The Small Firms Association (SFA) has warned that although labour costs are still the biggest concern for small businesses in Ireland, non-pay costs are hampering small businesses' plans to expand and hire more staff.
The fifth annual SFA national business survey shows that energy and fuel prices are a major concern for 77% of small companies and an increase in legislation is an escalating concern for 66% of small firms, with insurance costs cited by 56% as a worry.
SFA Director, Patricia Callan said the survey showed that costs in Ireland were rising more rapidly than in competitor countries, and that the move to a high cost, high wage economy must be matched by higher productivity and reductions in costs from the 'sheltered' sectors of the economy.
'While the economy is structurally very sound, we would be foolish in the extreme to underestimate the potential impact of frictional problems such as energy prices and inefficient public service delivery. The tight labour market, skill shortages, higher than average wage increases are all causes for concern', she added.
The cost of labour is still the most significant issue, with 12% of the 1,177 companies questioned citing labour costs as their single biggest threat and 88% as a major business problem.
'The pay element of the new National Agreement - Towards 2016 - is at the very limit of what the country can afford, and it is is now critical that productivity growth meets these wage increases in order for businesses to regain lost competitiveness in a global market-place,' she said.
The survey showed that legislation and red tape have increased as significant problems for small businesses in the survey, with 10.5% and 8.8% of companies respectively citing them as their biggest problem.
