Job growth halts and outlook dire, say small firms

Job creation in the private sector has come to a halt and the prospects for the rest of the year are poor, according to the Small Firms Association.

A combination of an uncertain trading climate and the rise in business costs means the small business sector will create fewer than 20,000 jobs this year, almost half the more than 36,000 projected less than six months ago.

"The situation for employment at the moment is dire," said Mr Pat Delaney, director of the SFA. "If you strip out the 14,000 jobs created by the Government ahead of the election, you would be looking at an unemployment rate of 6 per cent plus."

He said the economy had already shed 14,000 jobs in the past 12 months, 7,000 of them in the past quarter. "Ninety per cent of new jobs have come in the public sector. Job creation in the private sector has come to a halt and many companies are looking to consolidate."

The report from the SFA comes just weeks after the Central Statistics Office's quarterly national household survey showed a rise in the number of those at work in the three months to June of 4,400. That small increase came after two consecutive quarters where the numbers had fallen.

It also comes as employers and unions stake their positions ahead of negotiations on a successor national agreement to the Programme for Prosperity and Fairness (PPF).

The group's calls for a Budget designed to boost business confidence, a call unlikely to be met following publication of a secret Government memo outlining the need to cutbacks of €900 million in current spending ahead of any new budgetary initiatives.

The SFA blames unrealistic wage expectations, rising insurance costs and the price of energy for the fall in job creation and says these factors will affect existing jobs as the year progresses.

"We do not see any growth in employment in the fourth quarter," said Mr Delaney.

The association also criticised the forthcoming rise in the national minimum wage, saying it would lead to a cut of up to half in the availability of part-time work in smaller companies.

The increase - from €5.97 to €6.35 - would, said Mr Delany, place Ireland at least 21 per cent ahead of competitor economies and make companies more reluctant to employ part-time staff.

The 6 per cent rise in the national minimum wage from the start of next month is the second increase under the PPF.

The employers' group, which has been monitoring the jobs situation in more than 200 companies throughout the economy says wage rates are now rising faster than productivity for the first time in six years and that domestic wage increases are running at three times the euro-zone average.

Meanwhile, Irish exporters will today tell the Minister for Transport, Mr Brennan, that a loss of competitiveness due to poor infrastructure is one of the major threats facing the economy.

At a European Logistics Summit, exporters association president Mr Brian Ranalow will tell the minister that exporters were faced by growing customer service demands and rapidly deteriorating transport infrastructure to deliver the service.

The Minister will also address the conference.

Mr Ranalow says transport strategy has failed to keep pace with export growth in the Irish economy. He is expected to attack the lack of strategic vision and investment. The leaked McCreevy memo indicates that transport spending is about the only area of public spending not facing cuts.