Rising costs threaten viability of firms in Dublin, says Ibec

Sharp rises in the cost of doing business in Dublin threaten the viability of indigenous and multinational firms, according to employer group Ibec.

The organisation says that non-pay costs in the capital have risen 18.5 per cent between 2002 and 2004, more than three times the 5.9 per cent rise in the consumer price index over the same period.

Small business is faring significantly worse, according to a survey carried out by Ibec, with non-pay costs in the period jumping by 28 per cent.

Ibec director of enterprise Brendan Butler will tell a conference on the city's economy today that increases on such a scale are "both indefensible and unsustainable".

"Unless meaningful action is taken to address this imbalance, the ability of business to compete will be seriously threatened and this will ultimately put jobs at risk," he will tell the conference organised by the Dublin Employment Pact and the Dublin Regional Authority.

The major contributors to rising costs have been rents, which jumped 24.5 per cent over the two years, and insurance, which was 22.2 per cent higher in 2004 than in 2002.

Costs rose more steeply in 2003 (10.2 per cent) than in 2004 (7.5 per cent), largely as a result of the concerted drive to reform the Irish insurance market. Insurance costs rose 19.7 per cent in 2003 but only 2.1 per cent a year later.

The figures are drawn from a nationwide survey published earlier this year. The overall increase for Dublin is slightly lower over the two-year period than the national average of 19.1 per cent.

However, costs for small businesses in the city rose substantially faster than for the sector nationally - 27.9 per cent compared to 23.7 per cent. Mr Butler attributed the difference largely to the greater cost of rents in Dublin.

Mr Butler said that businesses were also meeting pay rises over the past two years that were running at almost twice the level in other euro-zone countries.