Demands from employees for increased salaries is the biggest challenge facing business today. 32% of Irish SMEs cited this as their top concern in a joint survey conducted by BDO and Ibec.
Compounding this issue, 29% of businesses stated that inflationary pressures impacting on company margins is the second biggest challenge facing their organisation.
Access to suitable skills and affordable housing for staff were third and fourth, at 18% and 4% respectively.
The BDO and Ibec 2022 SME Sentiment Index surveyed Irish SME organisations across three key categories: Staff Retainment and Recruitment; New Working Models; and Business Operations.
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It found that SME businesses expect over half of all employees will be back in the office full time in the next six months.
It also revealed that over 80% of SMEs, with employees ranging from 10 to 250, find retaining staff a significant challenge, with 8 out of 10 now spending more time on recruitment compared to 2019.
Despite challenging trading conditions, 60% of SMEs believe their business revenue will increase in the next 12 months.
Michael Costello, Managing Partner of BDO in Ireland, said it's clear from the results that the local and international business landscape for Irish SME's is challenging and evolving fast.
"Some of those challenges, such as recruitment and retention of staff, have been concerning business leaders for some time," Mr Costello said. "Others such as rising energy and commodity prices are new and need to be actively addressed."
He said it’s encouraging to hear that 60% of Irish SMEs remain positive that their revenue will increase over the next 12 months. "There’s no doubt that there are serious challenges ahead, but businesses continue to grow, building on the positive outcomes of the pandemic – focusing on people’s wellbeing and work life balance, and leveraging the innovative technologies."