LABOUR COSTS CONTINUE TO WORRY SMALL BUSINESSES - Over 1,000 companies responded to the annual Small Firms Association business cost survey on the most negative factors impacting on their ability to thrive. Asked what their single biggest problem was, there was a broad response. 13% cited labour costs while 11% cited inflation, 9.7% energy costs with a similar percentage citing skills shortages.
The director of the Small Firms Association, Patricia Callan, says that labour costs are the single biggest issue for businesses. 13% cites it as their biggest worry while 87% of them say it is a very significant issue. She says that over the last number of years we have been paying ourselves about three times the average EU salary increases so that now today our salaries are artificially high relative to our international competitors. Ms Callan says the country can not produce goods and services at the same cost than we used to - we have become uncompetitive. 'If we are to get back on our economic track, then we are completely reliant on the international economy and being able to export,' she says. Until we can tackle our own cost base, we will not be able to reduce our prices and sell more goods internationally, she adds.
Ms Callan says that access to credit from the banks has not emerged as a major concern for small businesses so far, but she adds that companies are beginning to review their expansion plans. She says that so far the banks are still open for business and a large number of start-up businesses are still coming through. But she says it is becoming more difficult to get loans with the focus more on overdrafts.
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CONSTRUCTION SECTOR CALLS FOR BALANCE FROM BANKS - There were lots of doom and gloom stories in the Sunday papers on the fate of the construction industry and its players. The Director General of the Construction Industry Federation, Tom Parlon, says that from the builders' point of view the biggest concern facing them is the access to mortgages. He says that all evidence points to the fact that banks are making less money available for mortgages for the typical first time buyer. He says that while the banks were very upbeat when they appeared before an Oireachtas committee last week, there is certainly a disconnect between their commercial side and their mortgage side.
Mr Parlon says the banks are being exposed to the global credit squeeze and the lack of liquidity among themselves is a problem. He says the Construction Industry Federation is trying to come up with ways to bridging that gap. He says that when things are going well, banks tend to be too generous and when there is a squeeze on, they tighten up too much. He says now is the time for some balance.
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MORNING BRIEFS - AIB has made another mistake - this time in the sensitive area of mortgage repayments. The problem involves 500 customers on discount tracker mortgage accounts whose mortgage payments were not adjusted upwards to take account of ECB rate increases between March 2006 and March of the following year. 'As a result,' says the bank, 'the balances on these accounts were higher than they would have been had the repayments been made at the correct level.' The bank says affected customers must pay up the shortfall with a lump sum by the end of this month or over the remaining term of the loan.
*** Aer Lingus says its total passenger numbers increased by 7.6% last month to 958,000, up from 890,000 the same time last year. Breaking down the figures, this was an increase of 7.8% on its short haul routes and a 6.7% on its long haul.
*** On the currency markets, the euro is worth $1.5628 and 79.18 pence sterling.
