Small indigenous Irish companies are in danger of being suffocated by increased regulation and excessive wage costs, delegates at the Chambers Ireland National Business Forum heard yesterday. Claire Shoesmith reports.

Addressing the gathering in Croke Park in Dublin, Joe Macri, managing director of Microsoft Ireland, said that small businesses bear an unfair amount of the regulatory burden.

He said that regulatory costs are 60 per cent higher for small businesses than they are for larger companies.

Meanwhile, Michael Donnelly, chairman of Growcorp, a company set up to develop new technology companies in Ireland, called on the Government to introduce some sort of tax break for small and medium-sized businesses to avoid the burden of employee-related costs, in particular pay-as-you-earn tax (PAYE).

"The single largest expense in each business is PAYE and this can be tough for small businesses," he said.

Excessive wage increases also pose a significant threat to small businesses, according to John Dunne, chief executive of Chambers Ireland.

"While current economic growth appears healthy it is fuelled by unsustainable increases in domestic credit whilst our export and productivity performance are both declining," he said.

Mr Dunne said the first priority must be to tackle competitiveness and drive increases in productivity, rather than simply raise pay.

Delegates at the forum also heard how Irish companies must consider expanding their businesses overseas if they are to continue growing.

Cian Kinsella, the founder of software group CR2, said that Ireland is a small country and that decent growth can only come through expansion or increased exports.