the end of its sentence it’s not!
I guess I’m just going to have to pay a few per cent extra tax to set up my soon-to-be-highly-lucrative grammar auditing consultancy in a country with some syntactic credibility. Well done Ireland – that’s one more highly skilled job you’ve allowed to slip through your bungling fingers!!!
Only prescriptive grammarians would present such a narrow, limited and mostly historical interpretation of syntax; it belongs back in the 18th century along with Bishop Lowth. Most modern grammarians accept the proposition that language is better analysed in terms of a lexical approach.
Q. Is Ireland…blah blah blah?
A. No
Enda says it is
No
Support Small businesses
Great country if your name is O’Brien
have your say