20,000 job losses feared in small firms crisis

Up to 20,000 industrial jobs could be lost before the end of the year as small companies face a "crisis" of confidence, the Irish Small and Medium Enterprises Association (ISME) has warned.

The association's latest survey finds that half of the Republic's small and medium-sized enterprises (SMEs) are less optimistic about the prospects for their business than they were at the same point of 2002. Manufacturing firms displayed most pessimism, with 55 per cent expecting a downturn over the next year.

ISME has urged the Government to establish a task force to develop solutions that would ensure the long-term survival of small indigenous firms. In particular, the association is calling for increased State support for research and development within firms involved in traditional manufacturing activities. Funding for training is also needed, according to ISME, which is calling for "a root-and-branch review" of the difficulties facing SMEs. ISME believes this is "vitally important for the survival of the sector".

Almost one-third of manufacturing companies responding to the survey said they expected employee numbers to drop over the coming year, a proportion that ISME says could equate to 20,000 job losses if current trends hold.

The ISME Spring Trends survey shows that the economic slowdown has already forced smaller companies to reduce staff numbers, with 37 per cent of respondents reporting that they employ fewer employees now than they did a year ago. This compares to 18 per cent of firms which said they had raised staff numbers.

Again, the manufacturing sector suffered the most, with 42 per cent of firms in the area reporting lower employment numbers than in 2002, and just 13 per cent experiencing growth.

The research finds that 28 per cent of respondent firms experienced order cancellations over recent months. A "double whammy" resulted from more than half of these cancellations coming from Irish firms, according to ISME.

Almost half of all survey participants said their order books were running below levels that could be expected for this time of year, while 39 per cent reported difficulties with late payments.

Employment levels in the financial sector fell by 1,100 last year, according to new data from the Central Statistics Office (CSO).

The numbers show that 50,100 people were working in banks, insurance companies and building societies at the end of 2002. This compared to 51,200 a year earlier.