Thursday 29 September 2016

ISME expects job losses as pay bills rise

Published 04/01/2016 | 02:30

SFA chief executive Patricia Callan Photo: Gary O'Neill
SFA chief executive Patricia Callan Photo: Gary O'Neill

Retail will not see the same boost in employment as other sectors of the economy this year because of the hike in the minimum wage, employers group ISME has warned.

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Elsewhere, however, prospects for small and medium enterprises (SMEs) are good and the sector could generate an additional 60,000 jobs, if costs are curtailed, ISME said.

Separately, the manufacturing sector is powering ahead on the back of record new order levels, though even its jobs growth is slowing.

The retail sector is among the country's main employers - accounting for about 15pc of the workforce or almost 275,000 people.

According to the results of employers' group ISME's Quarterly Business Trends Survey, owner managers in the retail sector expect to cut staff numbers in the year ahead by as much as 10pc, blaming last week's increase in the minimum wage by 50 cents an hour to €9.15.

Retailers have also slashed their expectations of profitability this year, from 20pc to 5pc.

That's in contrast to most broad sectors of the economy where owner-managers have generally positive expectations for the year ahead.

Business confidence has slipped slightly. According to the latest survey result, however, expectations for the future are up. That includes anticipated hiring - where the forecast for growth is the highest since 2007.

The head of the Small Firms Association (SFA), which also represents small business, said its members are overwhelmingly positive about the year ahead.

Over 65pc of respondents to an SFA survey indicated that they intend to recruit new staff over the coming year, up slightly since the last survey in June.

"Small firms already employ over half of the private sector workforce and almost two-thirds of our members will be hiring in 2016," SFA chief executive Patricia Callan said. "Small firms have a crucial role to play in job creation around the country, reducing unemployment, and attracting emigrants home to work. We expect small firms to create 30,000 jobs in 2016."

ISME's Mark Fielding said the latest results show the recovery is now reaching the SME sector, but warned that retailers are being squeezed.

"The future employment prospects in the Retail Sector, despite experiencing an increase in sales and employment in the final quarter, shows a drop of 13 points to minus-10pc as a result of the imminent imposition of a 6pc increase in the National Minimum Wage and the expected knock-on effect across the sector," he said.

Meanwhile, the manufacturing sector saw a strong finish to 2015 led by bouyant new order levels, according to Investec's monthly Purchasing Managers' Index.

Growth, which is translating into employment, albeit at a slowing pace, is being driven by the sustained weakness of the euro against sterling, according to managers.

Irish Independent

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