Irish Govt Failing To Support Recovery

by Jason Gorringe, Tax-News.com, London

21 June 2010

Despite recent reports that the recession in Ireland is over and the economy is slowly returning to growth, a survey of accountants conducted in the past week has revealed that more than half of respondents disagreed, or strongly disagreed, with the statement that Ireland is emerging from recession.

The survey, conducted by the Institute of Certified Public Accountants in Ireland, questioned more than 500 accountants employed in accountancy practices and across a wide range of industries throughout the country. The survey provides insight into the perspectives of those working at the coalface of Ireland's economy as almost 85% of those questioned work in small and medium sized enterprises.

When asked about the impact of the minimum wage, almost 20% said the introduction of the minimum wage had had a significant, or very significant impact, on their business; however, one in every two respondents said their organization would not employ more people even if the minimum wage was reduced. Almost 20% of respondents said their organization would employ more people if it was reduced, but this rose to 36% and 29% in the hospitality and retail sectors respectively. Almost 60% of respondents believe the minimum wage is making Irish business uncompetitive.

Reducing the cost of utilities and services and relieving the administrative burden on small businesses were two key reforms that emerged as preferred measures to increase Ireland's economic competitiveness.

Geoff Meagher, President of the Institute of Certified Public Accountants, agrees that urgent action is required to ensure a competitive operating environment for business. “Improving Ireland’s export performance and raising productivity across all areas of the economy are the only sustainable strategies for securing long term prosperity and creating jobs”, he argues.

“Ireland is a small open economy with a relatively small population but our size can be our strength as it bestows on us agility and adaptability. In order to adapt and innovate, concerted action is required on costs, infrastructure improvements and continued measures to encourage innovation, research and development."

Calling for a strong emphasis on skills development he said funding has to be set aside to increase the capabilities of SMEs and address skills deficits in potential growth areas. “Retraining options have to be focused and aligned with the needs of industry”, he added.

The CPA recently addressed the Joint Oireachtas Committee on Economic Regulatory Affairs, asserting that a failure by Government to act on the recommendations of high level review groups is adding to the regulatory and administrative burden on Ireland’s SMEs.

Two years after the Company Law Review Group had prepared a General Scheme for a Companies Consolidation and Reform Bill, its proposals were still with the Parliamentary Draftsmen’s Office with no sign of it being put forward as draft legislation.

"Over 90% of businesses in Ireland are either micro, small or medium enterprises. These companies are critical to our economic recovery and deserve to be supported. It is important to recognise that even small changes to ease the administrative burden can make a meaningful difference to the viability of a business. The main goal in the immediate future must be to foster an atmosphere in which SMEs can flourish while at the same time ensuring proportionate regulation which will protect Ireland’s reputation as a safe environment in which to conduct business" Mr. Meagher added.

Recommended