Wednesday 21 August 2019

Productivity at Irish SMEs 'stagnant' - OECD warning

Investment: Minister Heather Humphreys wants Irish SMEs to think internationally
Investment: Minister Heather Humphreys wants Irish SMEs to think internationally
Ellie Donnelly

Ellie Donnelly

Indigenous companies can play a bigger role in Ireland's economy but they need to boost productivity to the levels seen at multinationals, according to OECD deputy secretary general Ulrik Vestergaard.

A new review found the gap in the productivity of large companies here versus small and medium-sized enterprises (SMEs) is growing. Around 99.8pc of firms here are SMEs, which is broadly in line with other OECD countries.

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The Organisation for Economic Co-operation and Development (OECD) is an association of rich and middle income countries.

It presented a draft review on the Irish SME and entrepreneurship environment at a conference in Dublin yesterday.

"The good news is that SMEs and startups benefit from a favourable business environment in Ireland," Mr Vestergaard said. "However, the productivity gains for lots of SMEs have been stagnant. Boosting productivity will be crucial," he warned.

Currently, fewer than 7pc of Irish SMEs export their products and services, a low number compared with the European average, according to Mr Vestergaard.

Many of these exports go to the UK. With Brexit looming, diversification is increasingly important, he said.

Speaking to the Irish Independent, Minister for Business Heather Humphreys said the low number of SMEs engaged in export activities is something the Government will address through its Future Jobs Ireland plan.

"We want more companies to look at investing in R&D and how they can sell more products on the international market," Ms Humphreys said.

"Enterprise Ireland will be able to work with companies that may not have considered working abroad and ask them to look at that, and also help them look at their processes."

She added that productivity levels among SMEs needed to increase.

The OECD report made a number of recommendations for the Irish Government to develop its policies toward SMEs, including the scaling up of current initiatives to support exports, the establishment of an inter- departmental committee on SMEs and entrepreneurship, and simplifying the process for companies applying for R&D tax credits.

Elsewhere, the Government has announced two funds worth a combined €3m to help small and medium-sized businesses to improve their productivity. Both of the funds will be operated through Local Enterprise Offices.

Irish Independent

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